Food delivery picks up but 40% percent restaurants face closure, says Zomato

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Indians are shaking off the coronavirus fear to order in but are still not taking the risk of going out to eat and that could put 40 percent of restaurants out of business, online food delivery startup Zomato said on August 19.

“Affluent” residential areas were bringing in 50 percent more business compared to commercial areas, the Gurugram-based unicorn said in its State of the Restaurant Industry in India report.

Only 17 percent of restaurants were functional, the report said. Of the remaining 83 percent, 10 percent had shutdown and another 30 percent, too, could go out of business, it said, which is not a surprise as hospitality business is among the sectors that have taken the hardest knock because of the outbreak.

The report estimates that since the beginning of the lockdown on March 25, Indians may have ordered around 20 crore times from restaurants. Zomato fulfilled around 7 crore of these orders.

There has been a shift in the way restaurants do business. Eateries that were once focussed on dining experience have all pivoted to the delivery option to adapt to the new normal forced by the outbreak.

Around 70 percent of the restaurants are open for deliveries. Some five percent of these were not taking delivery orders before the outbreak.

The report also points to the fact that food ordering culture is taking root.

The Sequoia Capital-backed company said one in five customers from metropolitan cities used their apps in smaller towns since the lockdown started. Of these, one-third had started ordering at their new places as well.

With offices shut or switching to work from home, hundreds of thousands of office-goers chose to go back to their home towns as the virus spread. They have since begun to return as restrictions are eased in a phased manner.

Zomato is bullish on the space and expects a recovery to pre-Covid levels within two to three months.

Dining out, however, has collapsed, with restaurants operating at around 8 percent of their pre-Covid capacity. Even in cities where restrictions have been eased, 17 percent of restaurants are open but only a handful of diners are coming in.

The report says while 9 percent of restaurants are open in Chennai, the lowest among the metros, 29 percent are open in Kolkata, the highest. The rest are in the 12-20 percent range.

Chennai has been a corona hotspot and is still reporting more than 1,000 cases a day.

Strong recovery trends were seen in New Zealand, UAE and Portugal, which indicated that once infections come down, recovery will speed up, Zomato, which operates in these countries, said.