An attempt to contain the novel coronavirus has brought all national economies to a near standstill. As the F&B industry finds itself in the eye of the storm, hospitality associations and aggregators have stepped in to alleviate the situation which is being deemed as the worst economic downturn since the Great Depression, if not already at par.
An open letter to the landlords
In response to the corona pandemic, the National Restaurant Association of India (NRAI) had advised all its member restaurants to shut down. Due to the ongoing lock-down and the consequent drop in revenues, the survival of most of these restaurants is at stake. In an open letter to the landlords and mall owners in the F & B business, the industry body has appealed that rentals and common area maintenance (CAM) be waived off till the month of June.
To add to the loss of revenue, are the high operational costs (OPEX) that the eateries operate at. To achieve the combined objective of winning this battle for survival and attaining sustainability in its aftermath requires a more long term solution. As the industry will take a while to recover from the jolt of the outbreak, the NRAI has suggested working on a moderate revenue share model for six months following the initial three month waiver period. This is to ensure sustainability while businesses slowly gain lost ground, once the lock-down is lifted.
“Now with the prospect of zero revenues staring at us for a substantial period of time, our fight is a battle to retain our existence as commercial entities,” NRAI president Anurag Katriar said in the letter.
Rollback of the Maharashtra Government’s hike on excise duty
One of the major shocks for the hospitality industry came when the Maharashtra Government rolled out a 15% hike in the renewal of excise license for the year 2020-21. For a sector that has been one of the largest contributors to India’s GDP, such a notice from the State shows nothing short of apathy. Despite their plight, the food businesses have been at the forefront of helping the needy—opening up their kitchens for preparing meals for the underprivileged and serving up to one lakh meals a day.
With most small and medium businesses having their backs against the wall, the F&B industry is in dire need of support from the government. All major Trade Bodies in the food and hospitality sector—the Hotel and Restaurant Association of Western India (HRAWI), National Restaurant Association of India (NRAI) and Indian Hotel and Restaurant Association (AHAR)—have urged for the withdrawal of the State Government’s order. In a letter to Uddhav Thackeray, the CM of Maharashtra, they have appealed for:
- A reduction in fee, in addition to the 15% hike withdrawal on Bar license renewal.
- Allowance to pay fee in installments, on a pro-rata basis for the next year
- Withdrawal of expectation from the restaurant businesses to pay any fee under current circumstances, where lock-down is extended
Down but not out: The entire food fraternity in solidarity
In a letter to the Finance Minister Nirmala Sitharaman, NRAI has appealed for two-fold action from the government, involving the deferment of all statutory dues, for a period of twelve months,
- On the Central Level - GST, Custom duties & advance tax payments
- On the State Level - VAT, State excise & liquor license renewal
With all major restaurant businesses pulling down shutters, unemployment and layoffs are staring the industry in the face. Predicting job losses for an estimated 1.5 million in the food sector, NRAI has impelled the government for the provision of unemployment pay cover. They have urged the PM to provide relief to the worst hit employees through welfare schemes such as Employee State Insurance scheme(ESIC) or the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
Major FSAs (Food Service Aggregators) have joined hands with the trade bodies to support them in their endeavours.
- Zomato has initiated its Zomato Gold Support Fund. As a part of the initiative, all proceeds from the purchase or renewal of a Zomato Gold subscription in the month of April 2020 will go towards the support of disadvantaged restaurant employees. As of April 18th 2020, a sum of ₹2 cr has been raised. Zomato has disbursed its first batch of funds facilitating relief for almost 900 workers across 105 restaurants.
- Dine-out has started the #ReliefForRestaurants petition on Change.org to champion the appeals made by the NRAI to the Government of India and the Ministry of Finance- for the deferment of statutory dues and payment of utility bills, waiver of rental dues, temporary freezing of all EMI payments and interest, and unemployment pay cover for employees on the lowest end of the spectrum.
While the restaurant industry apprehends zero revenues amidst the COVID19 outbreak, Dineout has launched ‘Restaurant Vouchers’ to help them weather the storm. These can be purchased now via the Dineout app or on www.supportrestaurants.in , and customers can redeem them at any of Dine-out’s 20,000+ partner restaurants in the six months post the lock-down period.The funds that are raised will be transferred to the restaurants at no additional cost and provide the business with the cash critical for their survival under the current circumstances.
The entire online food community has come forward to stand in solidarity with the restaurant businesses as they grapple with the dire consequences of this unprecedented health crisis. Although the road ahead is long and winding, with support from the government and hospitality associations, the F & B industry will surely get back on its feet, slowly but steadily.