Restaurants and cafes across Russia are shutting down at their fastest pace since the war in Ukraine began, reflecting a broader slowdown in consumer spending even in affluent cities like Moscow.

From the capital to the far eastern city of Vladivostok, shuttered storefronts and “to let” signs are becoming increasingly common, pointing to growing pressure on the country’s $2.8 trillion economy.

Rising Costs Hit Small Businesses

For many business owners, a surge in costs has proved unsustainable. Yekaterina Oreshkina, who runs a chain of bakeries in Moscow, recently closed one outlet after facing a sharp rise in ingredient prices, rent and taxes.

A traditionally slow January period, combined with a 50% increase in costs, pushed her business beyond viability. While some outlets remain open, the downturn has forced difficult decisions.

Consumers Cut Back on Dining

Russians are tightening their belts, reducing discretionary spending such as eating out. Data from Sberbank shows restaurant spending fell to its lowest level in three years towards the end of 2025, while the number of catering outlets dropped sharply.

Consumers are increasingly opting for cheaper alternatives, including fast food and supermarket meals, as inflation and borrowing costs weigh on household budgets.

War Economy Begins to Show Cracks

Despite Russia’s economy showing resilience under Western sanctions, pressures are mounting. High interest rates, rising taxes and discounted oil revenues are beginning to erode growth.

Real consumer spending growth fell to zero in early 2026, while vehicle sales a key indicator of economic health have declined significantly.

High Interest Rates Add Pressure

Borrowing costs remain a major challenge for businesses. Interest rates, which peaked at 21% in 2024, continue to make loans expensive, limiting expansion and forcing some firms to shut down.

Even after a recent rate cut, access to credit remains difficult, particularly for small businesses reliant on constant borrowing to manage operations.

Outlook Remains Uncertain

While Russian officials maintain that the economy remains stable, analysts warn that the impact of prolonged war conditions is becoming more visible.

With consumers saving more and spending less, and businesses facing rising costs, the slowdown in Russia’s retail and hospitality sectors may be an early sign of deeper economic challenges ahead.

(with inputs from Reuters)