Staggered lockdowns start to bite battered restaurants – The Economic Times

lipped from: https://economictimes.indiatimes.com/industry/services/hotels-/-restaurants/staggered-lockdowns-start-to-bite-battered-restaurants/articleshow/82666514.cmsSynopsis

Even though take-outs and ordering have been exempted from the restrictions and continue in the bigger metros, there are fears that deliveries alone may not be enough to tide them over this time around and restaurateurs worry that this situation may persist for at least six months.

As cities and states across India shut down, the pandemic has not only reduced mobility and activity but also severely impacted the restaurant business, which was just about emerging from the doldrums after last year’s lockdown.

Even though take-outs and ordering have been exempted from the restrictions and continue in the bigger metros, there are fears that deliveries alone may not be enough to tide them over this time around and restaurateurs worry that this situation may persist for at least six months.

A tsunami of Covid-19 cases leading to a lockdowns and curfews enforced are absolutely crippling for the already beleaguered sector, which has always been the hardest hit, said one restaurateur.

“These restrictions are worse than a full nation-wide lockdown in certain cases as force majeure or other protective clauses might not come into play in certain scenarios,” said Zorawar Kalra, founder of Massive Restaurants, which runs Farzi Café, among others. “Additionally, with restrictions such as night curfews or weekend lockdowns, the financial viability is completely compromised as most of the dining-out business in India occurs during dinner and over the weekend.”

While there is always the risk of their restaurant teams getting infected, sometimes competitive pressure in such situations creates a fear of missing out and as a result restaurants choose to stay open even though there is no financial viability, Kalra explained.

“This time the recovery could be even slower as the very target demographic that we cater to — people under 45 — have been severely affected by the virus,” Kalra added.

According to Anjan Chatterjee, chairman ofSpeciality RestaurantsNSE -2.44 %, while the first lockdown last year was a shock for everyone, many had not imagined a second round so soon.

“The business was coming back in 2020, around October-November, and we managed to generate positive revenues for the October-to-March period. From survival, we had gone to revival. But this round looks like another six-month long process. The restaurant industry is the first to be shut and the last to open up in such situations,” Chatterjee said.

The challenge with micro lockdown situations is that while the number of diners dwindles, all the fixed costs of a restaurant remain constant — rentals, labour and air-conditioning. However, most mall owners have been understanding and cooperative about rentals, Chatterjee said.

To take the financial pressure off in some way, many restaurants, along with the National Restaurant Association of India, had pleaded with the government in the past to let them avail input tax credits. The association had also asked for relief in the budget in January, but in vain.

With an erstwhile annual turnover of about ₹4 lakh crore, the association said the sector provided direct employment to over seven million Indians and was “in a precarious situation, fighting a grim battle for its survival.”

Following the second wave of the pandemic, many restaurant businesses expect their turnover to shrink to a third or a fourth.

“Until just a month ago, many had come out to ‘revenge eat,’ but now we are at a loss over how to survive,” Chatterjee said.

Speciality Restaurants’ revenue from its India operations was about ₹23 crore during the November-March period.

While dining-in is among activities prohibited in many cities and states, restaurants have been allowed to accept home delivery and take-out orders.

Staggered Lockdowns Start to Bite Battered Restaurants

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