Restaurants are likely to take more time than expected to resume operations under the first phase of Unlock 1.0 — relaxed lockdown guidelines announced by the government on May 30. According to industry experts Financial Express Online spoke with, not more than 20-25 per cent restaurants across India have likely opened up on the first day of the phased re-opening of commercial activities. Along with restaurants, the government had allowed hotels, shopping malls and other hospitality services apart from religious places to operate with effect from June 8, 2020. Small business-dominated India’s restaurant sector, which has an annual turnover of around Rs 4 lakh crore, employs over 70 lakh people.
“Timing, restriction on the sale of liquor, new commercial terms with landlords that need to be arrived at, and then manpower are the challenges that need to be resolved for restaurants to open up,” Anurag Katriar, President, NRAI told Financial Express Online. NRAI represents over 5 lakh restaurants in India.
The government had last month revised the night curfew time from 7 pm – 7 am to 9 pm – 5 am. However, this will hardly be commercially viable for restaurants as a majority part of the business comes from the dinner segment. “60-65 per cent business comes from dinner while breakfast is hardly a segment and in current times it will hardly matter,” said Katriar.
“Restaurants are losing on dinner segment. So they are virtually doing one segment – lunch. Hence, commercial viability and sustainability are challenging,” Pradeep Shetty, Joint Honorary Secretary, FHRAI told Financial Express Online. FHRAI also has over 5 lakh restaurant members across India.
The associations had sought rentals and common area maintenance (CAM) expenses to be waived off by mall owners and independent landlords. NRAI had suggested a “moderate revenue share model” with no minimum guarantee. CAM is the amount paid by individual units for the maintenance of commonly used areas such as elevators, parking premises, corridors etc.
“It is important that the landlord and operator instead of being at loggerhead should resolve the issue and build the consumer confidence together to get in the crowd. Mall owners feel it is not their onus to bring in the crowd,” said Katriar. But even if they sort out rent issues and other challenges, the revenues will remain significantly low for next few months even as there will be manpower shortage as thousands of labourers have moved back to their hometowns. “The government announced allowing hotels, restaurants to operate only a week back. This is not enough time to bring the labour back. Also, there is the fear of virus contraction and hence, the willingness to come back is low,” said Shetty.
While the majority revenue of the business is compromised due to the curfew timing, the ban on selling liquor will further hurt whatever business prospects restaurants have now. “People may come to a restaurant for food but they need their booze. Seating capacity is also reduced to half. This means that pre-Covid commercials cannot work,” said Katriar.