Exactly 43 days have passed since the Centre allowed restaurants to resume dine-in services, as part of India’s Unlock 2.0 plan. However, barring a 10-day period sandwiched between two lockdowns, restaurants in Chennai haven’t been operating dine-in services for the last four months as the Tamil Nadu government has permitted only takeaways and home deliveries. The impact on Chennai’s F&B market has been quite severe.
Bars & fine-dine restaurants register zero business
“Our bar business employed 100 to 150 people in one business, and the other one accounted for another 100 people,” says Sandesh Reddy, chef and restaurateur, and founder of the popular Sandy’s chain of cafe-restaurants among other F&B establishments. “So, we’re talking about 200 to 250 people who have literally had nowhere to go,” he says, adding, “We’ve had to pay them something to keep them going for a while, but it’s obviously not sustainable.” This is largely because while pubs in Chennai shut down in early March, they still haven’t reopened owing to an unrelenting spike in COVID-19 cases.
Today, Sandesh keeps kitchen fires burning thanks to what in hindsight was an astute business decision — diversification. “The bakery business is keeping the stoves burning and some of our cafe businesses are continuing to contribute in some part,” he says, “It’s tough — there’s no denying it — but at least we know that one part of the business will help see us through a few months more.”
So, while Sandy’s registers 60 percent of normal revenues thanks to takeaways, Sandesh’s dessert bar Batter is seeing 50 percent of normal sales. The same, however, cannot be said of his specialty restaurants like Hutong, designed specifically for a dine-in experience.
Malls stay shut
The situation is worse in malls since they haven’t been allowed to reopen altogether, which eliminates the scope of any business at all. “There are people who run restaurants in malls where they can’t even open windows,” says Kiran Rao, Managing Director of Wild Garden Cafe by Amethyst. “It’s been a huge challenge, and I think it’s terrible because there are lakhs of people out of work and thousands of businesses that may have to close down because they depend on daily revenues.”
If the government’s reluctance to allow dine-in business was one problem, the twin lockdowns in Chennai have stressed supply chains. As a result, most restaurants have had to drop items off the menu or make do with entirely different sustenance menus altogether. “Supplies are disrupted. We don’t have basic ingredients that normally reach you consistently every other day,” says Sandesh, adding, “We don’t get mushrooms or lettuce, for instance. And even if we did, there’s still a whole lot of apprehension over eating raw food like lettuce during the time of a pandemic.”
‘Delivery partners’ commission impacting profit margins’
What has compounded the problem for restaurateurs in Chennai is a big hit on margins thanks to delivery partners like Zomato and Swiggy. “Our margins are being eaten up by the commissions that we pay,” says Shabnam Kamil, Additional President, Jonah’s. “It doesn’t stop with the commission, when it comes to online orders, you have to invest in advertising so that your brand is visible amid competition.”
This has caused some restaurants to maintain differential pricing for takeaways and online deliveries. “You are forced to increase your price online and that doesn’t leave a good impression in the mind of the customers,” Shabnam adds, “They feel there is a variation in the online price and the menu price.”
‘Takeaways don’t account for much, anyway’
Then there’s the other issue of takeaways not accounting for more than 5 to 15 percent of normal revenues at any restaurant or cafe anyway, according to Kiran Rao. The resultant situation is one where restaurateurs prefer keeping kitchen fires burning if and only if both dine-in and takeaway services are allowed to run.
These problems have led to several businesses simply running out of steam. Nearly four well-known restaurants in Chennai, like Thai Food House and Summer House Eatery, are on the block. Some of these establishments are being offered for throwaway prices of between Rs 5 to 10 lakh per restaurant. This is perhaps the most tragic story of what was a fledgling F&B market just earlier this year.
Source: Thanks https://www.cnbctv18.com/hospitality/four-reasons-why-chennais-restaurants-are-barely-surviving-covid-19-6398211.htm