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Cash crunch is eating into food business


The ongoing cash crunch is eating into business, but restaurateurs say the move against black money could help’ clean up the food service industry.

After the demonetisation announcement on November 8, restaurants, cafés and bars across Delhi saw a decline in sales as customers were faced with a cash crunch. While high-end establishments were not hit as badly as smaller businesses that rely on cash payments, eating out in general has been a casualty.

Arun Gupta, the owner of Nathu’s Sweets in Bengali Market, said 70 per cent of sales at the shop “evaporated”. “We are left with 30 business was back to 40 per cent. per cent of our sales. Earlier, 80 to 85 per cent of payments were through cash. Now 90 per cent are via cards. Though this is a tough time for businesses as well as citizens, it is a good move,” he said.

Liquidity crunch
Riyaaz Amlani, the president of National Restaurant Association of India (NRAI), said for two days after the announcement business was down by 40 per cent. Over the weekend, November 11-13 things improved a bit, but sales were still down by 20 per cent. This week again the decline in business was back to 40 per cent.

“There is a liquidity crunch, which is making people conserve cash. Like other sectors, restaurants are also hit, but we are willing to deal with it, provided it translates into a long-term curb on black money and corruption,” who owns the Social and Smokehouse Deli chains.

“There are restaurant owners who collect tax from customers but don’t deposit it. This leads to unfair competition. We hope the taxes on restaurants go down in the long-term as collections in-crease,” he said. Others welcomed the move, with the hope that it leads towards a cashless economy. “Depending on the type of res-taurant, business has dipped by 15 per cent to 40 per cent. But, after the situation settles down, we hope more customers start opting for mobile wallets and cards,” Samir Kuckreja, a trustee of NRAI. While restaurants are facing the prospect of another week of empty tables, most restaurateurs are hop-ing that when the dust settles, their industry ends up better off.

Source: The Hindu, Delhi

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