Still reeling from the impact of demonetisation and policy changes like the withdrawal of input tax credits on GST, the Food and Beverage (F&B) industry now faces an extended loss of revenue while restaurateurs continue to pay rent, employees’ wages and interest on their borrowings. Mumbai-based restaurateur-chef Rahul Akerkar, whose European restaurant Qualia at Lower Parel has shut down for the interim, believes that the road ahead will see more collaborative efforts between F&B players and revenue sharing models and commission sharing models with landlords. “There may also be more mom-and-pop places – the neighbourhood restaurant and bar – which is lacking here,” he says.
Here’s how leading restaurateurs see things playing out.
Properties: The Table, Mei 13, Mag St Bread Co, Iktara
Located in: Mumbai
POA: Only the delivery brands, Mag St Bread Co and Iktara, are operational. Under the Disaster Management Act, we can’t cut down on manpower and have to pay full wages. This is not sustainable if this goes on for months.
What the future holds: There are too many unknowns right now to gauge the full extent of the damage. A lot of restaurants will probably not reopen. We are banking on government support. The closure of restaurants will also affect big and small suppliers as well as imports.
Properties: Olive Bar & Kitchen, Olive Beach, Olly, SodaBottleOpenerWala, Guppy, Poke Bar, Hello Guppy, The Fatty Bao, Cantan, Toast & Tonic, Monkey Bar, The Grammar Room, Ek Bar, Serai, The Hoppery
Located in: Mumbai, New Delhi, Bangalore, Gurgaon, Noida, Kolkata, Hyderabad
Plan Of Action (POA): Our properties are shut. We are trying to pay March salaries. Over the years, Indian restaurateurs have contributed towards an employee insurance scheme (ESI), which currently has a corpus of almost Rs 100,000 crore. We are appealing to the government to release funds from this directly to the employees.
What the future holds: The lockdown is increasing each restaurant group’s liabilities and at the same time greatly reducing people’s spending power. It will take us a long time to get out of this hole, if we manage to do it at all, and that is why governmental support to the industry is critical. Despite our best efforts, Olive Bar & Kitchen will probably have to close a few of our restaurants.
Properties: Woodside Inn (Colaba and Andheri), The Pantry and Bombay Vintage
Located in: Mumbai
POA: All properties, except Bombay Vintage, are doing deliveries for a limited menu. We have asked our landlords to waive rentals for the period of the lockdown. We have disbursed a large percentage of the March salaries and even though we do not have the necessary cash flow in April, we are still working on a plan to ensure that we can support our team members.
What the future holds: It’s going to be a fight for survival. Some ideas, such as increasing the delivery business, operate for limited hours (to keep overhead costs down), and revenue-sharing arrangements with landlords, may work.
Properties: Flamboyante, Boardwalk by Flamboyante, Hammer & Song, Fountain Sizzlers
Located in: Mumbai and Alibaug
POA: I am the vice president of the CPRA (Cuffe Parade Residents Association), so I have continued to offer deliveries from Flamboyante and Hammer & Song on the instance of many senior citizens in the area, who can’t cook at home.
What the future holds: I believe restaurants will have to scale down. Even after it’s declared safe, it’s going to be a Herculean task to get people back to the restaurants.
Properties: Masala Library, Farzi Café, Papaya, YOUnion, Kode, Hotel Shanghai, Tygr, Made in Punjab
Located in: Mumbai, New Delhi, Bangalore, Chandigarh, Noida, Gurgaon, Lucknow and Hyderabad
POA: All our properties are non-operational at the moment. Right now we’re making sure displaced migrant workers and other needy people get their meals.
What the future holds: We hope to have government’s support because the industry, which contributes almost 2 per cent of the GDP, employs millions. The business model depends on cash flow, so even a month of zero revenue can have a devastating effect.
It’ll be over a year before things normalise. The best way to bring customers back will be to stress on the hygiene practiced at restaurants. For that social media will play an important role.
Properties: Indigo deli, Tote, Neel, Indigo Burger Project, The Eleven Kitchen, Dakshin Rasoi, D:OH!
Located in: Mumbai and Pune
POA: We have no revenue now. Meanwhile, we renewed our licenses for the whole year, paid insurance premiums, and are paying staff salaries. I believe that the ‘force majeure’ clause on leave-and-license agreements may bring us some relief with respect to rentals.
What the future holds: If the lockdown goes on for a month or so, things will eventually come back to normal, but longer than that will threaten the very survival of the industry. The government may announce a tax holiday, waive license fees and statutory dues, but who would fund operating costs?
Properties: Royal China, Jia, Kuai Kitchen
Located in: Mumbai, Pune, New Delhi, Kolkata
POA: We’re open for deliveries through food aggregators. We’re paying staff salaries as per the government’s instruction, but how can any business survive with expense and no revenue?
What the future holds: The restoration of supply chains will be a big challenge. It may remain difficult to import certain vegetables and sauces. In addition to making policy changes to support the industry, the government will need to help restore consumer confidence and stimulate the economy.
Properties: Hard Rock Cafe, Shiro, Asilo
Located in: Mumbai, Pune, Bangalore, Hyderabad, Gurgaon and Kolkata
POA: Our restaurants have been shut since March 15. This is an unprecedented situation, so right now, we need to keep the plan of action as fluid as possible.
What the future holds: There needs to be a clear direction for the next 12 months where landlords work on a revenue-sharing model and the government creates a stimulus package for the industry. Deferred taxes and payments are not a solution as it will only ease the immediate cash-flow problem and delay the carnage, so to speak.
Source: Thanks https://mumbaimirror.indiatimes.com/coronavirus/news/unpalatable-truths/articleshow/75114020.cms