Coronavirus pandemic| Restaurants closed; at least 70,000 face the prospect of job loss, salary cuts

From March 17 onwards, a host of restaurants in Mumbai and Delhi started sending out mailers to customers saying they will be temporarily closed due to the novel coronavirus (COVID-19) pandemic.

Simultaneously, a similar message was passed on to staff: “Expect a pay cut.”

To curtail the spread of COVID-19, the National Restaurant Association of India (NRAI) had issued an advisory earlier this week asking eateries to shut down. There have been 180 reported positive COVID-19 cases in India.

The move could directly impact the 7.3 million people (according to the NRAI Food Services Report 2019) employed across restaurants in India. Here, about 3.7 million people are employed by the organised sector, with the rest by the unorganised sector.

Initial estimates suggest that the around 70,000-80,000 employees could be impacted, which could be in the form of salary cuts or/and job cuts for staff.

At a Udipi food chain in Mumbai, which is unusually empty for a weekday, the manager looks irritated by the fact that out of the five waiters, only two have turned up. Two of the kitchen staff are absent too.

“We are barely doing any business. How can I afford to pay salaries? Anyway, the workers have also started staying away. Certainty, I will have to cut their pay and let go off a few,” said the manager.

Eating out has become a taboo with the coronavirus (COVID-19) outbreak. Patrons are worried about catching an infection by dining out while the restaurant staff themselves are opting to stay away.

On an immediate basis, a 15-day pay cut could be implemented for the shop-floor workers as well as management teams.

Human resource personnel told Moneycontrol that hospitality/restaurant business owners have already started initiating staff rationalisation plans. Higher the number of days that restaurants remain shut, the worse it could get.

“Jobs will be cut across all levels, but kitchen and ground staff would be the worst hit,” said the head of recruitment at a mid-size HR firm.

Anurag Katriar, President, National Restaurant Association of India (NRAI), told Moneycontrol that there will certainly be pay cuts in the near future.

“The nature of our industry is such that fixed expenses are fairly high and hence I cannot rule out the possibility of job losses right now. We have issued an advisory to restaurants to shut temporarily in lieu of employee safety. Lakhs of employees travel by public transport everyday, endangering their lives and also that of customers,” Katriar added.

However, he added that employees staying home also come with challenges of how to keep companies (restaurants) afloat.

Katriar said he is aware about industry players asking staff to either opt for paid leave or go on leave without pay. “Salary cuts are happening. A larger salary cut impact will be at the corporate offices since this is where employees are paid high compensation,” he added.

In this industry, the organised segment comprises standalone restaurants as well as food chains. The standalone market has a share of 75 percent with an estimated size of Rs 1.10 lakh crore in FY19.

NRAI Food Services Report 2019 pegged the industry market size at Rs 4.24 lakh crore in FY19. This is projected to touch Rs 5.99 lakh crore by FY23.

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