No Reservations (and what to do about it) this COVID-19 pandemic

Paying salaries, extending loan repayments, waiving of taxes, are a few areas the food industry wants government aid in order to sustain
No Reservations (and what to do about it) this COVID-19 pandemic

This is truly an unprecedented situation, and it requires a response of equally epic proportions for us to get through it,” says Indian restaurant czar Zorawar Kalra, speaking of not only the world in general, but also specifically about the nightmare situation the restaurant industry finds itself in. This industry, which directly employs seven million people in the formal sector – to say nothing of those who in the informal sector, from roadside vendors to delivery boys – has been crippled by the lockdown measures that the central government has been forced to adopt in the face of the ongoing COVID-19 crisis.

While the government has already announced some economic relief measures, with others still on the drawing board, restaurants are especially vulnerable, given the razor thin profit margins the industry makes. “If immediate support is not provided to the industry, it will be the end of the road for a lot of people. This industry is extremely important as it is the second highest employer of human capital in India after agriculture, and contributes two per cent to India’s GDP,” says Kalra.

Bakshish Dean, who dons a chef’s toque as well as a business owner’s hat, says, “Countries elsewhere are creating relief and stimulus packages for the industries hardest hit by the virus, with hospitality naturally being a big one. But, India’s economy doesn’t historically operate like that, and restaurants and similar businesses haven’t been supported in previous crises.”

While hopeful that this time will be different, Dean also notes, “After talking to friends in the industry, and with a lot of factors still unknown, we figure it will take anywhere between 12-24 months for the market to recover, and the industry itself could see up to 50-60 per cent shrinkage if measures are not taken.”

Inderjeet Singh Banga, who owns Prankster and is the Gurugram chapter head of the National Restaurant Association of India, notes the industry is hugely dependant on cash flow based, saying, “With the revenues at a zero, a huge backlog of payments to vendors and rents as well as salaries has become a major issue.” He, along with others from the industry, like Kalra, Dean, and Vikrant Batra of Café Delhi Heights, believe that among the most crucial support the government can give at this point is help restaurants pay salaries for a fixed period following the lockdown to avoid the mass layoffs that will otherwise follow.

“If the government can provide some interest free loans to restaurant companies than we can continue to pay our employees’ salaries, which they in turn can use for their own household expenses and help get the economy moving again,” suggests Batra. From a business owner’s perspective, every restaurateur has a common refrain. “Most importantly, restoration of the GST input tax credit would help the industry weather the storm,” says Kalra.

Another big concern is the massive rents that restaurants have to pay to landlords despite not operating, apart from other monthly expenses. Banga wants the government to provide more clarity on the force majuer clause of contracts to avoid unnecessary litigations between market/ mall landlords and their tenant businesses.

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The New Indian Express
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