Following the Prime Minister’s call for a 14-hour curfew in the country on Sunday, India went into a country-wide curfew to slow down movement of people as it tries to contain the global coronavirus pandemic that has infected over 320 people in the country.
The shutdown saw the country’s largest markets, busy bus stations, and roads turn empty starting early Sunday morning. According to the Confederation of All India Traders (CAIT), commercial markets employing 40 crore employees remained shut on Sunday.
Speaking of one thing at a time, we’ll start the day with the food services industry today. The regulatory body National Restaurants Association of India (NRAI) has expected losses of Rs 70,000-80,000 crore in 2020, given the ongoing conditions resulting in low demand and shutdown of operations.
Downfall in Demand for the Food Services Sector
While the NRAI advised its members to shut down their restaurants’ operations till March 31, nearly all the big chains except Domino’s Pizza and McDonalds have shut down their operations.
This was taken in light for the best health care measures for the employees of such restaurants.
However, despite everything that’s going on, the underlying truth here is that the times now are nothing but an existential crisis for these restaurant bodies.
The food services sector is pegged at about Rs 4.5 lakh crore, of which organised segment is around Rs 1.75 lakh crore. Due to low demands and shutdown of operations, NRAI is expecting losses of Rs 70,000-80,000 crore in 2020.
A leading restaurant chain promoter states that shall the crisis continue for over two months, the sector will see massive losses, permanent closures, wide-scale job cuts and a huge hit on the economy.
Dine-Ins and Tier-I Cities Largely Impacted
The food service sector in the country is widely divided into 3 sections:
- bulk dining
- in-restaurant dining
- value dining (includes quick-service restaurants and cloud kitchens)
Since most people have decided to stay at home and avoid social gathering, the first two segments have obviously been hit terribly.
However the 3rd segment, QSRs and cloud kitchen, which take food orders online, are the least affected of the lot.
From what we’ve learnt, Swiggy has seen around 25-30% fall in business. This drop is high in large cities as compared to tier-II towns, where there isn’t as much of a panic state.
In fact, Swiggy and Zomato were operational on Sunday, amidst the Janta Curfew but since the restaurants were closed, they relied on their own cloud kitchens.
Restaurateurs Expect the Govt to Provide Relief Parameters
The food sector in India attracts 7.3 million people for employment opportunities. The NRAI is predicting job losses of 20% shall the ongoing conditions prevail.
Whenever the situation begins to normalise, food and beverages (F&B) sector, particularly dine-in outlets, would be the last one to pick up since eating out is discretionary spending.
As per a restaurateur, nearly 70% of their costs are fixed and cannot be brought down. In such a scenario, they hope the government takes hold of the leash and steps in to provide some much needed relief to the sector.