Covid-19 fear: Restaurants warn of likely shutdowns

Restaurateurs have warned of possible shutdowns of outlets and job losses while mall owners have offered “marketing support” to retailers even as malls are being shut down across cities on Covid-19 fear and restaurants report up to 40% fall in revenues.

Anurag Katriar, president of National Restaurant Association of India (NRAI), said the situation is extraordinary and could lead to possible shutdowns and job losses.

“We need to take some very immediate emergency decision to save the sector from complete ruin,” he told ET. “The only way this can happen is by reducing fixed operating expenses significantly in the immediate term till consumption in the sector bounces back.”

NRAI, which represents more than 500,000 restaurants, had on Friday said it will seek interim relief on rents, energy costs, overall credit limits and taxation, as travel curbs and lockdowns have resulted in at least 35% drop in dining-in. In a 2019 report, the association had said the Indian restaurant industry employed over 7.3 million people in 2018-19, and that the organised food service sector contributed Rs 18,000 crore in taxes.

Mall operators, too, are facing the brunt of the novel coronavirus scare as some states have ordered shut down of malls and cinema halls while others have advised people not to visit crowded places such as malls to limit the spread of the deadly virus.

“The order of closure of malls and multiplexes across many top cities has caused the organised retail scene to come to a grinding halt,” said Anuj Kejriwal, managing director of retail advisory Anarock Retail. “Even short-term closures will have significant financial implications.”

An estimate by Anarock said the top eight cities of India have 126 malls spread over 61 million square feet with over 100 malls having multiplexes attached.

DLF, which operates a chain of premium malls and entertainment complexes including Mall of India, Promenade, City Centre and CyberHub in Delhi-NCR, has invited retailers in its malls to partner in “mall marketing support”.

“In the current unsettling times, we understand the situation and are here to support your brand with any marketing pertaining support required by the brand in the form of social media platforms, emailers or any particular offer you wish to push to your customers via the mall marketing,” the company said in an advisory sent to tenants on Saturday.

“If you wish to do any kind of display, kindly let us know so that we can work out a feasible plan for you to come out of the store and showcase the brand,” it said. “This, however, will be subject to space availability.”

Katriar of NRAI said the Covid-19 scared has severely impacted the foods and beverages industry, cutting across various segments of business due to closure of malls and drastic drop in footfalls.

“With a total embargo on in-bound tourism, it is expected to get even worse,” he said. “The business model has a very high proportion of fixed operating expenses in the form of rentals, manpower and energy.”

The number of Covid-19 cases surged to over 100 in India as on Sunday.

Analysts said stocks of multiplexes, entertainment zones, and restaurant chains will see significant headwinds with the containment lockdown further aggravated by the postponement of the Indian Premier League Twenty20 tournament.

Shares of multiplex operators PVR and Inox Leisure and amusement parks chain Wonderla Holidays fell about 20% on average last week.

“All retailers are at risk in the near term, specially multiplexes (and) amusement parks,” said Abneesh Roy, senior vice president at Edelweiss Institutional Equities.

At the same time, Hindustan Unilever, Godrej Consumer and Dabur would benefit because of higher demand of sanitisers, soaps, chyawanprash and cough syrups and higher margins due to fall in crude related direct and indirect raw materials, Roy said.

Meanwhile, advertising within the restaurant sector is focusing only on hygiene announcements such as heightened sanitisation within stores, supply chains and credit cards machines.

McDonald’s and Social are among restaurant chains that have put out seeking to assure consumers.

A statement by Westlife Development subsidiary Hardcastle Restaurants Put Ltd (HRPL), which operates some 315 McDonald’s restaurants in west and south India, said it is keeping a close check on its supply chain “with stringent scanning methods for all suppliers and ensuring that they have food safety management systems at their plants”.

Source:- Economic Times

Comments

0