Uncertainty and fear were the overriding emotions of the nearly 1,000 Indian restaurateurs who tuned into an hour-long webinar last week. Appropriately called “After the Bloodbath, Emergency Revival Plan for the Restaurant Sector,” the webinar was replete with questions and strategies to salvage their businesses.
But many will not survive.
“30-35% of our industry will not exist post-Covid,” Jimmy Shaw, managing director at luxury hotel The Waterfront Shaw told The Ken. The ones that do will not see business bounce back in a hurry, added Shaw, a member of The Federation of Hotel and Restaurant Associations of India (FHRAI).
That’s a dire prognosis for an industry that directly employs over 7.3 million people and has an annual turnover of about $50 billion $50 billion Reuters India’s $50 billion restaurant industry to lose estimated $9 billion this year Read more , as per the National Restaurant Association of India (NRAI). The industry body asked the government for a bailout as early as March.
Rahul Singh, founder and CEO of the Beer Café chain, estimates that it will be a year before restaurants see full houses again, even with reduced seating capacity. In the same period, he warns, the industry’s revenue will plunge more than 40% as costs won’t fall in tandem. Rent and staff costs typically account for 40-50% of fixed expenses each month, seven restaurateurs told The Ken—bills that continue to be paid while their shutters are down.
For restaurants that reopen, stricter hygiene practices will be compulsory compulsory The Ken In a post-Covid world, health ratings are not just confined to restaurants Read more , further increasing costs by 4-5%, Kapil Chopra, investor and chairman of table-reservation platform EazyDiner said. Since hygiene will be a primary concern, restaurants will have to absorb this cost to reassure customers.
Restaurants will also have to actively practice social distancing. That means fewer tables in the same restaurant, which makes balancing revenue and costs tricky. The Delhi outlet of SodaBottleOpenerWala, a popular Parsi food chain, has a 48-seater licence. If social distancing cuts seating in half, there is no point in reopening, said Manu Chandra, chef-partner at food and beverage company Olive Bar & Kitchen Pvt Ltd., which also owns and operates SodaBottleOpenerWala.
The small slice of the industry that is open during the lockdown—those still offering home delivery—are also taking a hit as customers prefer to cook at home fearing contamination.