Covid fallout: More eateries could shut shop as customers continue to stay away

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September 12, 2020 8:00 AM

“Delivery cannot be the mainstay. We did contemplate shutting a few more outlets but so far our landlords have been supportive,” says Mukherjee. However, the company has had to let go of some employees.

In the organised sector, it is the dine-in segment that brings home the bacon.In the organised sector, it is the dine-in segment that brings home the bacon. (Representative image)

In June, the Khan Market outlet of Smoke House Deli was shut down. Three months down the line, Jaydeep Mukherjee, brand head at Smoke House Deli, says there are no signs business will recover anytime soon. Experts say industry revenues remain at less than 20% of pre-Covid levels, even though restaurants were opened up early in the Unlock phase. While most eateries are offering delivery services, these contribute only about 10-12% to total revenues. In the organised sector, it is the dine-in segment that brings home the bacon.

AD Singh, founder and MD at Olive Group of Restaurants, which runs over 30 outlets, told FE he had expected business to reach pre-Covid levels by December but now believes normalcy may be delayed by up to a year. The company has already closed down two restaurants and unless landlords are more supportive, three more may be closed down.

An estimated 30% of restaurants and bars have permanently shut, says Anurag Katriar, president, National Restaurant Association of India (NRAI), and more could meet the same fate unless there is an “unexpected revenge consumption”. Bars and banquets will bear the maximum brunt of social distancing, says Katriar.

Right now, Smoke House Deli is running just a handful of the dine-in restaurants in New Delhi and Bengaluru since Maharashtra has not allowed them to restart operations. While takeaway services are available, these can’t compensate for the dine-in business which brings in the bulk of the revenues.

“Delivery cannot be the mainstay. We did contemplate shutting a few more outlets but so far our landlords have been supportive,” says Mukherjee. However, the company has had to let go of some employees.

Restaurateurs in Kolkata, however, seem to be doing reasonably well. Occupancy levels at Chowman and Oudh 1590 are about 40% and 60% of pre-Covid times on weekdays and weekends, respectively. Debaditya Chaudhury, MD, Chowman Hospitality & co-owner Oudh1590 & Chapter 2, is hopeful of more footfalls during the Durga Puja festival. Chaudhury says the company has recruited fresh staff to man two new outlets and another one due to open next week.

Karan Khilnani, partner at Elephant & Co Gastropub, which runs two outlets in Pune, says the intention so far is not to discontinue operations. Once restaurants restart, the menu will be truncated to minimise inventory losses and discounts will no longer be offered. “Most employees have relocated to their native places and we may not need to re-hire all of them since we would require fewer staff,” Khilnani said.

Shridhar Poojary, MD, Shiv Sagar Restaurants, told FE the company will consider opening restaurants once the sentiment improves. Until then, the focus will be on deliveries which the firm is well-equipped to manage since it has been running an in-house delivery network. The restaurant industry with an annual turnover of approximately Rs 4.25 lakh crore provides direct employment to over 7 million people. A Crisil report in May estimated the organised dine-in segment’s revenue would fall 40-50% in 2020-21.

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