“A Queue at the Restaurant Doesn’t Mean the Business Is Profitable” – Mafia Group Founder on Industry Challenges and Strategic Pivots

In the competitive landscape of Ukrainian hospitality, appearances can be deceiving. Oksana Serediuk, the founder of one of Ukraine’s most recognizable restaurant chains, Mafia Group, recently shared candid insights about the realities of running a restaurant business in today’s challenging economic environment. Her statement that “a queue at the restaurant doesn’t mean the business is making money” cuts through the glamorous facade of the industry to reveal the complex financial pressures restaurateurs face daily.

Serediuk’s comments come at a pivotal moment for her company as Mafia Group undergoes a significant transformation. The entrepreneur has been actively rebranding several of her Mafia locations into a new concept called Rumbabar, signaling a strategic shift in response to changing consumer preferences and market conditions. The Mafia chain, which became synonymous with accessible Italian-Japanese cuisine in Ukraine over the past two decades, is now evolving to meet new demands. This transformation reflects a broader trend in the hospitality industry where established brands must continuously reinvent themselves to remain relevant and financially viable.

The decision to rebrand represents more than just a cosmetic change. Industry analysts note that restaurant chains globally have been forced to adapt to post-pandemic consumer behaviors, including preferences for different dining experiences, delivery-focused models, and varied price points. Mafia Group, which at its peak operated dozens of locations across Ukraine, built its reputation on a successful formula of combining Italian and Japanese cuisines under one roof – a concept that was innovative when it launched but has since become commonplace. The Rumbabar concept appears to target a different demographic and dining occasion, potentially offering the company new growth avenues.

Perhaps more revealing was Serediuk’s acknowledgment of difficult business decisions, including the closure of “Igra s Ognem” (Game with Fire) restaurant on Khreshchatyk, Kyiv’s main thoroughfare. Despite the prestigious location in the heart of the capital, the establishment could not sustain operations. This closure underscores a harsh reality in the restaurant business: prime real estate and foot traffic do not automatically translate to profitability. Rent costs on central streets like Khreshchatyk can be prohibitively expensive, and without sufficient margins, even popular venues cannot survive. The closure serves as a cautionary tale for entrepreneurs who equate visibility with viability.

The Ukrainian restaurant industry has faced unprecedented challenges in recent years. The COVID-19 pandemic devastated the sector with prolonged lockdowns and restrictions, and just as businesses were recovering, Russia’s full-scale invasion in February 2022 created new existential threats. Power outages, supply chain disruptions, staff shortages due to mobilization and emigration, and dramatically reduced consumer spending have forced many establishments to close permanently. Those that survived have had to become remarkably agile, often operating on razor-thin margins while maintaining quality and service standards.

Serediuk also addressed a looming concern for the entire Ukrainian business community: potential tax changes for individual entrepreneurs, known locally as FOPs (Фізична особа-підприємець). The simplified taxation system for FOPs has been a cornerstone of Ukraine’s small and medium business sector, allowing entrepreneurs to operate with reduced bureaucratic burden and lower tax rates. However, discussions about reforming or eliminating these benefits have created uncertainty in the market. According to Serediuk, implementing stricter taxation on FOPs could have devastating consequences for the restaurant industry, where many workers – from chefs to servers – operate under this status. Higher labor costs would inevitably lead to increased menu prices, reduced staff, or both, potentially triggering a wave of closures across the sector.

The restaurant industry typically operates on profit margins between 3-9%, making it one of the most financially precarious sectors in any economy. In Ukraine, where inflation has been significant and consumer purchasing power has declined, these margins have been squeezed even further. Serediuk’s observation about queues not equating to profits highlights the importance of understanding unit economics – the relationship between revenue per customer, cost of goods sold, labor costs, rent, and other overheads. A busy restaurant might generate impressive revenue while still losing money if its cost structure is misaligned. This reality is often invisible to customers who see packed dining rooms and assume success.

Looking ahead, the Ukrainian hospitality sector faces a complex recovery path. Business owners like Serediuk are navigating not only immediate operational challenges but also planning for an uncertain future. The transformation of Mafia into Rumbabar, the painful closure of underperforming locations, and vocal advocacy regarding tax policy all reflect the multifaceted approach required to survive and eventually thrive. For aspiring restaurateurs and industry observers alike, Serediuk’s candid assessment offers valuable lessons: success in hospitality requires constant adaptation, rigorous financial discipline, and the willingness to make difficult decisions even when the dining room appears full.