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Why eateries have many problems on their plate



There’s at least one post daily from a restaurateur inGurugram putting up all furniture and kitchen equipment — mixers, cooking lines, salamanders — for sale. As the food and beverage industry looks at an imminent reopening, some have decided to wind up.

Many others, particularly those operating from malls, are also unlikely to open their outlets unless they receive rent relief. Over the next couple of weeks, when permissions begin coming through for the food and beverage industry, it’s quite likely that many of your favourite eateries will still keep their shutters down.

“There will be many instances of first-time restaurateurs simply locking their outlets and handing over keys to landlords and request to offset their dues against the equipment and furniture lying inside the premises,” said a restaurant owner, who did not wish to be named.

In a difficult market where the cheapest rentals at any viable location are upwards of Rs 1 lakh a month, recapitalising the business after more than two months in lockdown is simply not viable for several owners of single restaurants, cafeterias or microbreweries, who invested significant shares of personal money in these ventures, out of love for food.

It’s one of the reasons why the restaurant business thrived inGurugram and acquired the same eclectic character as its people; the city’s constellation of corporate offices drew from across India young, ambitious professionals and a sizeable expat population. As the demand for good food rose, the entrepreneurial among them opened restaurants, bars and cafes.

Now, with no business for nearly 75 days and no waivers on rent, many of them simply don’t have the cash reserves. A financial analyst, who ran a small takeaway and 10-seater eatery on the outskirts of the Sector 29 market in the evenings after her office hours, says she doesn’t see herself going back to it for at least six months. Some others have even offered to leave their entire setup as it is and walk away.

But even businessmen who own restaurant chains and have deeper pockets are worried about viability because the ‘crowd’ will simply not be there. “Footfalls in public spaces have already fallen to one-third of pre-lockdown days. The huge crowd that comes from Delhi and Noida will not visit in the near future. It makes no sense for us to reopen any outlet of ours,” says a leading restaurateur with a chain of eateries in the city.

National Restaurant Association of India’s (NRAI)Gurugram chapter head Inderjeet Banga, himself a restaurateur, says rules need to be such that it makes business sense to reopen. His immediate concerns are working hours; he says 65% of his sales come from dinner hours after 9pm with Friday and Saturday being the big days. It’ll make sense, he says, if restaurants are allowed to remain open till 11pm.

Another major concern that Banga says the entire industry has are rent negotiations with malls and landlords. “Minimum guarantee rent is no longer possible. If a mall or a market cannot guarantee minimum footfall, then how can they ask for a guarantee of rent. A revenue-sharing model has to be the way forward for us to consider reopening,” he says.

Even multinational chains are not willing to reopen their dine-in facilities till rents are negotiated again. A senior executive at one such fast food chain said they have started most of their takeaway, drive-through and delivery outlets but will only consider reopening dine-ins when malls renegotiate, waive off rent for the lockdown and agree to new terms for the rest of this financial year. “In one of the meetings of food retailers, there was a consensus to move out of malls that do not support us in one of our toughest hours. There will be many closures in coming days if landlords do not relent,” he says.
Running a restaurant involves steep costs. At any standard mall, a 60-70 seater would have to pay monthly rent of Rs 5-6 lakh, plus around Rs 80,000 as maintenance. Staff salaries and overheads would cost another Rs 3 lakh. To cover the costs, the eatery will need 50-70 guests a day, according to estimates shared by a popular eatery at Cross Point mall.

Suvir Saran, chef and owner of House of Celeste, says the industry will have to invent a new wheel. “Business as we know it may not be the same till next year. So only those with deep pockets will be able to survive this,” he says, adding, “Rents are an issue. A restaurant in Lado Sarai does not pay the same amount as we do in fancier places. We also have to look at training of new staff because the old staffers are no longer there. I have heard of partnerships being frayed because one person feels they should shut the restaurant while another feels that they should continue.”

Saran is only planning to open his restaurant in mid-July and is preparing for it with a limited takeaway menu and implementing social distancing norms. But he is hopeful that things will look up. “People have already been at home for about 80 days. We must go ahead with business by ensuring customer and employee safety,” he adds.

Rahul Kumar, MD of Red Mango, stresses the need for uniform guidelines from the government. He agrees footfalls will not be anywhere near pre-Covid days, but says reopening businesses and knowing what standard operating procedures are is important. “We will have to learn to live with coronavirus till a vaccine is found. Our workers want to return and we want to reopen. But we need support from the state government and landlords,” he says.

Kumar says most outlets demand a revenue-sharing model as the way forward. He says while landlords of standalone premises have been accommodating, malls have been unrelenting. “About 40% of outlets may not reopen or survive even if they reopen. It is not good for malls as well that so many brands will either shut shop or just leave. There could be weeks of discussions before brands eventually reopen due to negotiations with malls even if the state government allows reopening,” says Kumar.

Pushpa Bector, executive director of DLF Malls, says they are awaiting standard operating procedures (SOPs) from the state government and are in negotiations with brands on an individual basis. She says the company had strong relations with each tenant and shares their pain. ‘Caution, slow start’ will be the new normal for the next few days, she says, hoping most outlets will be open by June-end.

On concerns about footfall, Bector says premises such as Cyber Hub that follow strict hygiene protocols are better placed than others to implement hygiene and social distancing guidelines. At a time when office crowds will remain low, she is banking on the “organic following” of one of Delhi-NCR’s most popular hangout destinations that goes beyond just workforce of Cyber City.

Arjun Gehlot, director of Ambience Malls, says they are prepared to deal with the ‘new normal’ of social distancing and hygiene protocols. He says the mall has updated its app to keep track of real-time footfall, sending notifications on safety and cleanliness, booking of parking slots and online food ordering, and conversations on reopening plans with tenants had happened “on a positive note”. Most outlets, he insists, are prepared to reopen.

Capital problems

“It is great to see the wheels turning again and doing what we, in hospitality, do best,” read a post by Delhi restaurateur A D Singh as he announced home delivery and takeaway from his brands Olive Qutub, The Grammar Room and Guppy with “ever-clean kitchens and extra precautions”. Chef Jatin Mallick has been receiving calls from patrons of his restaurant, Tres, asking when they are reopening for celebrating birthdays, anniversaries and other occasions.

Mallick says rather than make long-term plans, he is focused on taking each day at a time. Explaining the emerging scenario – from border sealing and new guidelines to disruption in the supplies of ingredients and workforce and reduced capacity at eateries because of social distancing – Mallick says it is the time to unlearn and learn. While he envisions each dish as a sensory appeal, he has tweaked his menu and come up with simplistic dishes that retain the ethos of his ingredient-based cooking. Latest CommentTough times are going to be there as in next coming 2-3 months people are not going to rush to restaurants. Malls and property owners should look for a revised revenue share or 6 months no rental kin…Read MoreGarg SanjaySee All CommentsAdd comment With liquidity sucked out during the lockdown, some outlets have been sending out impassioned pleas to regular diners to buy vouchers they can redeem later. Daily updates are being sent about hygiene protocols, such as live feed from the kitchen noting the body temperature of kitchen and delivery persons.

Riyaaz Amlani, CEO of Impresario Entertainment & Hospitality – which runs outlets like Social and Smoke House Deli – says reopening with some of the present guidelines will further bleed the industry. He suggests the focus should be on hygiene and safety than on 50% occupancy. “Old business models, especially rents, are no longer relevant. We are looking at highly reduced revenues. If landlords do not support, we will have no option but to move on to new premises,” he says.

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