Restaurants in a soup, may cut staff pay but no layoffs yet

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Published: April 2, 2020 5:30:20 AM

However, most proprietors are hesitant to let go of employees for the moment, even though they feel it could be a good six to seven months before business picks up.

By one estimate, restaurants employ some seven million people and earn annual revenues of Rs 4 lakh crore.By one estimate, restaurants employ some seven million people and earn annual revenues of Rs 4 lakh crore. (Representative image)

As they struggle to come to terms with the lockdown, restaurant owners are beginning to think of salary cuts and layoffs. It’s becoming imperative now to cut costs since there’s no money coming in and it’s not clear how soon they will be allowed to throw open their eateries. However, most proprietors are hesitant to let go of employees for the moment, even though they feel it could be a good six to seven months before business picks up. By one estimate, restaurants employ some seven million people and earn annual revenues of Rs 4 lakh crore.

Ranbir Nagpal, partner at Yazu: Pan Asian Supper Club, Mumbai, told FE that the firm does not intend to fire any employee till April 15. However, if the current circumstances persist beyond that, it may need to “start thinking on the lines of letting some people go”.

Karan Khilnani, partner at Pune-based Elephant & Co Gastropub, said his firm intends to pay the staff 70% of their March salaries and adjust the balance later. The senior management, too, is taking a pay cut this month. “We are re-scheduling payments, including rent and raw materials, but laying off staff will not work in the long run,” Khilnani said.

Sandeep Trehan, COO at luxury resort Karma Lakelands, said a “freeze on hiring” will definitely have to be part of the firm’s strategy till such time that stability returns. In the near term, the company will come up with solutions to avoid layoffs, Trehan added.

Shyam Thakur, co-founder at Gurgaon-based bar and diner RYU, said as of now, salaries were being funded through cash reserves. However, the firm does plan to adjust salaries later by reducing the work hours. Thakur believes sales will continue to slide at least for the next 5-6 months.

Visakh Viswambharan, director at Bengaluru-based cafe chain Cuppa, said there are no plans to reduce the workforce. Cuppa has been able to keep things going since it delivers via food delivery apps, Zomato and Swiggy.

Dinesh Sharma, co-founder at Enchante Patisserie, said all employees are trained professionals and the firm will certainly not let them go.

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