The restaurant industry comprises over 2% GDP of the country. It was also one of the first sectors to face the impact of the lockdown. Over 20 lakh people are expected to have become jobless too. With all these drastic dips and high-value numbers, how are the restaurateurs coping up and what plans do they have for the future. Zorawar Kalra, the founder of Massive Restaurants, that has some popular places like Farzi Cafe, Pa Pa Ya and Masala Library under its umbrella; shares his thoughts.
1. How has the two-month long lockdown treated you?
Lockdown has been tough for all of us. The only thing that you can find solace in, is the fact that the whole world is with you in it. But I think these two months have really allowed us to reflect, to pause to be able spend quality time with our families because this is something we have been able to do. My kids are 8 and 6 years old and I have never been able to spend more than 10 days together at my house with them. So this is one of those silver linings. This is a humble and very good positive outcome of this lockdown.
2. This time has been hard for the restaurant space with an estimated loss of over ₹1 lakh crore and has left 20 lakh people potentially jobless. What kind of a situation do you think we are headed towards?
So, you know, I think along with travel and aviation, the restaurant industry and the hospitality industry in general has been very badly hit. I am going to bore you with some numbers because our viewers need to understand. Our industry is actually very important. We contribute over 2% of the country’s GDP. We are the second largest employer in India employing 7.3 million people. That’s just directly employed and there are a lot more people that are going through ancillary businesses such as distributors, alcohol, entertainment companies, DJs so many different industries that are there. We’re also the number one form of entertainment for Indians by the way. Indians spend the highest percentage of the gross disposable income on eating out than aren’t any other form of entertainment. In fact, we are 40 times larger than Bollywood in size.
“We are 40 times larger than Bollywood in size”
But it’s all on standstill right now. A lot of restaurants shut down in India but started delivery. However, we haven’t even started that. But something very unique is about to happen. Now we are going to launch that service in a very big way across our restaurants be it Farzi Cafe, Pa Pa Ya, Made In Punjab. All of them will be delivering to you very soon. There will be a lot of innovations out of delivery, so I think people will enjoy this.
3. While home deliveries are on the rise, nothing can replace the joy of eating out or socialising with your friends. How are you going to provide safety measures to guests arriving at your restaurants?
Humans are very social at heart. I think it’s in our DNA. We are social beings and at a DNA level, we enjoy people’s company. We like to go out. Everything can go offline, you know, you can watch movies at home. You can buy clothes online. Everything can go offline but never restaurants and bars. You always want to want to go out. You always want to hang out with friends to celebrate your life’s special moments. So, I’m very very hopeful that everything is going to bounce back. I think it’s a temporary phase. Yes, the next six to eight months will be very tough but I see normalcy returning 12 to 14 months. The problem is the next 12 months are going to be very tough for the industry. A lot of people will not see the light at the end of the tunnel. Perhaps it will be the end of the road for a lot of them. Some estimates suggest that between 25 to 40 percent of restaurants are not even able to open post lockdown.
“Some estimates suggest that between 25 to 40 percent of restaurants will not be able even open post lockdown”
4. What do you think about delivery as an upcoming service?
Delivery as a medium of mitigating some of that sales loss is definitely smart however no amount of delivery can cover up for the losses. At best a restaurant will deliver 20-30 percent of its revenue. But If your sales are going to go down from 100 to 30 and your delivery is closer from 10 to 20, they’re still down 60. So just relying on delivery for these larger or experiential restaurants, no amount of delivery will be able to cover up for the loss in dining sales. However, definitely add value.
Also read: One In Four Restaurants In India May Never Reopen Again
In the post-covid world, whether it’s delivery or dynamic, the number one priority for all consumers will be safety and I think that’s our top priority as well. Only way to get people back into restaurants is to give them what I call stress free dining or nostalgia dining. And I want people to be able to go to restaurants the way they used to in December of 2019.
5. What are the precautions that you will take to ensure providing a safe dining-out experience?
I firmly believe that eating in a restaurant is actually safer than eating at home because we’re going to do all that work for you. We will do sanitisation every two hours. We will make sure we’re using ultraviolet lights to check the table before we turn it over. All our guests and employees will be checked for temperatures. With respect to our employees, we will make sure that tests are done. We will make sure that they are wearing protective gear, gloves and shields and going to emphasise on physical distancing, even in our kitchens.
The kitchen’s menu will come down but I think they will become more focussed. The quality will go up and the chef will probably focus on 25 dishes as opposed to 50. So there are gonna be a lot of positives.
6. Have you received any directive from the government in terms of what the capacity should be at the restaurant once you resume operations?
The government has been very forthcoming about giving guidelines. So we are awaiting those. But we have a fairly good idea of what they might be, studying what’s happening in the rest of the world. The guidelines by the WHO and the international bodies are being very closely watched by the government. We are expecting some norms, but I am just hoping that they are not too strict. If they are, a lot of restaurants will choose not to open up as the business might be viable based on the number of guests allowed. Any number below, 66 percent of capacity utilisation won’t yield the restaurant unprofitable in nature.
“The guidelines by the WHO and the international bodies are being very closely watched by the government. We are expecting some norms, but I am just hoping that they are not too strict”
Also read: This Will Be The Future Of Eating Out In India, Post Lockdown
7. Has there any relief that has been announced by the government for the hospitality sector?
Firstly, I would like to thank the government on this huge stimulus package that has been announced for our nation. I think a lot of the sector’s problems have been addressed, especially agriculture. However, somehow we did not find any mention and the hospitality sector was not given immediate relief. We are very hopeful that something is coming our way.
8. Do you think home deliveries are the way to go? If yes, what happens to the delivery aggregators and the commission. The margins have been hit badly. So has there been any negotiation on what commission will be given?
I think the rules of engagement will have to change so, you know, these aggregators are run by some very fine people. However, the commission’s being charged before the Covid era are no longer sustainable for growth. So people will get into re-negotiations. I think the aggregators will also understand that the overall number of restaurants that they represented will also come down because of the closures and also restaurants will have to spend a lot more ensuring food safety and hygiene, perhaps even changing suppliers and vendors. So the costs of production are going to go up and sales are going to come down.
Also read: Over 20 Lakh Indians May Lose Their Jobs In The Restaurant Industry Amid Coronavirus
So naturally the commission is already fairly high and has to come down. I’m assuming that the negotiations will work. I’m assuming that our friends in the aggregator business will understand that and realize that those earlier levels of commissions are simply unfathomable right now and will lead to heavy losses to the industry.
9. What happens about your international businesses and expansion plans? I believe you are present in over 7 countries? Are you still looking at opening more restaurants?
So we’re currently in several countries. We have three restaurants in Dubai, one in London and some in other parts of the world. Expansion is definitely going to be put on hold for now. I think Jack Ma stated very smartly, very aptly, a few days ago. I saw his report. He said that 2020 and 2021 are not years of expansion, or growth. It’s simply for survival. If you can survive, keep your neck of water, you will come out much stronger, once all this over.
“The years, 2020 and 2021, are not years of expansion, or growth. It’s simply for survival”
I think growth will have to wait for at least one year. Focus on the business, tighten things up, spend more time with your team, spend more time understanding consumer issues and feedback. I think that’s what should be done this year.
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First Published: June 01, 2020 3:00 PM