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Mumbai-based restaurateurs share concerns about the lockdown effect on the F&B business

The nationwide lockdown in India has been extended and restaurant owners worry about the days ahead for the food and beverage industry. Despite NRAI's support, business post this period will be challenging, say owners of popular F&B chains from Mumbai

Mumbai-based restaurateurs share concerns about the lockdown effect on the F&B business

PM Narendra Modi, on April 14 2020, announced an extension of the nation-wide lockdown until May 3, 2020. The coronavirus outbreak in India has brought many businesses to a halt. One of the important sectors across the country which has been affected the most is the 'restaurant' industry, which runs on higher costs, especially in a city like Mumbai. With the complete shutdown, hundreds of restaurants across Mumbai are starting to face losses, but the management of these food and beverage outlets are hopeful about tackling the situation and making up for the losses, once this period is over. 

In a conversation with Mumbai Live, some restaurants shared their thoughts on the same. Senil Shah- Founder, New York Burrito Company, said, "This lockdown will have a lot of impacts and I believe this won’t end until May. People’s cash flow will be a big issue and pretty much all the restauranteurs are short on funds. In the restaurant business, 80% cost is rental and salary. The impact will be big and a lot of people will lose their job in the hospitality industry. As of rentals, there are many landlords who are not agreeing for the rental free period and that might pose a bigger concern. As per my understanding, 20 per cent of restaurants will be out of business when we resume business by May or June."

Ashish Mehta, Co-founder & Director, Oheka, Bombay Cocktail Bar, February 30 and Blanco, said, "A few ways to cope up with this loss are to promote food delivery with utmost high standards of hygiene right from cooking to delivering, request longer credit period from suppliers when the restaurant reopens - attract the old patronage and keep promoting hygiene and good health standards to attract back and bring in new customers. It will take time to recover the losses, but this is a global catastrophe where everyone is in together. If the pandemic continues for a longer period of time then it would be disheartening to do but the reduction in staff would be a step to be taken by force, not by choice. Keeping only the necessary staff which could be maintained for a longer period will be the only choice. Further, once the economy reopens, it will slow down the hiring and the pay packages will take a hit."

Towards the end of March 2020, the National Restaurant Association of India (NRAI) reached out to the government seeking help for the Food and Business industry. Further, with an aim to offer relief to the business owners, the association released an open letter asking all the landlords who have rented their space for the F&B businesses, to waive rents until the time the lockdown continues.

An article on ET said that through the letter, the association further sought a “no minimum guaranteed” rents for six months and requested the owners to think of a revenue share model which was "equivalent to 50% of the agreed terms up to a maximum of 10% of monthly revenues."

Sharing his thought on this move, Vipul Hirani - Co-Founder, Crafters Taphouse added, "I am grateful to the NRAI for taking this step proactively on the matter. NRAI's discussion with the Maharashtra State Excise has already born fruit in terms of the relief provided with respect to the license fee payment. Focusing on the discussions with landlords, most of the landlords will be sensible when it comes to taking care of their tenants after the lockdown is over. According to me, most brands will have to discuss with their landlords on a case by case basis as everyone will have their opinions and points to be talked upon. Also, not forgetting the landlord's opinion as even they will have their own incomes to take care of. In the coming few days, I expect the NRAI to reach out to the central government in order to come up with solutions with the landlords in order to save the restaurant industry and to ensure its smooth functioning post the COVID-19 effect. This discussion can be more effective if NRAI provides examples of what countries like the UK have done on the subject to the government."

Gudiya Chadha, Owner and Proprietor, All Elements, further added, "We need a waive off for the next 2 months as all staff has gone to villages, people with low earning won't be spending of restaurants and luxuries, hoarding of essentials food stock has been an exercise in each home so people will restrict to eat out. We all will need to begin from ground level and yet pay salaries, electricity and basic fix cost. We need support from the government that entrepreneurs can't be giving from both salaries and rent."

Since most of the F&B businesses in India work with approximately 12-15 per cent EBIDTA margin, NRAI states that more than 50 per cent of the restaurants in India will shut down if the situation continues further as very few chains in the country have enough cash reserved to sustain for the next few months. Hence, the open letter and such requests were made in the initial stages of the lockdown, keeping the forecast in mind. 

Further, over half a million restaurants in March reached out to the government requesting the deferment of GST, urgent settlement of claims by insurance companies and all other statutory dues. The body also wrote to the Finance Minister Nirmala Sitharaman asking for immediate relief in the job cover for employees in the sector.

Talking about how the lockdown has affected his group of restaurants, Hitesh Keswani, Owner - Silver Beach hospitality, said, "All decisions are taken in unison with other restaurant owners & we will have to do what’s best for everyone. As of now, everything is on pause mode & hopefully with the Governments help we will be able to bounce back. Needless to say, we will need the Governments to help after we cross over to a better world. There will be a lot of mess to clean, for all industries. For the hospitality industry, we will need total & immediate deferment of all statuary dues like GST, advance tax, custom duties etc for at least 12 months in addition to the restoration of the Input tax credit on GST, Unemployment pay cover for our employees, general notification allowing invoking of force majeure, total & immediate deferment of all payments for utilities & moratorium of repayment of all types of loans & facilities amongst any more such required reforms."

Sharing his thought, Shantanu Prasad Roy from PnL and Business development of 3 forks hospitality, added, "We are expecting the government to offer relief on the taxes, for at least 6 months after we restart. It will be a great help for all the hoteliers. Post the lockdown, we are going to face many challenges in terms of business as the overall economy needs time to improve and recover. The industry will have to take an aggressive approach to bring the business on track."

The entire nation is looking to fight the current coronavirus crisis, and just like others, these business owners are keen to restart their work, with a new vision. However, one has to understand that the dining experience post the lockdown will change drastically, as venues will have to abide to certain guidelines, continuing the norms of social distancing. Hotels and restaurant owners will have to follow a new set of rules to ensure the safety of their staff and guests. 

Days ahead will see a change and for the good. After we fight the virus, let's hope for a better tomorrow - both for our personal and professional lives. 

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