As expected, the decision to shut down restaurants due to the Covid-19 scare, has come as a massive blow to restaurants. This misfortune is exacerbated because looking at the past, numerous restaurants have had to shut shop and they simply cannot afford to down their shutters anymore.
The Delhi government’s recent order to decision to shut dine-in restaurants has already started to hurt owners.
A a report by Moneycontrol quoted Kabir Chugh, who runs a chain of five restaurants under the brand name Nizam’s and one called The Turkey Project. “We cannot reduce staff and we have to continue paying them their salaries without any business coming in. There will be a sharp drop in profitability” he said.
It is reported that the organised restaurants in Delhi 3,00,000 people and generate yearly revenue in excess of Rs 31,100 crore.
Anurag Katriar, a trustee of the National Restaurants Association of India (NRAI) said that the November to February window is peak season for the hospitality sector which was affected again. “This will have a larger impact on the businesses. December alone constitutes 15-20 percent of the annual revenue,” he said to the publication adding that the unlock last year saw the industry reach 75-80 percent of pre-pandemic levels.
Garish Oberoi, former president of the Federation of Hotel and Restaurant Association of India said: “Rents and other compliances like license fees, salaries are all in place. But due to this closure, which no one is sure how long this is going to be, restaurants are looking at a dark future. Restaurants had been struggling with a staff crunch after an exodus of employees back home following previous waves of the pandemic and consequent lockdowns, he said. They had just managed to get over the crunch when they were ordered to close to dine-in customers.”
Katriar added that a baffling 25 percent of restaurants had already shut permanently. “This was unexpected. The staff was brought back, people had invested in newer things. You have invested money and now restaurants have to shut down,” he added.
Dine-in vs. delivery
To be sure, the government is allowing home delivery and takeaway of food from restaurants, but that accounts for a small portion of overall business.
“Many restaurants started looking at deliveries during the pandemic. For most restaurants and bars, delivery accounts for 15-20 percent of the business,” said Oberoi.
Even Katriar said takeaway and delivery cannot substitute business from dine-in customers.
“We have 25-30 percent business coming in from deliveries but that is not enough for me to sustain. For most restaurants, delivery will help curtail losses, but it won’t help be profitable. Experience-based restaurants like cocktail bars are in a challenging situation. The bar which is dine-in oriented (run by Chugh) we saw sales falling 70-80 percent in a day (when Delhi announced closure of restaurants). These bars are in upmarket localities and the rents are exorbitant. How many home bar kits can you sell,” Chugh said.
Kabir Suri, president of NRAI, said in a statement that Delhi had the maximum dine-out frequency at six times per month compared to a national average of 4.5 times per month.
He added that the restaurant industry was worried about the fate of over 300,000 people employed in Delhi restaurants.
Delhi NCR is the Restaurant Capital of India with highest number of restaurants in the country. Revenue generated per year from organised restaurants in Delhi is Rs 31,132 crore,” Suri said.
NRAI has urged the Delhi government to either allow restaurants to operate at normal hours with safeguards and protocols or compensate the industry, its employees, suppliers and landlords for the loss of business arising out of the closure.