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India’s restaurant industry is staring at significant losses as localized lockdowns to contain the second wave of covid-19 have crippled business. Restaurant owners said they were operating at 25-30% of pre-covid levels on the back of home deliveries and takeaways, as dine-ins remain suspended.

India’s 4.25 trillion restaurant industry employs seven million people, with dine-ins accounting for 75% of the organized industry’s business, according to a Crisil Research report in 2020.

Restaurant owners said even when state governments allow dine-in to resume, the slump in consumer sentiment could delay recovery. To be sure, between December and March, things were looking up for restaurant owners with many of them reporting 75-80% of pre-covid operations.

However, the second wave has had a deeper social and psychological impact on people than the first wave, said Zorawar Kalra, owner, Massive Restaurants Pvt. Ltd, which owns Masala Library, Farzi Face and Made in Punjab. “Deliveries and takeaways are on the rise for sure and that is a very welcome scenario. However, they can never cover up for the dine-in loss. The economics of the restaurant business cannot ensure viability on the basis of delivery and takeaway alone."

“The target demographic of most restaurants, aged between 21 to 45 years, has been the worst-affected by the second wave, and this time the recovery will be slower than the last time. The mood of the consumer is something the industry will have to wait and watch. The sombre mood, though completely understandable, will definitely make the path to recovery harder," Kalra added.

Lite Bite Foods, which owns several restaurant brands, such as Zambar and Punjab Grill, is also operating at 20-25% of pre-covid levels with outlets across India open only for delivery and takeaways. “If we look at the first lockdown, our delivery was 7-8%, then it went up to 25-30%. Now that share of delivery continues to grow and the ordering level is better than September 2020, and we are penetrating the market further," said Rohit Aggarwal, director, Lite Bite Foods. The newly launched cloud-kitchens business continues to draw orders, he added.

Rajat Agrawal, chief operating officer and head, corporate finance, Barista, said home delivery for the chain has grown. “Delivery on an absolute level is continuing at the same momentum. Larger sentiment has not impacted the absolute numbers that we were doing on home delivery, and have remained robust and at similar level as last year (post-lockdown)," he said.

Pre-covid, deliveries for the coffee chain were at 8-9%. “But because there is a drastic fall in dine-in, percentage of delivery has gone up to 20-25%. The contribution has increased much more," he said. It is running more delivery-centric promotions. In the last one year it has also started working with Dotpe, a commerce and payments platforms, to set up its own delivery channels.

Many restaurant chains have resorted to pay cuts, said industry executives. Last week, the National Restaurant Association of India, which has over 500,000 members, urged landlords and mall developers to reconsider commercial arrangements, including rent waiver, in view of the covid-led uncertainties.

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