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Omicron effect: Restaurants brace up for a hit on business during New Year’s Eve

Several states, including Maharashtra, Delhi, and Haryana, have imposed night curfews and restrictions on large gatherings. Restaurants were expecting a bumper month on the back of Christmas and New Year celebrations.

December 27, 2021 / 02:47 PM IST
Representative Image

Representative Image

Restaurants are back to drawing boards as they expect a hit on business with the recent restrictions after the emergence of Omicron. Restaurant companies, such as Speciality Restaurants, Charcoal Concepts, and Indigo Hospitality, are bracing up for the impact, and are focusing yet again on delivery services.

Delhi has imposed a night curfew -- from 11 PM to 5 AM -- from December 27 onwards. Maharashtra has already imposed the curfew from 9 PM to 6 AM from December 24.

The Maharashtra government has also asked restaurants, gyms, spas, and cinema halls to operate only at 50 percent capacity. Karnataka, too, has announced night curfews for the next 10 days. Madhya Pradesh, Haryana, and Uttar Pradesh are some other states that have imposed night restrictions.

Since these curbs will hurt New Year celebrations, restaurants are expecting muted business.

December best month, traditionally

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“December is normally the best month for the restaurant business but the restrictions will have a very negative impact this time,” said Sagar Daryani, co-founder and CEO, Wow! Momo, and vice president, National Restaurant Association of India (NRAI).

Restaurants, one of the worst-hit by the pandemic, were hoping for bumper business this December as the second wave of COVID-19 waned and governments lifted restrictions on movement.

“We were expecting a bounce-back and better business than in December 2019, when the situation was normal. However, we might not be able to get there now,” added Daryani.

Restaurants had reported a quick pickup in footfalls in October and November as active and new COVID cases subsided and several state governments eased curbs.

According to a recent report by the Retailers Association of India, quick-service restaurants (QSRs) witnessed 29 percent sales growth in November 2021, compared to the 5 percent during the same period in 2019 (pre-pandemic). Fine-dining restaurants, too, were near the pre-pandemic numbers in November 2021 and were hoping to grow further in December.

“We not only recovered but witnessed some growth as well. This month would have been fantastic, but with restrictions, the numbers will stagnate again,” said Anjan Chatterjee, chairman, and managing director, Speciality Restaurants.

How restaurants are gearing up

Restaurateurs, however, are hopeful that, given the robust sentiments, consumers would fall back to deliveries in the wake of government curbs. They are, hence, gearing up for such a scenario.

“We are doing complete ground planning. We are bringing down our preparation time so that more orders can be serviced, deploying more people and aggregators, and also utilising our vehicles for deliveries,” said Chatterjee.

According to industry estimates, the sales split between delivery and dine-in had stabilised at 50:50 levels over the last two months, instead of 70:30 during the May-June period.

Restaurants are also prepping up physical outlets for a third wave.

“We want to ensure a safe zone for our guests and teams, and have implemented screens between tables, UV sanitisers for all crockery and cutlery, and are following government guidelines to provide a comfortable and safe dining experience at all our units across India,” said Reetesh Shukla, Business Head, Charcoal Concepts.

COVID impact

A recent report by Care Ratings pegged the overall market size of the food services industry to have declined by 40-50 percent since the onset of the pandemic in March 2020 and subsequent imposition of restrictions in the country.

The food services industry comprises restaurants in hotels, independent as well as fine dining and casual dining restaurants, QSRs, pubs, bars, lounges, roadside eateries, dhabas, and cafes. The industry registered a CAGR of 7 percent and grew from Rs 3 lakh crore in FY15 to Rs 4.2 lakh crore in FY20, said market sources.

Mumbai restaurants hit hard

Restaurants in Mumbai have been particularly hit by the restrictions as the Brihanmumbai Municipal Corporation (BMC) eased curbs only in August, and that, too, only for limited hours and capacity. The metropolitan regions of Delhi and Mumbai combined, account for 40-60 percent of revenues of most major restaurant players.

According to the NRAI, the market size of the organised food service sector in Greater Mumbai (which includes Mumbai, Kalyan-Dombivli, Mira-Bhayandar, Thane, Vasai-Virar, and Navi Mumbai) was estimated to be Rs 32,785 crore in 2018-19. The association pegs the number of organised and unorganised restaurants in the region at 87,650.

A return to earlier restrictions might push back the industry to the brink again.
Devika Singh
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