New lockdowns push F&B industry to the brink again

With numbers of Covid infections rising alarmingly, many states have put new lockdown restrictions in place. The F&B sector, already under severe duress, is staring at further devastation with dine-in closed and deliveries limited.

Clearly, we’re not out of the woods yet. With numbers of those infected by Covid rising fast, state governments across the country have announced a fresh spate of lockdowns. New restrictions for the month of April have been announced and authorities everywhere are on high alert.

Naturally, the economy, still reeling from the effects of the last lockdown, is in a precarious state, and brutally affected industries such as hospitality, F&B and entertainment are in a state of tizzy. While restaurants and bars have been asked to close down dining-in for the time being in many states, in some, after a certain deadline, even deliveries and takeaways aren’t allowed. In some states such as Maharashtra, restaurants inside hotels have been allowed to stay open but can’t serve anyone but guests staying at the hotel. With not much wiggle room under the circumstances, restaurateurs are understandably concerned.

As mentioned by Anurag Katriar, President of the National Restaurants Association of India, the spate of new restrictions will make the situation very dire for an industry already on life support.

Riyaaz Amlani, CEO & MD, Impresario Handmade Restaurants says, “We’ve worked very hard in the last few months to regain consumer trust for dining-in at restaurants. Things were finally looking up and the hospitality industry had only just started to recover when the night curfew and weekend lockdown got imposed again. While we understand that the government has imposed the curfew keeping in mind public safety and rising numbers, this will probably be the final nail in the coffin for the F&B industry. About 75% of our business happens during dinner hours, and now with an 8 pm curfew, even home deliveries have been hit hard.”

“The new measures in place are understandably the need of the hour but will have a huge impact on sales. Take away and delivery alone cannot contribute to the revenue. Already the restaurants were operating at a 50% capacity and now, with the new lockdown measures in place, it is definitely going to affect business,” says Zorawar Kalra, Founder and Managing Director, Massive Restaurants.

“We had started to see an improvement in the numbers in the months of January and February as the spread was largely under control, coupled with renewed consumer sentiments as vaccination drives were rolled out pan India. However, the fresh round of lockdown will definitely affect business as people become wary again. The new time and seating restrictions have made us rethink our calendars once again, and will definitely hamper recovery and create further setbacks,” says Tanai Shirali, Senior Director – Operations, JSM Corporation, which owns brands such as Hard Rock Café, California Pizza Kitchen and Asilo, among others.

“We were seeing an increase in dine-in customers as more and more people were getting confident to step out knowing the precautions we were taking. We were still being very careful and I think that encouraged customers to step out. Now with the cases rising, restaurants are obviously a soft target, which means now we need to go back to just doing deliveries,” says Rachel Goenka, CEO and Founder of The Chocolate Spoon Company.

“At this point, businesses just need to sustain themselves. Starting a new venture that enhances your business is an understood game, but investing heavily in a new venture during the current scenario would be a problem. Of course, virtual businesses would do very well. Similarly, now home delivery activities for restaurants need to be given a push considering the current scenario,” says Rahul Bajaj, Director and Conceptualiser, Out of the Blue.

Smaller, niche businesses and new entrants, of course, are finding it harder to deal with the restrictions. Freny Fernandes, Founder and Chef at Moner Bistro & Dessert Bar, says, “A lot of places including Moner mainly make all their revenue post 8-9 pm. At Moner especially, people come in after having dinner, for desserts and coffee. This new curfew has hit us quite hard and with no help from the government, a lot of businesses might even shut down if it’s extended for a longer period.”  

“We understand the urgency and importance of this lockdown and our team’s and customer’s safety is of utmost importance to us. However, it is a difficult time for the F&B industry as the alternate scope to provide service is very limited. We are hoping and taking all possible precautions as individuals and industry players to curb the pandemic and come back stronger than before,” says Pratekk Chturvedi, COO of BrewDog India (Ace Aloha Group), a recent entrant in the craft brewery space in the country.

Covid vaccination
Rapid vaccination might be the safest way to reopen but until such time, urgent measures are required to keep the F&B industry afloat.

Rapid vaccination might be the only way to start reopening, but given our population, it’s a process that might take some time yet. Fortunately, at least for some, crucial lessons were learnt during the last lockdown and these are expected to help these businesses survive until we emerge on the other side of the curfews.

Although cloud kitchens and delivery services alone can’t really shore up businesses, as the margins are much too low, it is one of the only options for most establishments to stay afloat through this period. Many are also looking at virtual events, workshops and promotions as a way to stay relevant and connected with patrons. Yet others will have to choose the extremely difficult task of realigning timings, staff and other resources.

“We urge the government to increase vaccination drives so that more people can get vaccinated. We would also sincerely urge customers to order directly from restaurants rather than aggregator apps to help us tide through what is once again going to be a hard time for us. Delivery and cloud kitchens will in no way, shape, or form help restaurants survive another lockdown. There’s no thought behind restricting industries like F&B and retail once more. We’ve had a gun pointed at our heads and expensive license fees and taxes have been paid, and yet we’ve been forced into a lockdown once again. It’s about time the government starts giving this industry the relief that it so badly needs. They also need to tell us how they intend to vaccinate our front-line workers like delivery staff in order to provide essential services such as food delivery,” says Riyaaz Amlani.

Food delivery
Cloud kitchens and delivery services account for only a minute part of a restaurant or bar’s revenue. The margins are too low to allow cash-strapped businesses to survive.

And although the lockdown might signal the end for some, given the devastating losses already accrued over the last year, one thing unanimously agreed upon by restaurateurs and reflected in statistics is that demand will surge as soon as the restrictions are lifted. There was a clear recovery over the last few months, with consumer confidence growing, especially with the rollout of vaccines and a complete overhaul of hygiene and safety measures.

The optimistic are looking at the lockdown as a speed bump along the way. As is, most expansion plans in the F&B industry are usually in the works for months and years before coming to fruition. For most, the restrictions might cause a delay in executions rather than cancellations.

“While the virus has slowed things down for sure, we had planned our road map long before the pandemic. There was a period when the pace of work slowed down, but we made sure that we closed on our commitments and even opened two new Hard Rock Cafe outposts, one in Guwahati and another in Chandigarh in December 2020 and February 2021. We have more outlets slated to open this year. Forward is the only way through for us at JSM,” says Tanai Shirali.

Rachel Goenka admits that the schedule for new projects will be affected. “Sassy Cafe in BKC is now going to be delayed. Luckily, we were able to launch House of Mandarin in Sheraton, Pune (which was delayed by a year).”

For Chef Freny Fernandes, it means a longer journey until they break even. “With the new set of restrictions and the rise in the number of cases, it will take us even longer to break even as a new business. More than expansion, we wanted to introduce unique creations and experiences at Moner which we might have to put on hold now.”

The resilience of the F&B industry is rather hard-earned and near-impossible to maintain. Urgent measures are required to keep it from going under. While rapid vaccination might be the safest way to reopen, certain moves such as relaxation of delivery restrictions, tax breaks, among others, will go a long way to help the industry in the meantime.  

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