Three days after the food services industry body National Restaurants Association of India (NRAI) advised it members to shut down their restaurants' operations for 14 days till March 31, nearly all the big chains, except Domino's Pizza and McDonalds, have shut down operations. The decision was announced as restaurant body feared that it might put the lives of employees at risk. "As such, those outlets that continue to operate have seen over 70 per cent drop in footfalls," says Anurag Katriar, President of NRAI and Executive Director & CEO of deGustibus Hospitality, which owns Indigo Deli, Tote and Dakshin Ras. "All of my restaurants are closed. It's an existential crisis for us," he says.
The food services sector is pegged at about Rs 4.5 lakh crore, out of which organised segment is around Rs 1.75 lakh crore. With the low demand and shutdown of operations, NRAI is expecting losses of Rs 70,000-80,000 crore in 2020. "Our futures depend on the how long this crisis lasts. If it continues for over two months, there will be massive losses, permanent closures, wide-scale job cuts, and huge hit on the economy," says a leading restaurant chain promoter.
NRAI is also predicting job losses of 20 per cent in the sector (for the time being) which employs about 7.3 million people. "The impact of the COVID-19 on our sector is still unfolding and therefore we are not in a position to estimate the eventual loss of jobs because of this," NRAI responded to a Business Today query.
In India, the food services sector is largely divided into three segments: bulk dining, in-restaurant dining, and value dining (that includes quick-service restaurants and cloud kitchen). As a large part of the population has decided to stay at home and avoid social gathering, the first two segments -- that is bulk and in-restaurant dining segments -- have been badly hit. The QSRs and cloud kitchen, which take food orders online, are the least affected of the lot.
As per a source, online food delivery service Swiggy has seen around 25-30 per cent decline in business. "Even though their orders are down in large cities, in tier-II towns, the drop is not that big since there's a lot less panic. Swiggy and Zomato have said that they will be operational on Sunday (the day designated by PM Narendra Modi for Janta Curfew), but where will they pick up orders from if the restaurants are going to be closed. The only option they would have is their own cloud kitchens," says an industry insider.
As per sources, the government authorities have reportedly asked Swiggy to shut down its cloud kitchen in Chembur (Mumbai).
Business Today has emailed to Zomato and Swiggy for their responses on the continuity of business under Sunday's curfew, and the reports of shutting down of a kitchen. The story will be updated in due course.
A restaurateur says that whenever the situation begins to normalise, food and beverages (F&B) sector, particularly dine-in outlets, would be the last one to pick up since eating out is discretionary spending. "Nearly 70 per cent of our costs are fixed that cannot be brought down even as revenues continue to slide. The sector has never witnessed anything like this before. We are hoping for the government to give some relief to the sector," he says.