According to the National Restaurant Association, over two million people may have lost jobs in the restaurant sector. The data represent over 500,000 restaurants across the country. The restaurant sector is among the worst hit due to the novel coronavirus outbreak.
The restaurant industry directly employs over 7.3 million Indians and an almost equal number of people are employed indirectly. Dushyant Singh, the Jaipur-based entrepreneur who owns three restaurants (OTH, Rustic by OTH, and THE LAMA) says that the restaurant business involves a lot of overhead expenses that now look like a dead elephant as the businesses come to a standstill. Dushyant further added,
“After the lockdown opens up, the first thing that every eatery would do to cut down existing expenses is fire employees which would create a lot of unemployment in the sector. It would be difficult to start again with the same force.”
The cumulative size of the food industry across the country comes to Rs. 4.25 lakh crore with formal sector alone contributing up to Rs. 1.75 lakh crore. According to Anurag, the CEO of deGustibus, the daily revenue loss of the organized sector alone is around Rs. 480 crores. Anurag believes that the restaurant sector would be the last to get permission to open up. He further added,
“Let us say we get permission after three months, then we are staring at a revenue loss of Rs. 43,150 crore and business/cash loss of Rs. 17,260 crore. These numbers could cripple a very solvent sector and ours is barely solvent. No company in the sector will come out unscathed in the aftermath of the lockdown.”
Many Restaurants will not survive Pandemic
The NRAI believes the government should provide aid to the sector to help them sustain and has made multiple representations regarding the same. It also believes that the aid must come now and many restaurant chains cannot survive the pandemic. Kolkata-based Shiladitya Chaudhary who owns 21 hotel chains believes that not many restaurants can survive more than two-three months of shut down. He believes that this will eventually lead to non-payment of salary and laying off of employees.
Wow! Momo that has over 345 outlets in India has for the first time in losses in 11 years. If it continues to pay rentals and salaries, it will eventually close in another 3 months, as per the CEO. Sulagna Ghosh, who runs Sienna café, believes that the restaurant sector’s vulnerable model has been exposed during the pandemic. She says,
“It is a business model that works on a steady churn of liquidity and low margins, especially for smaller eateries and cafes.”
However, the restaurant sector believes that the government should make use of ESIC coffers and unclaimed deposits of PF. It also expects the government to come up with adequate working capital for the sector with low interests, low collaterals, and moratorium.
Source: Yourstory
