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Partygoers remain cold to new year celebrations

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NEW DELHI: 2018 may have been rung in with what seemed like customary fervour but Indians didn’t party all that hard in the festive quarter ended December, said bar and high-end restaurant owners, who estimated business dropped as much as 30% from the year-earlier period.

2017 had already been a roller coaster ride for the industry with a ban on the sale of alcohol close to highways and the goods and services tax (GST) being rolled out on July 1. Then, late in the year, Delhi and its neighbourhood were hit by deteriorating air quality and traffic jams while Mumbai was rocked by the rooftop fire at Kamala Mills.

“The uncertainty post GST, when consumers were unwilling to spend, two weeks of heavy smog in the north and deteriorating air quality index put together impacted numbers through the quarter by about 20% compared to the same quarter last year for brands such as Lord of the Drinks and Warehouse Cafe,” said Priyank Sukhija, who operates brands such as Tamasha, Townhouse, The Flying Saucer and Out of the Box Cafe as well as the ones he mentioned. “Pre-Diwali is in any case slow because people prefer to have more house partiesthan going out.”

Riyaaz Amlani, chief executive of Impresario Entertainment and Hospitality, which runs Social and Smoke House Deli in Delhi, Mumbai and Bengaluru, said, “We expect the dip to be in the range of 10% (overall) for the festive quarter.”

‘Clogged Roads a Dampener’

“Delhi was subdued because of the smog and pollution and the sealing of open areas,” he said. The capital’s municipal authorities ordered the closure of upper floors in Defence Colony, a restaurant hub, on the grounds that these were unauthorised.

Amlani, who has signed an investment deal with LVMH-owned LCatterton Asia, said profitability was hit in the country’s biggest markets of Mumbai and Delhi.

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The dip was more pronounced in Delhi at about 30%, he said. Mumbai business was hit following the fire at Kamala Mills that saw 14 people killed and the subsequent drive to demolish illegal structures at 100 restaurants and pubs by the Brihanmumbai Municipal Corporation (BMC), he added.

Rahul Singh, promoter of The Beer Cafe, said clogged roads were a key factor. “Heavy traffic does affect destination-based restaurants as they depend a lot on special events. People don’t want to take the trek owing to the time they have to spend on the road. Also, in the festive season, weddings clog roads. This definitely puts pressure on large format restaurants,” he said. “North India saw consumerism dip mainly due to the air quality. Offices and schools were closed down and people were advised to stay indoors. In the west, New Year’s Eve was sombre due to last week’s Kamala Mills tragedy.”

Dec 31 cancellations

Some hoteliers and restaurateurs said business on the last day of the year slumped as people cancelled reservations on December 31. Anurag Katriar, executive director of Mumbai-based deGustibus Hospitality which runs Indigo Deli in the Delhi National Capital Region, Mumbai and Pune, attributed the slowdown to multiple factors.

“The new year’s eve party in our restaurant Tote on the Turf in Mahalaxmi used to get completely sold out. We have barely done about 70% bookings compared to last year. There has been an overall dip of 4% in the same store growth in quarter three,” he said, adding that the imposition of GST and the scrapping of input tax credit (ITC) for restaurants had a direct impact on margins. “The Kamala Mills incident was unfortunate and took its toll on sentiments. Delhi had its own problems. ITC impacted business across the board.”

The GST Council had slashed rates to 5% from 18% for all restaurants with effect from November 15. But input tax credit is no longer available to restaurants, which they say is impacting profitability.

Patrons were reluctant to venture out of home to brave crowds, traffic and, in Delhi, cold and smog. “If we would have hosted 100 or 150 couples last year, we did not even do 60% of this on New Year’s Eve,” said Saurabh Khanijo, managing director of the Kylin chain of restaurants.

“We did more marketing this year but nothing worked out. It could be GST, smog and pollution in Delhi-NCR. People did not head out as much as before. They preferred staying at home and the trend was the same everywhere.”

Ashish Saxena, chief executive of TexMex Cuisine India — the master franchisee for American casual dining restaurant chain Chili’s Grill & Bar in the south and west — said 2017 was “one of the restaurant industry’s toughest years.”

“While we were still emerging from demonetisation came the liquor highway ban,” he said. “It took nearly eight months for highways within municipal limits to be excluded. By then the damage had been done to many restaurants which had to shut shop or stopped serving liquor for an extended period.

Then came the service charge advisory and of course the GST rollercoaster. Due to these norms and regulations, it becomes difficult to run a business, create jobs, serve guests good food and generate a return on our investment.”

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