Coronavirus impact: What the future holds for battered restaurant industry

The restaurant industry is one of the hardest hit by coronavirus-induced lockdown in the country. Massive layoffs are just the tip of the iceberg. Getting people back into restaurants and regaining their confidence once the lockdown is over is likely to be the next big hurdle in reviving the industry. The fear of COVID-19 among customers and a hesitation to spend might prove to be a death knell for eateries.  Dining out is a social experience and with social distancing norms in place, industry insiders are mulling over how to get past this obstacle. As of now, the Restaurant Association is looking for urgent policy and liquidity help from the government.

Corona effect

The restaurant industry employs around 7.3 million people in the country, according a 2019 report of the National Restaurant Association of India. When lockdown began on March 24, all economic activity wound up but many restaurants had already started seeing lessening footfalls. The sector had been reeling under problems of its own even before the pandemic struck. The current GST regime added to the cost of running a restaurant. Currently, the industry is looking at losses of around Rs 1 lakh crore during the lockdown.

Battle for survival

Restaurants have never had it easy even before the pandemic. Real estate costs are high and now the current crisis has only worsened the situation for them. It is estimated that post lockdown, four out of 10 restaurants might close down for good. Consumers would be unwilling to pay considering that spending power will shrink. The effects of the battle to survive have already started taking shape. Bengaluru-based Swiggy is laying off 1,100 employees. Zomato has decided to cut strength by 13 per cent and cut up to 50 per cent salary of its employees with higher pay scale. CEO Deepinder Goyal said that the restaurant industry itself could shrink by 25 to 40 per cent in next 6 to 12 months. Not only the restaurant business, the future of cloud kitchens is also in doubt. Swiggy has already started shutting down cloud kitchens temporarily or permanently. The National Restaurant Association of India has warned that even 10-20 per cent job losses among its 7.3 million employees in restaurants across the country would mean up to 15 lakh unemployed.

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Food delivery

Most of the food business has now shrunk to home delivery services but is that enough to keep the industry afloat? There has been a 70 per cent fall in food delivery business itself. Food delivery apps had led to a boom in cloud kitchen services but those too are feeling the heat. Cloud Kitchens like Eat Fit are already looking for buyers. Experts believe food delivery business will take at least a year to get back to pre-lockdown levels, if not longer.

 

The future of dining

Restaurateurs have understood that the need of the hour is to innovate and be flexible about their offerings. Many restaurant brands have transformed into food delivery models. Bigger brands like Impresario's Smoke House Deli have introduced DIY meal kits. Ready-to-cook options are becoming popular during these times. Some fast food chains have also resorted to delivering groceries in a bid to survive during the lockdown.

Even as businesses in India are opening up, restaurants remain shut to the despair of owners who would take a long time to regain the confidence of customers. Human interaction remains at the centre of the restaurant business and taking it out of the equation would have adverse effects on the industry. Hygiene and contactless deliveries are already in place. Restaurants would further need to incorporate innovative ways of social distancing in the dine-in culture.

Infographic: How coronavirus has damaged job scene in India