![]() ![]() We reckon that our business will take anywhere between six and twelve months to gain any respectable traction in the post-Covid era. "We are sure in our assessment that our sector is staring at a complete decimation and seek a few urgent interventions from you to keep ourselves afloat. It submitted a list of demands to different authorities, including Finance Minister Nirmala Sitharaman and NITI Aayog CEO Amitabh Kant. In the first phase of the lockdown in March and early April, the sector was sanguine about getting some relief from the government. Talk to any large restaurant operator in the country, and all you will hear is anger and hopelessness. The only wheel we can preserve is labour," he says. While demand and supply have gone for a toss, there has been a significant erosion of capital in the past few weeks. "There are four wheels of the economy: demand, supply, capital and labour. He says saving jobs is crucial for the economy. Hence, retrenchments are unavoidable, say some owners.īut The Beer Cafe's Singh has an atypical viewpoint. If revenues drop 50 per cent, this may rise to 60 per cent, which is going to be untenable. Manpower costs are about 30 per cent of expenses. First Fiddle has paid basic salary to almost 50 per cent of the 1,100 employees, especially the junior ones. At Olive Bar & Kitchen, for instance, the entire senior management has taken salary cuts. ![]() That's where the relationship with them matters," says Olive Bar & Kitchen's Singh, who runs 27 outlets across nine brands.Įven though most organised chains have resisted layoffs till now, most announced salary cuts in April. "We have been trying to bring down costs by renegotiating contracts with landowners. When services are resumed, this will lead to ugly disputes. Of course, that will require a series of changes such as reduced menu, more focus on delivery services, lower rents and reduced workforce," says Aggarwal.īut renegotiations are not going to be easy as a large number of restaurants have stopped paying rents despite landlords raising full or partial bills. "I will be happy if I can break even at the outlet level in six-eight months. Lite Bite Foods' Aggarwal says the practice of fixed rentals has to be suspended for some time and the industry has to work on a revenue-sharing model. As nearly 90 per cent restaurants in the country operate on premises taken on lease, and given that it's the second-biggest expense at the outlet level, most owners will negotiate a lower rent with landlords. However, the owners are making plans to minimise costs after they restart. "If there's no government support, 30-40 per cent restaurants may not be able to reopen," he says. Singh, MD, Olive Bar & Kitchen, says the impact of the pandemic is so huge that many restaurants will just fold up, especially in the unorganised segment. "It's early to say this but at least 15 per cent of my restaurants will never reopen," says Priyank Sukhija, CEO and MD, First Fiddle Restaurants. Others will likely report losses, shut shop or shrink their presence. Big players like Jubilant FoodWorks (which operates Domino's Pizza, Dunkin' Donuts and some other brands), which had reserves and surplus of Rs 1,192 crore as on March 2019, might survive. Typically, restaurant ch-ains operate at 5 per cent EBITDA (earnings before interest, taxes, depreciation and amortisation) margins, which are extremely low to weather a crisis of this magnitude. While estimates vary, most industry players are expecting revenues to fall by 50-70 per cent year-on-year for six-nine months after they resume operations. As per some estimates, most restaurants in India have a cash buffer of 15 days, which they exhausted long ago. Restaurants are a long-gestation business where corporate-level profits are low," says Rohit Aggarwal, Director, Lite Bite Foods. Revenues of Lite Bite Foods have fallen sharply, yet the chain has been paying full salaries to its 3,300-strong workforce. ![]()
0 Comments
Leave a Reply. |