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Faced with mass layoffs, restaurant body writes to Nirmala Sitharaman seeking bailout

Speaking to Express, NRAI President Anurag Katriar said the food and beverages industry operates with a very high proportion of fixed operating expenses, which makes businesses very high-risk

Published: 23rd March 2020 05:49 PM  |   Last Updated: 23rd March 2020 05:49 PM   |  A+A-

A closure notice is put up on the main gate of a restaurant in wake of the deadly coronavirus pandemic. (Photo | PTI)

Express News Service

NEW DELHI: Rapid shutdowns in cities to stem the infectious coronavirus have thrown eateries across the country into a sudden and complete disarray. Revenues have dried up abruptly with many restaurants staring at closures, threatening mass layoffs in the sector employing more than seven million people.

Given the enormity of the problem, the National Restaurants Association of India has shot off a letter to the Finance Ministry seeking an immediate financial bailout package.

“While we all hope for a quick normalisation of the situation, we would like to state that the food service industry, which was already battling through tough times for the past couple of years, is now facing a challenge of mere survival,” NRAI president Anurag Katriar stated in the letter.

The apex body, which represents the interests of over five lakh restaurants, proposed deferment of all statutory dues at the central and state level, pay cover for the marginal workers, moratorium on bank loans, restoration of input tax credit on GST and waiving of utility dues such as electricity, water, gas etc.

Individual owners are also seeking concession on rentals and deadline extension for licence renewal to keep their businesses afloat. While footfalls were down since February, the mandated closure in select cities only confirms how it all crashed down with breathtaking speed for the Rs 4 lakh crore restaurant industry, say industry executives.

Speaking to Express, Katriar explained that the food and beverages industry operates with a very high proportion of fixed operating expenses, which makes businesses very high-risk even in case of moderate revenue fluctuations. “For a restaurant, you have to have certainty in order to operate. It doesn't matter if you're a big chain or a small corner diner, all are seeing the impact immediately.”

In such a scenario, take-out and delivery have been a band-aid for big chains. While well-funded and insured restaurant groups are feeling an urgent obligation to carry on for the sake of their hundreds of workers and their families, small diners who are unable to absorb these costs are asking employees to stay home and are considering pay cuts for the time being.

Vikram Dewan, who runs the cloud-kitchen Fitgrub in Delhi, said sales have plunged by nearly 50 per cent since the first week of March. “From March 23, we have suspended our operations temporarily as most of our staff aren't able to report to work because of the lockdown. If things don’t improve, we will have to look at ways to cut costs.”

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