ANURAG KATRIAR
the impact
F&B industry, along with travel and tourism, are perhaps the two most impacted industries due to COVID-19 and the resultant lockdown. We are right now fighting for our mere survival. This is the worst time that the industry has ever witnessed. With global recession staring at us, even the immediate period post COVID doesn’t look too bright. We are watching with bated breath as the sordid corona story unfolds. The eventual degree of impact on us will largely depend on the duration of this lockdown and extent of damage/ mortality the coronavirus leaves behind in India.
the recovery plan
Before going to post-pandemic planning, I would urge the restaurateurs to kindly use this period to reimagine and retool their business models. Make it as lowrisk and as asset-light as possible. Post-pandemic recovery will neither be quick nor will it be easy. I advise everyone to keep patience, stick to the basics and be frugal with their money. Start planning for the working capital requirements now; you will need a lot of it to start business and survive for a few months post the pandemic. Adopt a low-risk model.
government support
The initial support that we sought from the government was more like an emergency life-support system to keep ourselves afloat. We had asked for deferment of all statutory dues, extension of dates for renewal of licenses, moratorium on term loans, unemployment pay cover for our employees, and extension of interest waiver on all debts. These steps were aimed at conserving our cash flows and deploying them towards more humane needs such as salaries to employees and payments to small suppliers. We have achieved some degree of success on this front with deferment of GST and license fee renewal in a few states like Maharashtra and Haryana. RBI also announced a moratorium on loans. However, if the lockdown continues for a longer period, these measures will not suffice and government will have to step in with some kind of social security cover for people working in the sector. In the long run, we will need a massive stimulus package from the government encompassing things like easy availability of interest-free and collateral-free loans, restoration of input tax credit on GST, tax holiday and much more.
Alternatives to keep restaurants floating
As long as the lockdown continues and our expenses remain as they are, there is no hope of survival for many in the trade unless they own their property. While home-delivery business is permitted currently, there is hardly any volume there to eke out a living and we don’t even know how long the permission will remain in place.
the damage
It is almost a 100 per cent erosion of revenue right now. Post resumption, I expect the business volume to be in the range of 30-50 per cent of normal for first three to six months, which may go up to 60-70 per cent after six months. In the best case scenario, it may take us a year to get back to the pre-COVID numbers. This will lead to a massive bloodbath in the interim.
how soon will the situation get back to normal?
In the immediate term, we will definitely see an impact on the Indian culinary revolution because the focus will be on mere survival. With complete capital erosion, investment into new ideas will also be subdued but the brighter side is that many chefs may be indulging in newer creative pursuits during the lockdown and they may unleash them sooner than later. However, consumer sentiments for stepping out to a crowded bar or spending top bucks at a swish restaurant will be muted. If the prediction of global recession immediately post COVID comes true, it will get even worse for us, with both corporate and individual spending going down.