New Delhi: With the Covid-19 lockdown, India’s restaurant business is facing its worst crisis. Revenues have considerably dropped and businesses are left with little money to pay salary to their employees or even rent for their premises.
“We are already operating on wafer-thin margins and our expenses are adding up. If sales fall by 50 per cent due to reduced footfall, we are looking at three-fold losses,” said Riyaaz Amlani, CEO of Impresario Handmade Restaurants that owns popular chains such as Social, Smoke House Deli, among others.
“Around 35 per cent restaurants may not even be able to open after the lockdown,” he told ThePrint.
A recent CRISIL study has revealed that sales at organised restaurants have reduced by as much as 90 per cent since the lockdown that was imposed on 24 March.
The organised restaurant sector includes quick service eateries, pubs, cafes, fine dining, dessert joints and cloud kitchens, among others.
Organised restaurants account for 35 per cent of India’s restaurant industry, while 65 per cent are unorganised. Dine-ins account for 75 per cent of these organised restaurants, with online delivery/takeaways making up the rest.
“Dine-in is not operational and online orders have declined 50-70 per cent. And when the lockdown is lifted, the rebound is expected to be only gradual,” said Rahul Prithiani, director, CRISIL Research.
Even after restaurants are allowed to open, footfall is likely to remain low. A LocalCircles survey on 21 May has hinted that 87 per cent people are unlikely to visit a restaurant in the next 30 days due to the fear of catching the virus.
A CARE Ratings report from last year had projected that the Indian food and service industry will register about 10.4 per cent Compound Annual Rate Growth (CAGR) in the next five years to reach Rs 5.5 trillion by 2022.
But two months into the lockdown, several Indian restaurants are already staring at possible closures, layoffs and an overhaul of dining-out as an experience.
Restaurants struggling to cover costs
High rentals and covering basic overheads are proving to be some of the biggest challenges for owners.
“I pay Rs 2.5 lakh rent per month. Problem is, even if we don’t pay now and are asked to pay later, how will we pay if there’s no income?” asked Priyadarshini Dey, who owns Mumbai’s Rajbari Rasoi Restaurant.
Some restaurants have been forced to cater to home deliveries to cover costs.
“Electricity boards are sending disconnection notices. Out of six restaurants, we are only delivering food out of one branch. There’s been 90 per cent drop in revenue post lockdown and even our delivery business revenue has fallen by 80 per cent,” said Saurabh Wahie, who owns Cafeteria & Co and Ricos in New Delhi.
Popular restaurants like The Bombay Canteen in Mumbai have stopped home deliveries too after a staff member tested Covid-19 positive. The restaurant’s co-owner and celebrity Chef Floyd Cardoz succumbed to the disease in New York in March.
“We had all protocols in place, including temperature checks, gloves, masks, sanitisers. Yet one of our team mates got infected. So we are looking at how we can work within the ecosystem to ensure early detection. Revenue is down by 50-70 per cent in the lockdown period,” said Sameer Seth, partner, Hunger Inc. Hospitality that owns The Bombay Canteen.
For restaurants that don’t deliver, covering various costs have proved to be a mammoth task. “We were already dealing with 50 per cent reduction in footfall due to the coronavirus scare since early March. From 20 March onward, we have had no income. If this continues we will have no option but to move to a different model,” said Daksh Gupta, who owns August Cafe in Mumbai.
Another problem many eateries have been facing is shortage of staff. “Most of our staff members have gone back home. Some had left for Holi and haven’t been able to come back, while many went back during the lockdown,” said Wahie.
Dey also said, “I am now operating with only eight staff members as opposed to the 25 I had earlier.”
‘We need financial help from government’
Restaurateurs are now hoping there will be a bailout package from the government to tide over this crisis. The National Restaurant Association of India (NRAI) met Finance Minister Nirmala Sitharaman on 21 May with a list of demands.
“We need financial help from the government, including automatic renewal of all our licences for next five years, which we now have to renew every year,” said Amlani, who was a former president of the NRAI and is now a member of the body.
ThePrint tried to reach the finance and tourism ministries via phone calls, emails and text messages but received no response.
Without financial aid, restaurant owners say layoffs are bound to happen. “The bigger picture is there will be job losses. Running a restaurant with this kind of low footfall is very difficult, no matter how deep your pockets are. If push comes to shove, we may have to shut some restaurants after six months,” said Anjan Chatterjee, whose Specialty Restaurants includes Oh! Calcutta and Mainland China, among others.
Post-Covid dining experience
Restaurant owners are also grappling with changing dining experiences to suit a post-coronavirus world order.
“Compressing timelines and stores will be counter-productive, going forward. If you allow more places to stay open, all the time, business gets done and crowds too can be avoided,” said Amlani.
Some restaurateurs, however, feel eateries may no longer be “recognisable” in a post-Covid world.
“The camaraderie that defined a restaurant outing may never return,” said Chatterjee.