Home / News / India /  Fresh curbs leave a bitter taste in the mouth for eateries

NEW DELHI : Night curfews, intermittent lockdowns and a second wave of covid-19 infections has once again paused any meaningful recovery seen by the restaurant industry.

Business in cities such as Mumbai and Delhi is down by as much as 50-70%. This is a combination of fresh set of restrictions being announced by state governments as well as consumers turning cautious amid a raging second wave.

“Things are not looking good," said Nakul Chandra, chief executive officer, Riga Foods which runs chef Ritu Dalmia’s restaurants in the city. “For standalone restaurants, more than 70% sales come from dinner service, which has been wiped out for us because of the Delhi government’s night curfew," said Chandra.

All guests and staff have been asked to vacate the restaurant by 9 pm, affecting dinner sales. “Mumbai and Delhi customers do not have dinner at 7:30 so in the past one week, our dinner business has collapsed," said Chandra.

In fresh curbs announced in the Capital on Saturday, the Delhi government restored 50% cap on seating in restaurants and imposed night curfew.

Maharashtra, on the other hand, said restaurants and bars are to remain closed, except for those inside hotels. However, it has permitted delivery and takeaways. More recently, it allowed deliveries round the clock—which only select restaurants are opting for given the logistics involved.

Restaurants expect another round of closures to hit the industry by the end of the month and turn the business unviable—at least for smaller players.

Riga Foods, which had six restaurants in Delhi and one in Goa, shut down three in Capital and the one in Goa during the 2020 lockdown. “If this lockdown continues for more than 45 days, it will be the last nail in the coffin, not just for us but for many in the industry," he said.

Earlier this year, restaurants reported healthy recovery as consumers returned to eateries after months of observing social distancing. In January-February business was back to 70-80% of pre-covid levels. The recovery has again been paused.

“In Q4FY21—people were seeing recovery. I think in March, the last 10 days were weak across Delhi-NCR for sure, and other parts of India where the cases started going up. Obviously, these new restrictions are a complete body blow," said Kabir Suri, co-founder Azure Hospitality that runs the Mamagoto and Sly Granny restaurant and bar. The company operates over 35 restaurants, including cloud kitchens.

In April—business is already down 50%, he said. “If this moves to May, I think you might see a problem for the sector unless the government helps," he said.

As footfalls recede, liquidity could again be a challenge in the near-term especially as the restaurant business is cash flow heavy. “Most restaurants are down to just 30-35% of their pre-curfew business. Delivery is never going to be able to cover up for dine-in. Most restaurants are not built for just delivery, that is not how the economics work," said Zorawar Kalra, owner of Massive Restaurants Pvt. Ltd that operates restaurants such as Farzi Café and Masala Library.

The restaurant company has more openings in the pipeline—five under construction, which it plans to temporarily pause and pick up again as footfalls improve. "Things should improve in the next three to four months," he said.

Closures and job losses could be on the anvil too. Suri expects another 20% of restaurants to shut down if the situation remains the same for another month.

"We had hired people back. Now we have to again ask them to sit at home," said Riga's Chandra.

Meanwhile, companies are back to renegotiating rentals with malls. States such as Maharshtra have directed malls to close, except for essential services. “We have just sent out e-mails to malls—the message is clear, we will need their support, because that's the only way we can survive," said Sagar Daryani, co-founder and CEO, Wow! Momo Foods.

Shuchi Bansal contributed to this story.

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