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Coronavirus pandemic | 40% restaurants may not recover from the impact of COVID-19 lockdown: Report

Analysts say dining out and ordering in will take very long to recover after the lockdown ends as consumer spending will be low due to salary cuts and job losses

April 30, 2020 / 01:37 PM IST
Representation picture

Representation picture

Four out of every 10 restaurants and cloud kitchens will likely be permanently shuttered in the absence of a government bailout.  The impact will be severe in the industry that had a turnover of Rs 4 lakh crore and provided direct employment to over seven million, reported The Economic Times.

Adding to these grim estimates from the National Restaurant Association of India is the nearly 70 percent fall in the food delivery business. Analysts say dining out and ordering in will take very long to recover after the lockdown ends as consumer spending will be low, due to salary cuts and job losses.

Cloud kitchens, which operate only through online ordering, are also feeling the pain. Eat Fit, founded by Mukesh Bansal, is scouting for buyers as it put out 18 of its facilities up for sale, expecting orders over the year to significantly decline.

According to RedSeer Consulting's estimates, food delivery alone will take at least a year to come back to pre-lockdown levels, and even longer in smaller towns and cities. Similarly, the wallet share for dine-in restaurants will decrease sharply, as per 68 percent of respondents in a survey conducted by the firm.

However, some entrepreneurs are trying to reinvent business models by launching packaged foods, delivering DIY (do-it-yourself) meal kits, re-engineering menus, and even delivering groceries.

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ThickShake Factory, a Hyderabad-based business that scaled up to 120 outlets on the back of selling milkshakes, are pivoting to a multi-brand, delivery-only model, branching out to food and new beverages. They expect no footfall for the next five months.

Bigger brands are also looking for solutions to tackle the situation. Rebel Foods, which operates Faasos and Behrouz Biryani, and Impresario’s Smoke House Deli have introduced DIY meals targeting consumers who are cautious about ordering cooked food. A kit typically consists of all ingredients needed to cook a dish, measured out in exact proportion, and comes with cooking instructions. DIY meal kits have been a success in the US, with one business, Blue Apron, now a listed company.

Considering safety rules that have to be followed post-lockdown, Dineout and Zomato have begun conversations with restaurants to adopt contactless dining products. This is likely to raise the cost by at least 4-5 percent. And stricter social distancing norms may see dine-out occupancy fall by at least 20 percent.
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