While companies had been trying to get their businesses back in shape post the lockdown last year, a devastating second wave and the ensuing restrictions this year made it difficult for them to sustain operations. Arush Malik, founder & CEO at The Immigrant Cafe, recently shut down his outlet in New Delhi’s plush Khan Market.
Lockdown restrictions may have eased but you may still be in for a disappointment if you planned to visit your favourite joint for a quick bite or a high street coffee bar for some hot cappuccino. Reason: Covid has compelled many restaurateurs to shut shop.
While companies had been trying to get their businesses back in shape post the lockdown last year, a devastating second wave and the ensuing restrictions this year made it difficult for them to sustain operations. Arush Malik, founder & CEO at The Immigrant Cafe, re cently shut down his outlet in New Delhi’s plush Khan Market. It was becoming nearly impossible to shell out a significant Rs 8 lakh in rental payments per month amid dwindling sales. In pre-Covid times, each outlet garnered some Rs 35-40 lakh in sales on an average per month.
That came down to about Rs 20 lakh in February when the situation was better. “Having a cost of Rs 8 lakh and incurring staff salary expenses were too much to be taken on, so we had to let go to ensure economies of scale. We tried on deliveries but it did not work out. During the second lockdown, not many orders were coming as almost everyone had an ill patient to cater to,” Malik told FE. The company now runs only one outlet at Connaught Place.
Premium pizza brand 1441 Pizzeria had already shut down all 12 of its kiosks within Inox premises, two standalone dine-in outlets in Bengaluru and one mall outlet in Pune when the first wave hit, reducing its total store count to nine. The brand is now relocating two of its flagship stores in Mumbai’s Lokhandwala and Fort to cheaper rentals. “The landlords were very supportive during the first wave. But this time, they did not extend any help,” said brand head Vandini Gupta.
Delivery was never a focus area for the firm that specialises in making wood fired pizza. Gupta said that the company invested heavily in R&D for perfecting the pizza for delivery. The brand started a clutch of delivery only kitchens during the pandemic and the strategy ahead will be to have a mix of dine-in and delivery only outlets depending on the location and consumers’ purchasing power. The company started five new delivery only kitchens and runs a handful of dine-in outlets across Mumbai, Pune, Ahmedabad, Surat and Hyderabad currently. However, business is meagre and unless operational restrictions are removed, recovery will be a far cry. “About 90%-95% of the business is still thriving on deliveries,” said Gupta.
According to estimates given by FHRAI, nearly 40% of restaurants and hotels in the country have shut down permanently and about 20% have not opened fully since the first lockdown. The remaining 40% continue to run in losses.
Bihar-based Old Champaran Meat House closed its Delhi chain and another four outlets across cities, including Varanasi and Bhagalpur. The brand that was also aiming to make its international foray by 2022 halted its expansion plans. “We had to pay a hefty rent with almost zero income which is why we had to shut down the outlets and give up rental spaces,” owner Gopal Kumar Khushwaha said.
Angad Singh Dua, owner at Yummy Adda, had to recently let go of his mall outlet in Delhi’s Nehru Vihar. Dua managed to hold on to the space during the first lockdown but given the already shrinking volume of business, he recently had to close operations completely. Besides, his landlord refused to cooperate. Dua primarily catered to university students residing in the nearby areas but the closure of university campuses crippled his business. Sales declined by as much as 70% compared to pre-Covid.
“Opening a restaurant requires high capital and if the daily business turnover gets impacted due to periodic closure owing to lockdowns, survival becomes difficult..unless I have visibility of at least six months of no lockdowns or at least 25% of general population getting vaccinated, I will not be able to think of opening my restaurant at least in the same way as it was before,” said Dua.