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Virus slowdown threatens India's restaurants with bitter aftertaste

EconomyApr 07, 2020 06:40AM ET
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2/2 © Reuters. Outbreak of coronavirus disease (COVID-19) in in Mumbai 2/2

By Aftab Ahmed and Abhirup Roy

NEW DELHI/MUMBAI (Reuters) - After growing tenfold in the last decade, India's restaurant sector fears for the future when a nationwide lockdown is eventually lifted, with customer numbers and spending expected to plunge in the fallout from the coronavirus pandemic.

India, which has recorded more than 4,000 coronavirus cases and over 100 deaths, has been under a three-week lockdown since March 25, and officials say that may be extended in some hotspots.

Even when the situation normalizes however, restaurateurs fear that business will not bounce back in a hurry and people will socialize less in crowded restaurants.

"From the people's perspective they're not going to have the money to spend," said Ashish Kothare, a veteran restaurateur in India's IT hub Bangalore.

"People will start saving for a rainy day and fear psychosis will set in," said Kothare, whose plans to start a delivery-only kitchen have been shelved for now because of the lockdown.

India's $50 billion restaurant industry is already set to lose an estimated $9 billion this year, and that could force a quarter of the nation's restaurants to shut down, according to the National Restaurant Association of India (NRAI).

A.D. Singh, founder of Olive Group of Restaurants, fears reduced customer numbers due to greater social distancing will sound a death knell for many restaurants in cities such as Mumbai and New Delhi, where rents are sky-high.

"We will have to shut at least four or five restaurants," said Singh, who operates dozens across India.

While the food services industry across the globe is expected take a hit, the situation in India is especially grim given the large percentage of people employed in the informal economy who have no safety net or alternate income.

Restaurateurs say they are now looking to cut employment, shelve expansion plans and rework their business models to be able to cope, as sharp salary and job cuts in other sectors may set the customers' incomes back by years.

Reuters spoke to at least 10 restaurant operators, who were either planning to shut some of their businesses or shelving plans to open new ones.

The NRAI estimates more than 1.5 million jobs will be lost in the restaurant sector amid the fallout.

Anurag Katriar, who is president of the NRAI and runs popular outlets like Indigo Deli, said that after April he "might not be able to pay salaries at all".

Virus slowdown threatens India's restaurants with bitter aftertaste

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