Gastronomic facilities in the Czech Republic have been in a difficult situation during the recent years. They are constantly faced with new bureaucratic demands. It became compulsory to monitor food allergens and provide information about them to clients, smoking in gastronomic properties started to be prohibited by the law, obligation to submit the electronic records of sales was implemented, and problematic also became the lack of skilled labour. Even though it seemed like it couldn't get worse, the final blow came in the form of the worldwide Covid-19 pandemic. The worst situation is in Prague, especially in the Prague 1 district, which is completely dependent on incoming tourism. The goal was to map the actual situation in the field of gastronomy in Prague 1 connected to the pandemic and based on the results propose number of options to eliminate losses and related restrictive measures to a minimum through the government support programs, energy savings, reduced wage spending, reduced operations or temporary downtime.

The operation of gastronomic facilities has always meant many worries and complications on one side and a relatively low profit on the other, while facing different problems at any time. In recent years, especially in our country, in terms of various restrictions the administrative burdens and other problems have accumulated significantly. Whether that was through the introduction of summary and control reporting, the obligation to label allergens, the nationwide ban on smoking, and last but not least, the introduction of electronic sales records called EET. All this resulted in the fact that 10% of the total number of 35 thousand restaurants closed in 2018 compared to the usual 5% closure of restaurants in the regular year. But this was not the end of all the problems. Due to the excellent economic results and the related economic situation, significant issue in a key area began to appear in the macroeconomic environment. The issue being unemployment, which was the lowest in the whole EU in 2019. All segments had problems with securing human resources. However, in the area of services, especially in tourism, this situation was the most serious. In 2019 the labour market in the Czech Republic lacked about 11 thousand of chefs. In Prague it was around 3 thousand. This was very alarming. Wages grew significantly in this segment and everyone suspected that it was no longer sustainable. It was assumed that the economy would overheat, a crisis would come and the situation would improve. Unfortunately, something much worse came. Global pandemic represented by the Covid-19 disease.

The impacts associated with the coronavirus are huge not just on the ordinary lives of citizens and their reverberations will be here for a very long time to come. Basically, we are nearing the end of the pandemic’s first half. However, what we are interested in is also the economic impact. The impact not only on the national but also the global economy will be immense. The decline in GDP was recorded by all countries, including the Czech Republic. So far, the slump has been far greater than expected. The most affected segment is tourism. Travel agencies, hotels, but above all restaurant facilities are at risk. Anti-covid measures had the greatest consequences on restaurants, which were closed the longest during the first and also the second wave. This condition persists to this day. Prague is divided into 22 so-called large city districts, i.e., those with a number (Prague 1 - Prague 22) and another 35 so-called small city districts. Although Prague 1 is not the largest from the point of view of tourism, it is one of the most important localities. Thus, the consequences in connection with Covid-19 affect most restaurants in Prague 1.

According to the legend, the city of Prague was founded by the wise Princess Libuse who was the wife of Premysl Orac, the founder of the Premyslid dynasty whose origins we can only speculate about. However, we know with absolute accuracy that the dynasty’s rule lasted in our lands for several hundred years until August 4, 1306, when the last Premyslid was after the sword of Wenceslas III assassinated in Olomouc. If we have reports on the beginnings of the history of our capital, then they come mainly from Roman, Frankish or Byzantine sources. Our first more credible chronicler Kosmas did not live until the 11th century. The territory of the City District of Prague 1 includes the very core of Prague and covers an area of 550 ha, i.e., approximately 1% of the territory of the entire capital city. Due to its size, it belongs to the smaller urban areas. The territory of the Prague 1 district is defined in detail by the Statute of the Capital City of Prague (Decree No. 55/2000 Coll. Of the City of Prague) and has existed without changing its area since 1960. The administrative district became an independent city district in 1990. It consists of Josefov (the smallest cadastre in the territory of the Capital City of Prague) and the Old Town, partly the cadastral area of Hradcany, Malá Strana and Nove Mesto and very marginally also the cadastral area of Holesovice (behind U plovárny Street) and Vinohrady (area above the Museum and around the State opera). Individual areas in hectars are as follows: Hradcany 105 ha, Mala Strana 130 ha, Holesovice 1 ha, Stare Mesto 129 ha, Josefov 9 ha, Nove Mesto 174 ha, Vinohrady 2 ha. In total 550 ha, of which left-bank (Malostranska) part is 225, right-bank (Old Town) part 270, Vltava (including islands) 55, of which Strelecky strov is 2,7, Slovansky ostrov 2,5. Italics data are approximate and unofficial. Due to the basin character of the terrain in the central parts of the city, the altitude fluctuates across the city part. It reaches a minimum value of 185 m in the Vltava riverbed, on the contrary, the left-bank parts of Mala Strana and Hradcany rise up to 330 m. More than 31,000 economic entities are registered in the Prague 1 district. According to the branch classification of economic activities (so-called CZ-NACE), most of them are registered in the area of real estate business and its rental, in trade (services) and accommodation and food service activities (about 2/3) (Figure 1).

Figure 1: Cadastral territory Prague 1.

Comparative advantages and disadvantages of Prague 1

Each territory provides its residents or entrepreneurs with various advantages as well as disadvantages. In relation to gastronomy, these are the following:

• Location - the most popular and sought-after area for foreign and domestic tourists; the historic centre of the city with the most important monuments (Charles Bridge, Old Town Square, Hradcany, Lesser Town, Powder Tower).
• Infrastructure - high-quality supplier-customer facilities; the best bars and restaurants. The top hotels like Four Seasons, Alcron, Aria, Mandarin, Hilton Old Town or Augustin generate many restaurant guests.
• Cleanliness - the management of Prague 1 pays maximum attention to maintained and tidy streets, takes care of parks and all public spaces (Prague 1 is the "showcase" of the capital city of Prague)
• Transport accessibility - Prague 1 has a wide tram and bus network with intervals of 2-4 minutes, day and night lines, crossing of all metro lines A, B and C and direct connection to the airport.
• Security - there are local departments of the Parliament or the city police. In particular, the Hradcany and Mala Strana areas are under constant surveillance 24 hours a day, thanks to many embassies, the seat of the government, the Parliament of the Czech Republic and the Senate.
• Business office - the best law firms, luxury brands and investment companies are based in Prague 1. They generate many clients for gastronomic facilities, especially during lunches.
  

• Tourism – Prague 1, thanks to its location and priority position in relation to tourism in the City of Prague, attracts a huge number of foreign tourists. Because of that, domestic clients are sometimes discouraged from visiting this part of Prague. This trend does not help to diversify the client portfolio of restaurants, which manifested itself in the first wave of the pandemic because without tourists, the restaurants were empty.
• Rent and real estate prices - the most expensive location in the whole of Prague in terms of rent prices for non-residential premises or real estate prices. The rent for restaurants ranges between 800-1200 CZK per m2.
• Price for occupation and rental of municipal premises - due to the historical significance of the area, great interest on the part of employers, and last but not least, due to fiscal reasons, the Prague 1 management introduced the highest prices for occupation and rental of municipal premises (especially front gardens).
• Competition - there are about 700 restaurants in operation in Prague 1, which means a very strong competition within the territory. There are also the best restaurants here from all over the Czech Republic.
• Repairs and building modifications - due to the historic core, any building modifications or reconstructions are very expensive and time consuming. Some of them are not feasible as the vast majority of buildings are subject to control by the National Monuments Institute (NPÚ). The NPÚ headquarters are located in Prague 1.
  

Prague 1 is an area with the largest concentration of restaurant facilities. Thanks to its exposed and significant location, many exclusive and award-winning restaurants are located here. Among the most famous and endangered thanks to the pandemic are Terasa U Zlate studne, Bellevue, La Degustation Boheme Bourgeoise, Field and Alcron.

Terasa U Zlate studne: This restaurant with a beautiful view of Prague is characterized not only by delicious cuisine and masterpieces of Chef Pavel Sapik, but also by a beautiful roof terrace, which invites you to lunch and dinner or to simply enjoy a glass of wine. In the summer months, guests can also have private access to the royal gardens of Prague Castle directly from the roof terrace. The restaurant is located on the 4th floor of the Golden Well Hotel (U Zlate studne) from where you can be convinced that Prague really is the city of hundred spires. The history of the building dates back to 1528 and around 1900 already housed a small pub with an amazing view of Prague's rooftops. In 2008, the restaurant underwent an extensive renovation of the interior and facilities. The Italian architects Lorenzo Carmellini and Katrin Herden took part in today's design of the interior spaces, bringing together an interesting combination of modern design and Renaissance elements. The restaurant appeared on the Top 25 in Europe list according to Trip Advisor and was awarded 1st place in the Czech Republic, it is 3 times absolute winner of Grand Restaurant festival - Maurer's selection, and holder of 3 Golden lions according to Top Life. Pavel Sapik has been the chef for over 18 years.

Bellevue: The elegant restaurant with an unmistakable view of Prague Castle will captivate your eyes as well as taste buds with works of art created on your plate using traditional ingredients. The menu is prepared from the best ingredients in the rhythm of current world culinary trends. The dishes are presented in an imaginative arrangement with attention to detail and combined with premium wines of major European appellations. The restaurant placed on the Top 20 in Europe list according to Trip Advisor, became the absolute winner of Grand Restaurant - Maurer's selection, and holds 3 Golden lions. After the long-term chef Marek Sada, the chef now is the Frenchman Alexander Martin.

La Degustation Boheme Bourgeoise: This is a luxury restaurant that offers European cuisine and traditional Czech cuisine. It is located in Hastalska Street in Prague. Forbes Life called it its first choice for the engaging three-hour, tasty, seven-course menu. The restaurant offers an extraordinary experience, unique lighting and open kitchen. In addition to a simple and functional interior, it mainly offers a refined tasting menu - up to eleven courses. The restaurant was the absolute winner of the Grand Restaurant - Maurer's selection, awarded with 3 Golden lions and most notably since 2010 it has been the holder of the Michelin star. Oldrich Sahajdak has been the chef since the opening.

Field: At FIELD they strive to combine first-class dishes with a relaxed atmosphere and experiences perceived by all the senses. Their goal is not only to satisfy guests perfectly, but to give them both a taste and a visual experience. Featured on the menu is Czech modern cuisine based on local and seasonal ingredients of the highest quality. The restaurant was awarded one star in the Michelin Guide 2017 and also holds 3 Golden lions. The chef and co-owner is Radek Kasparek.

Alcron: Since its opening, the Alcron Restaurant has been a place of selected cuisine collecting awards all over the world, a place of joy and well-being when sitting with friends and of philosophical or political contemplation. After the reconstruction in 2000, its layout changed a bit, however, the tradition and the characteristic phrase indicating a high level of "It's like in Alcron" lives on. Alcron offers an intimate candlelit interior, with Tamara de Lempicka motifs dancing in New York and a 1930s fireplace offering intimate seating for just 24 guests. It offers a great selection of delicious dishes in the form of tasting menus not only of fish and seafood, prepared in a creative spirit. The restaurant was awarded according to Trip Advisor No. 1 in the Czech Republic, the absolute winner of the Grand Restaurant - Maurer's selection, holder of 3 Golden lions and for 5 years was the holder of the Michelin star. The chef was Roman Paulus for many years, now replaced by Jakub Cerny.

The aim of the paper is to map out the current situation in the field of gastronomy within the Prague 1 territory in connection to the global Covid-19 pandemic. Based on the achieved results, various possibilities were proposed on how to approach the further operation of gastronomic facilities in the given locality and how to due to the above-mentioned pandemic eliminate losses and related restrictive measures to a minimum. All this was done using secondary data and data from own research, personal, telephone surveys and statistical evaluation. At present, there are just over 35 thousand restaurants in the Czech Republic. When calculated per capita, this gives us a coefficient of 290 inhabitants per facility, which in itself is highly competitive in comparison to 500 inhabitants in neighbouring Germany or 800 in Great Britain. This simply means that the 290 inhabitants have to support the restaurant. Currently, according to Trip Advisor, there are 4618 restaurants in Prague. Of this number, 702 are in Prague 1. However, the gap has historically been easily filled by crowds of tourists. They even far exceeded it, and thanks to that, the restaurants in this locality showed above-standard profits. The generality of Prague in comparison with individual regions in the Czech Republic is clearly at the forefront of all statistics, whether in the number of overnight stays or in the case of tourism gross value added (Figure 2,3).

Figure 2: Development of the number of overnight stays of guests in Prague in the period 2012-2019.

Figure 3: Gross value added of tourism by region in the Czech Republic in 2015-2018.

Although in the past it was a very promising and sought-after area, nowadays it is the most affected area, which is turning for help to the state. However, it is the City Hall of Prague in particular, who should help. It is true that the operators should have created an economic "cushion" or an operational reserve, but on the other hand, the city management should be interested in keeping the restaurants open for many reasons. In recent years, restaurants have been a very strong source of income for the city. So now it should be the time for the city to meet the needs of individual establishments, because the current situation in this segment is catastrophic.

Based on the obtained secondary and primary data, it was found that 15-20% of the restaurants are still in operation through the so-called "across the street" sale or through the dispensing window, either to direct consumers or through a delivery service such as Dame Jidlo, Uber Eats, Wolt or Rohlik. At the same time, which is very sad, at the end of October 2020 out of the total number of 702 restaurants 130 of them closed down. The original prediction and estimate was that about 20-25% of establishments are expected to close. This estimate has now been revised and up to 45% of companies are expected to close down. There was also a decline in sales not only due to a decrease in performance, but also a decrease in prices compared to other locations in the Czech Republic. That is real sales. This decrease was 20%, for restaurants such as Haute Cuisine or Fine Dining we are talking about a price reduction of 40-50%. At the same time fixed costs, the price of energy or raw ingredients increased year-on-year. Last but not least, hotel occupancy was 10-15% in July-October. In a comprehensive sense, this "deadly cocktail" of restrictions, falling prices and sales, rising costs and almost no tourists will have fatal consequences within the territory of Prague 1. The most affected areas within the evaluated locality are gastronomic facilities along the so-called Royal Route from the Powder Gate to Prague Castle. This is the most popular location where the restaurants were maximally oriented on tourists. This zero risk diversification became fully apparent at this time (Figure 4).

Figure 4: He Royal route from the powder gate to Prague castle.

Optimization and savings

Labour costs: This is the most sensitive area, however, wages in gastronomy and tourism in general can account for up to 50% of operating costs. Therefore, it is recommended to try to agree with employees on a temporary reduction of wages, for example by 20%, until the situation improves. We also do not have to pay various personal assessments, which form a non-claim component of wages. It is necessary to communicate this with employees and explain to them why the steps are being taken and what the goal is. Furthermore, say goodbye to all employees on various agreements for the performance of work or work activities, part-time workers, employees on probation. If it is necessary for further reasons to continue with layoffs, we then follow the LIFO method. Those who are with the company for the shortest time are let go because we have no ties to them and their severance pay is the smallest. Keep key employees as long as possible.

Energy: The challenge is to reduce energy costs to a minimum. Instead of heating the property, switch to only tempering and try to revise contracts with energy providers. Fix prices if it's convenient. Cancel waste collection. Disconnect the hot water heater (however, due to the Legionella bacteria, it is necessary to put it into operation from time to time and let it warm up). Switch off all refrigeration equipment, refrigerators, ice makers, etc. (be careful not to leave the condensing equipment in operation, it could happen that it will no longer start).

Revisions, service and contract fees: Try to move regular and legal revisions to the next period. Do not adhere to periodicity until reopening. However, if we are open (selling across the street, importing food) then of course the necessary revisions are needed. Otherwise agree with the service inspection provider on revision postponement (lifts, cooling, and air conditioning) for a later period. Furthermore, try for discount or remission on monthly contractual fees, for example for Osa, Integram or cash register system in the case that we are closed and not using this.

Bank expenses: Again, it is good to maintain communication with the bank. If we have some operating loans, or mortgages, it is desirable to agree on the payment plan of only interest without principal or the deferral of repayment for a later period.

Investments: Any investments that have already been planned or are almost in progress should be postponed. Exceptions are investments on such scale that the suspension would entail greater costs than their completion. The same applies to investments that are paid for from the investment and reserve fund created in previous years and it is necessary to dissolve these expenses into costs.

Operation restrictions: Another way to save money is to reduce traffic. It is a matter of saving in terms of energy and also in terms of labour costs. So again, lay off unnecessary employees, or at least leave them on obstacles at work on the part of the employer. That way we save 40% of wage costs. At the hotel restaurant it is possible to switch from weekly operation to 5 day shifts. The original two teams can be replaced by one team rotating on 8 hours of working time schedule. If we have weaker lunches, it is recommended to be open only during the evening service or vice versa. It depends on the concept and nature of the operation.

Alternative activity: In addition to traffic restrictions, which is appropriate if there are no full government restrictions (restaurant closures) or it is a good step in reopening, there is the possibility of selling through a dispensing window (selling across the street) or home delivery. Selling through the window is a certain possibility for generating some sales, but it is able to substitute only about 20% of usual sales. If I have a restaurant near office buildings and companies are currently in the home office mode, then this alternative is pointless. We can also distribute through various companies such as Wolt, Dame Jidlo, Rohlík or Uber Eats. The disadvantage is the high commission fees for delivery, which are around 30% of the price. Of course, we can also deliver on our own. However, this means additional costs for a company car and, as in the first case, it is necessary to purchase packaging technology for food delivery. The advantage of this alternative is that the company is constantly maintaining operation and is in subconscious of existing and potential customers. The members of staff are also kept in "operating mode" and maintain personal ties with colleagues or the employer and above all, do not lose work habits.

Total shutdown: If I already have a very limited number of employees, the building is in my possession and is not burdened by mortgages or operation loans, then it is definitely a cheaper option to temporarily close all operations, ideally until April 2021. The remaining employees according to § 209 of the Labour Code will be sent to obstacles at work, when 60% of their wages are paid. If the Kurzarbeit is approved (according to the government's proposal), then the state would bear 70% of the costs and the employer would bear only 30% of the total wage (up to a certain limit). As a result, fixed expenses for employers would be reduced and the employee would also receive full pay, and this would not have such a significant effect on consumer demand. Thanks to these steps, the employer would have a clear strategy for 4-5 months ahead and the expected expenses would be only in terms of wage expenses, energy (reduced) and other small expenses. For this declared amount, the employer could apply for an operating or bridging loan from commercial banks.

Last year, Czechs spent 166.5 billion CZK on eating outside the home and public catering represented 3.2% of GDP. Approximately 250,000 people work in this field and it is one of the most important markets for agriculture. The whole industry is divided into companies - accommodation, catering (restaurants, bistros, cafes, fast food), but also factory or school canteens and finally social and entertainment companies (bars, clubs). Therefore, it is necessary for the state to help these companies if it has reduced their operations. It can be argued that there are certain support programs, which is good but it is not enough. This is mainly about maintaining employment, but it will not replace consumer demand. It is necessary to look further into the future and the state should become more involved. Just look at neighbouring Germany where there was a reduction in VAT on gastronomy from 10% to 5%. There is also the issue of tax on tips in our country, while in Austria, Germany or Great Britain tips are not taxed at all. There are many of other areas that the state should focus on. And it's definitely not a short run. On the other hand, it must be admitted that restaurant operators should have had some financial cushion and surpluses from previous years, when sales were at their peak. A good entrepreneur creates a budget "buffer", reserve and investment funds. So mistakes happened on both sides. It is common in a normal economy for weaker and unstable companies to disappear and be replaced by others. It may sound blasphemous, but there are more restaurants in Prague 1 than is desirable. Therefore, if some disappear, nothing so terrible will happen from my point of view. The question is the share that will disappear. So it remains to be seen how many businesses will possibly survive, if citizens will be healthy and the national economy will have access to pre-pandemic data as soon as possible.

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