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The Delhi government’s decision to shut dine-in restaurants to curb the spread of COVID-19 has dealt a massive blow to eateries trying to claw back business lost to previous waves of the pandemic, restaurant owners say.
The shut-down was ordered as the number of cases of COVID-19, positivity rate and deaths caused by the Omicron variant surged in the national capital, signaling the third wave of the pandemic.
“This is going to cause a lot of disturbance. It is a tricky situation that we are in because we cannot reduce staff and we have to continue paying them their salaries without any business coming in. There will be a sharp drop in profitability,” said Kabir Chugh, who runs a chain of five restaurants under the brand name Nizam’s and one called The Turkey Project.
Organised restaurants in the city employ 300,000 people and generate yearly revenue in excess of Rs. 31,100 crore, according to a business organisation.
Peak season
The closure of restaurants has come in the peak season for restaurants, said Anurag Katriar, a trustee of the National Restaurants Association of India (NRAI).
“This will have a larger impact on the businesses. December to February is big contributor to overall business of the restaurant industry, out of which December alone constitutes 15-20 percent of the annual revenue,” Katriar said.
He added that the industry had reached 75-80 percent of pre-pandemic levels despite capacity restrictions.
“But now the whole sentiment has been dampened,” said Garish Oberoi, former president of the Federation of Hotel and Restaurant Association of India and chairman of the Delhi state committee of the Hotel and Restaurant Association of North India.
He said the closure was the “last straw” for the restaurant industry.
“Rents and other compliances like license fees, salaries are all in place. But due to this closure, which no one is sure how long this is going to be, restaurants are looking at a dark future,” he said.
Restaurants had been struggling with a staff crunch after an exodus of employees back home following previous waves of the pandemic and consequent lockdowns, he said. They had just managed to get over the crunch when they were ordered to close to dine-in customers, he added.
Katriar said 25 percent of restaurants had already shut permanently and the closure induced by the third wave had forced restaurants that were recovering to go into a pause mode.
“This was unexpected. Rents were negotiated, the staff was brought back, people had invested in newer things. You have invested money and now restaurants have to shut down,” he added.
Restaurateurs said the current situation was no different from what they had confronted during the two lockdowns in the past two years.
“In the last two lockdowns, we invested our own money to keep the business up and running. I had to shut two of my outlets out of the four outlets I had pre-COVID. And now the knee-jerk reaction of shutting down has become more challenging. This is the third lockdown the restaurant industry is facing. We are in a helpless situation,” said Manika Jagdish Pahwa, who runs Wood Box Cafe in Delhi.
In the first lockdown, out of around 100 staff that she had, only two stayed and the others left for their hometowns.
“Wish the government had extended help to businesses like ours,” she said.
Dine-in vs. delivery
To be sure, the government is allowing home delivery and takeaway of food from restaurants, but that accounts for a small portion of overall business.
“Many restaurants started looking at deliveries during the pandemic. For most restaurants and bars, delivery accounts for 15-20 percent of the business,” said Oberoi.
Even Katriar said takeaway and delivery cannot substitute business from dine-in customers.
“We have 25-30 percent business coming in from deliveries but that is not enough for me to sustain. For most restaurants, delivery will help curtail losses, but it won’t help be profitable. Experience-based restaurants like cocktail bars are in a challenging situation. The bar which is dine-in oriented (run by Chugh) we saw sales falling 70-80 percent in a day (when Delhi announced closure of restaurants). These bars are in upmarket localities and the rents are exorbitant. How many home bar kits can you sell,” Chugh said.
Kabir Suri, president of NRAI, said in a statement that Delhi had the maximum dine-out frequency at six times per month compared to a national average of 4.5 times per month.
He added that the restaurant industry was worried about the fate of over 300,000 people employed in Delhi restaurants.
“Delhi NCR is the Restaurant Capital of India with highest number of restaurants in the country. Revenue generated per year from organised restaurants in Delhi is Rs 31,132 crore,” Suri said.
NRAI has urged the Delhi government to either allow restaurants to operate at normal hours with safeguards and protocols or compensate the industry, its employees, suppliers and landlords for the loss of business arising out of the closure.
