Restaurant owners seek concessions as temporary closures hurt business

NEW DELHI: Restaurant owners say that they are seeking concession on rentals to keep their businesses afloat, extension on deadlines for renewing certain licences required to operate restaurants and bars, and are hoping for a moratorium on loans for small businesses, among other such measures, as they grapple with sudden closures across several states in the midst of the COVID-19 outbreak.

Members of the National Restaurant Association of India (NRAI) have been making representations to various local governments and excise departments seeking a delay in payments linked to renewal of license fees.

“The hospitality industry’s first concern is our employees, their health, and their salary and finding a balance between the two. We are staring at a situation where we don’t have cash flows, no top line and just having expenses will be a bit of a stretch on the restaurants,” said Riyaaz Amlani, CEO and MD of Impresario Handmade Restaurants. Amlani said that the restaurant industry is trying to come together to ensure that they don’t have to let go of people.

“We have to ensure our employees get their salaries, and this can be done if the government assists us by nullifying excise fees and charges, VAT, and reduces license fees,” he said.

Restauranteurs said they are staring at expenses such as renewal of license fees for the new financial financial year over the next few days.

"There are a lot of immediate liabilities for our industry that are due in the next ten days, from GST, to renewal of excise licenses etc. Right now, our priority is employees and smaller vendors, so we are asking both central and state governments—to allow delay in payments and not to penalize businesses for that," said Gauri Devidayal, director, at food services company Food Matters India Pvt Ltd. Devidayal is also member of the NRAI.

India's food services industry currently employs around 7,00,000. If lockdowns continue, the sector could look at a possible 20% to 25% unemployment scenario, Devidayal, said. Restaurant closures could also impact several affiliated jobs including small vendors, and housekeeping and security staff at outlets.

Restaurant owners said they are looking for some concessions on rentals as well.

“We are trying to renegotiate rentals with our landlords and seek concessions, at least for a quarter, in locations where outlets are still open,” said Nitin Saluja, founder, at Chaayos. Roughly 25% of the chain’s outlets have remained shut over the last few days.

To be sure, restaurants in malls and other complexes could be exempted from paying rents as part of a clause that applies whenever operators or landlords have to shut their premise.

But for others that are open, high rentals continue to be a liability in an environment when business is lean. NRAI's president Anurag Katriar said footfalls across restaurants, bars and pubs are down significantly, at least in the top cities. For the restaurant industry that has high overheads the next few months could be challenging.“The biggest problem that we foresee is the loss of jobs—that has already started happening as manpower is the second largest expense for most restaurants,” said Katriar, adding that “lots of people who don’t have ability to absorb these costs are asking employees to stay at home.”

Smaller eateries are feeling the pinch too. Vikram Dewan, who runs a cloud-kitchen in the city of Delhi, said orders have dropped by nearly 50% since the first week of March. “If things don’t improve over the next one to two months I will have to looks at ways to cut costs. We might look at reducing the size of our kitchen going forward,” he said.

Amid stringent lock downs across cities, restaurants, bars and eateries said they have witnessed a sharp drop in footfalls in the country’s top cities such as Mumbai, Pune, Bengaluru, as more people remain indoors, work from home, and try and restrict their movement.

Moreover, closure of malls, and certain cities such as Delhi restricting dine-in has impacted business.