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F&B in the city: Starved for cash


What effect has the demonetisation decision had on our lives? The Hindu’s reporters fan out across neighbourhoods, professions and industries to find out. Today, we look at eating out, whether it’s street food, your favourite local restaurant, or fancy fine dining

The Indian food and beverages (F&B) sector, comprising fine dining restaurants, organised food retail chains and restaurants at malls, has witnessed a nearly 40 per cent drop in business since the government’s demonetisation announcement on November 8, industry officials and restaurant owners said.

 “Sales at all outlets have declined by 35 per cent to 40 per cent across the country. People in general have no money to eat out as they don’t have liquidity. We believe this is a temporary phenomenon,” said Riyaaz Amlani, President, National Restaurants Association of India and CEO, Impresario Entertainment & Hospitality Pvt Ltd.

More than 50 per cent of the revenue in the organised F&B sector is in cash, and this has been hit hard since Rs. 500 and Rs. 1000 notes are no longer legal tender.

“There is no problem in credit and debit card transactions. So customers who use cards are still coming. The home delivery business has gone up as more people are ordering online and paying through cards as they don’t have money in hand,” Mr. Amlani said.

Restaurant owners said people are busy meeting their urgent requirements rather than indulging in eating out. F&B outlets in malls have also witnessed fewer footfalls, industry officials said.

“B-grade restaurants, which mostly deal in cash, are badly affected. A-grade restaurants are affected, but not as badly, although liquor sales at these outlets are down by 20 per cent,” said Ajay Mohan, General Manager, Blackberry Restaurant, which runs an outlet at T2, Mumbai airport.

“People visiting A-grade restaurants are rich and pay by card, so we face no problem,” Mr. Mohan said.

India’s F&B sector is estimated at $46 billion and is growing at 10 per cent year on year (see chart). It is expected to continue the growth momentum after December, when the situation would normalise. The organised sector is estimated at $16 billion, and has taken less of a hit as compared to roadside outlets, which cater to the vast majority of customers.

Food zones in Bandra and Lower Parel have reported a slight improvement in footfalls since last Saturday as some customers have managed to exchange their high-value cash and are gradually returning.

NCR Delhi is the biggest market for food followed by Mumbai, Kolkata and Bengaluru. While Mumbai’s big food zones are confined to malls and khau gallis, Delhi boasts of food zones in Cyber Hub in Gurgaon, Connaught Place, Khan Market, Pandara Road and Hauz Khas to name a few.

The losses are universal though. While Indore’s 56 Dukan and Sarafa Bazaar have witnessed a sharp decrease in sales, so has Tank Bund Road in Hyderabad, industry officials said.

Food Services Market Size 2016 (in Rs. Crore)

Chain market -– 20,400

Standalone market -– 72,255

Standalone hotels — 8,820

Unorganised market -– 2,07,635

Total Market –- 3,09,110

Source: India Food Services Report, 2016

Mumbai constitutes 11% of the food services market in India

With a population of 23 million, Mumbai has a market size of Rs. 32,330 crore

The city has about 32,330 restaurants

8.8% of the population eats at restaurants and hotels once a fortnight

8.3% of the population chooses restaurant food once a month

Break-up of restaurants: 4,715 chain markets, 9,950 organised standalones, 17,665 unorganised markets.

(Source: Indian Food Service Industry Overview, 2016)
Source: The Hindu

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