The Corona Effect on the Restaurant Industry

The Corona Effect on the Restaurant Industry
Here is how the restaurant industry is being impacted by the coronavirus situation, Photo Credit: Shutterstock
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With the ongoing lockdown, bars and restaurants are closed to sit-down diners and restricted to takeout orders and delivery. Many restaurants had already closed on their own accord even before these measures were taken. Here are how things have unfolded

Rupali Dean
March 30 , 2020
08 Min Read

Restaurants across the country are scrambling to respond as the coronavirus spreads. Executive Director & CEO, Degustibus Hospitality & NRAI President Anurag Katriar’s biggest worry right now is more human than commercial. “With limited cash flows, how do we keep the kitchen fires in the homes of our employees and marginal suppliers burning is a question that does not have an immediate answer. We have sought deferment and concessions from all tax authorities, statutory bodies and financial institutions so that our limited cash flows are deployed towards more humane cause. We have met with some success on this. We are seeking similar relief from our landlords. However, if the COVID-19 spread is not controlled soon and lockdown continues for a while, we may not be left with enough resources to combat the problem despite our genuine and honest intent. The government may have to help with some unemployment pay cover for these folks through bodies like ESIC or any other social security scheme like MNREGA and/or free distribution of essentials”. 

For most restaurateurs, the current situation is more about ensuring safety and security of the staff and guests. “We shut down our operations well before the Prime Minister mandated us to do so, because we are social gathering spaces," says Ashish Dev Kapur, owner Whisky Samba, The Kimono Club, The Wine Company & Antares Goa. "This has meant a large financial business loss, but safety and security are far more important to us. Right now it’s not about business but making sure that the security of the staff and their wellbeing is in place. Seeing that they have enough money to survive for the next couple of weeks, and that our infrastructure is of use to the nation at large, perhaps by feeding people". 

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Several restaurants are focusing on restructuring operations, planning menu items that can be easily transported, all keeping in mind profits that are melting faster than ice cream. “As a company we are trying to reduce our fixed cost on all other parameters like rent, etc. in order to hold on to our manpower, so that as and when the business gets going we are able to offer the same quality our patrons were used to before”, says Nikesh Lamba, Executive Director, Pricol Gourmet Pvt Ltd.

However, even if business picks up, the damage could be long-lasting. “The present situation is all about surviving this pandemic with the least amount of casualties. As restauranteurs, we are looking at how to give wages to our staff so as they can meet their daily expenses. Once businesses re-open, the second stage of revival will pose many challenges, unseen and unimagined. For instance, decreased manpower, lack of money, a fall in demand, government and supplier dues, and higher fixed costs of rentals. Many businesses will not be able to survive this second stage unless all stakeholders of business, including government and landlords, provide impetus to the entrepreneurs”, adds InderJeet Banga, Promoter, Biggie Hospitality.

Amit Bagga, CEO and Co-founder of Daryaganj hospitality

Most unnerving is the haste with which the downturn came and the ambiguity over when it might end. “As of now our corporate teams are working on our systems and SOPs and strengthening them and also analysing our sales mix and doing a lot of analysis on the numbers so when we re-open, we are ready with better ways to run the business and increased profitability”, adds Amit Bagga, CEO and Co-founder, Daryaganj Hospitality

No customers also means less work, and restaurants are utilising their time in the best possible way. Jamsheed Bhote, Chef-Owner, Plats is getting some much-needed rest and quality family time. But going forward, he and his partner Hanisha want to use the extra time to brainstorm on what lies ahead. They plan to work on a couple of concepts and menus and be charged and ready for when this is going to pass. “We are training ourselves for the near future, reflecting on innovations that can be brought in which our patrons can look forward to. Most importantly, we are currently focusing towards serving our community by providing free packed meals to the underprivileged and those in need”, says Sandeep Pande, Executive Chef, JW Marriott, New Delhi.

THE FUTURE

TWO SIDES TO A COIN

The current crisis arising out of COVID-19 is still unfolding and restaurants are trying to prepare for what’s coming, and do what they can to protect public health. “The future looks really good as I am sure when all this ends, people will really want to go out and will value those outings at restaurants more than they did before. Usually people cut down on holidays, or shopping for expensive items, but they never compromise on going out or watching movies which are the only two good forms of entertainment in India”, says Bagga.

No one can really assess the extent of the damage it will cause or the duration of this crisis, how long it will last but one thing is certain that business isn’t going to be the same any more. “An economic slowdown is imminent and with that the ability of our sector, largely driven by discretionary expenses, to get back on its feet will be hugely challenging. The definition of luxury will change in the immediate term and a fancy meal will surely fall under the revised category of luxury. People will largely be conservative in spending on such meals. Home cooking will be preferred for a while. I further reckon that the value dining segment, including deliveries, will be the first one to get off ground. However, the biggest fallout of this crisis will be the shutting down of several food service enterprises and the resultant loss of jobs in the sector. This will also adversely impact the investments in the sector. We are perhaps fighting a battle for our existence,” says Katriar.

The restaurant industry is facing severe impacts due to the global pandemic

Without any clear guidelines, restaurants are trying to do what they can. Ashish Dev Kapur feels that the future is very uncertain as they don’t know when they will open full strength. “If we look at the trends in China where this disease originated from and which has now got back to some normalcy in the restaurant business, it’s a very dismal future. A big issue will be getting dispersed workers back and I am saying this based in what I am reading about China. Supply chain gets broken so getting operations back to the right supply chain with the right manpower is going to be the first challenge. It has been a large financial hit with no sale and there is a cost structure like employees on roll, negotiating with landlords, etc. Hopefully they will see the problems we are facing, and overlook rentals for not just now but at least a year as sales are going to be sluggish. And lastly, to sustain ourselves will be a huge challenge as it will take six months to a year to come back to normal sales”, says Ashish.

By the time things return to normal, people will probably have built much stronger habits of eating in and as such the percentage of people going out will drop substantially “Secondly, everyone will be more careful about being in groups, and as such parties, bar nights, big events etc. will be slow to pick up. Thirdly, I expect this period to create a huge economic strain on everyone and as such disposable income post normalisation will be very tight. All these paint a bleak picture for the dining out industry for the near future”, says restaurateur AD Singh.

Nikesh is an eternal optimist but the future looks a little confusing at the moment for him too, “I am sure that with the collective effort of the government and fellow Indians we will win this battle against coronavirus. However, the financial effects of the lockdown will have lasting effects for months to come and sectors like hospitality and tourism will take the longest to recover. The entire sector therefore is looking forward to some specific stimulus once the larger war is over”, adds Nikesh Lamba.

I am sure most of us would like to believe and go with what Sandeep Pande says, “The future is surely optimistic. My team and I look forward to welcoming you to JW Marriott New Delhi once the situation becomes normal”.


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