Restaurants cook up a strategy to beat pandemic blues

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July 7, 2020 8:08 AM

Eateries’ sales have dropped 90% since lockdown and fine dining outlets are resorting to deliveries and cloud kitchens to make a comeback

According to a report by Crisil Research, India’s organised dine-in restaurants are on course for a 40-50% downslide in FY21 revenue due to Covid-19.According to a report by Crisil Research, India’s organised dine-in restaurants are on course for a 40-50% downslide in FY21 revenue due to Covid-19.

Reeling under the impact of Covid-19, fine dining restaurants are looking at new ways to tide over these tough times.

Restaurant companies such as Impresario Handmade Restaurants and Lite Bite Foods have launched cloud kitchens and have also introduced their own platforms for deliveries. Speciality Restaurants, which owns brands like Mainland China and Oh! Calcutta, too, plans to get into the cloud kitchen space.

Impresario, known for brands like Smoke House Deli and Social, has launched a tech-enabled platform for the online ordering of food. Under this, consumers can directly order food through a WhatsApp-enabled link, which will be delivered by the company’s delivery fleet.
“We have also introduced cloud kitchens at three locations in Mumbai and plan to scale it up further,” said Jaydeep Mukherjee, brand head, Smoke House Deli. Deliveries for the restaurant, according to Mukherjee, have come down by 30% as compared to the pre-Covid times.

Lite Bite Foods, known for brands like Punjab Grill, Zambar, Tres and You Mee, has piloted its food delivery app FooGo and introduced a cloud kitchen in New Delhi.

“While we plan to partner with food aggregators for our cloud kitchen initiative, the focus from now on is going to be our new app,” said Vineet Manocha, senior vice-president – culinary, Lite Bite Foods.

Both the companies have also introduced DIY meal kits under certain brands in select locations in the country and plan to scale these up, going forward.

The move by restaurants is an attempt to get back some of the lost business due to the lockdown and the pandemic. According to a report by Crisil Research, India’s organised dine-in restaurants are on course for a 40-50% downslide in FY21 revenue due to Covid-19.
Organised restaurants account for about 35% of India’s restaurant industry, which was pegged to be sized at `4.2 lakh crore in FY19, as per Crisil Research. Dine-ins contribute about 75% of the sales at organised restaurants, while the rest comes from online deliveries and takeaways.

During the lockdown months, dine-ins at restaurants declined to zero and are not expected to recover in the near term as consumers are unlikely to venture out due to the fear of contracting the virus. Overall, sales fell by 90% as per Crisil, at restaurants. New seating arrangements to ensure social distancing, which brings down the occupancy at restaurants by almost half, will also impact revenue.
The current focus on delivery brings its own set of challenges. Experts say that competition is going to be tough on this front as food aggregators such as Swiggy and Zomato have built their delivery capabilities over the years.

“While these brands are launching apps as the cost profile of food aggregators doesn’t suit them and it’s strategically important as a direct connect with their consumers, they will have to make it worthwhile for their customers to use their app,” said Pinakiranjan Mishra, partner and leader, consumer products and retail, EY.

Competition is also tough in the cloud kitchen segment with several cloud kitchen companies and food aggregators, too, operating in the space. Rebel Foods, for instance, which operates brands like Faasos, Behrouz Biryani, Oven Story etc, currently has over 300 cloud kitchens in 35 cities in the country. Swiggy, on the other hand, reportedly has over 1,000 cloud kitchens.

According to the industry watchers, price points would also be a determining factor and restaurants may have to bring down their prices for deliveries.

For instance, the DIY meal kits introduced by Smoke House Deli and Punjab Grill cost in the range of `500-800, while those by Rebel Foods cost around `200-250.

“Customers won’t be willing to shell out as much because in a restaurant, they are also paying for the experience, service, ambience, etc. These companies, hence, will have to work on their pricing strategy,” said Devangshu Dutta, chief executive, Third Eyesight. A dining experience for two people at restaurants like Smoke House Deli, Punjab Grill, Zambar etc, on an average costs between `1,500 and `2,000.

Read Also: Coronavirus Impact: How film acquisitions will drive subscription for video OTT platforms

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