Large restaurant chains have taken over much of the centre of Helsinki
Competition for the best locations has sharply increased over the last few years
By Tuomo Väliaho
Large restaurant chains have invaded the city centre of Helsinki and taken over many of the places considered advantageous for commerce. Competition for the best commercial real estate has markedly increased.
"The influence of large restaurant enterprises in the downtown area has grown. As competition increases, they toughen their strategies, and special attention is payed to the place of business," says Ari Larnemaa, CEO of Actival, a company specialising in restaurant commerce and consulting.
The increase in restaurant chains can be seen best in hotel and staff restaurants and pubs.
The greatest demand is for locations in downtown Helsinki, specifically in the 00100 postal code area, which is the most expensive area for businesses. The price of business premises has skyrocketed in recent years.
"Small-time entrepreneurs cannot afford the expensive office space. They usually establish their businesses in small, downtown alleys, where clusters of restaurants and cafés are formed," says Vesa A. Heikkinen, a researcher and head teacher of the Haaga Institute.
One reason for the price rise is that the City of Helsinki has begun to encourage competition in the leasing of its real estate.
"Good locations are worth more than gold. In addition to rent, the entrepreneur must make large investments in ventilation, for instance," says Tapio Sademies of the city's real estate office.
Sademies does not reveal how much rent is paid, as it is a business secret.
New faces have also appeared in the Helsinki restaurant business, who have challenged the old entrepreneurs.
Seppo "Sedu" Koskinen, owner of the restaurant and hotel chain Palace, has bought and set up numerous successful restaurants over the past few years.
Palace started out with four locations. Since gaining private ownership in 2001, it has expanded greatly. Today, Palace has 15 restaurants.
"Active and centralised sales are a big thing. If one place is full, another one can be offered immediately," CEO of Palace, Mikko Heinonen explains.
"If there is only one restaurant and it is full, you do not have anything to sell."
Palace challenged Royal Restaurants in the battle for the best business real estate, and made the highest bid for the lease for Pohjoisesplanadi 17. Sasso and Fishmarket replaced Alexander Nevski and Havis Amanda.
Royal Restaurants, in turn, changed from a small family business of four restaurants into a big-time enterprise in 1998 when it bought the 21 restaurants of the Arctica chain.
Sedu Koskinen opened his first restaurant, Tiger, in Helsinki on December 26th, 2001. Koskinen quickly transformed Helsinki's nightclub business.
"Sedu was very interested in nightclubs, which cannot be said about most chains at the time. Sedu found an opening in the market and used it skilfully," says Larnemaa.
In the nightclub business, restaurants have to be huge. Business has to flow whenever there is an opportunity for it.
"The time when profits are made is very short, we are talking about a few hours per week," Larnemaa sums up.
Big businesses can expand more easily than smaller businesses, since they have more capital available, and they can also survive setbacks. Large companies work with concepts and brands that are not profitable if the consumer group is small.
"There have to be lots of customers. A restaurant belonging to a chain with fewer than 100 seats is rare. An exception to this is Delfox's so-called fish restaurants," Larnemaa summarises.
"Not all of the big chains want to look alike, however. For example the establishments of Royal Restaurants and Palace are all one-of-a-kind."
Some of the large chains started to divide their restaurants into separate sections. They try to get several consumer groups under one roof by offering something for everyone. The restaurant of a large business is still not always successful.
"A business idea can fail even if the facilities are perfect. The business idea may still fail to reach the customer," Larnemaa ponders.
"Small businesses can often react to changes faster. They do not have a massive management branch, and there is nobody telling the entrepreneur what to do."
Helsingin Sanomat / First published in print 19.11.2005
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Restaurants sell more food and less alcohol than before
TUOMO VÄLIAHO / Helsingin Sanomat