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Neat-Picking: Rents Are Killing Restaurants

Neat-Picking: Rents Are Killing Restaurants

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We’re starting a new column called Neat-Picking by editor Priyanko Sarkar that aims to distill and analyse the emerging stories from the beverage industry in India and the world. If you like what you’re reading consider sharing it with your friend and sharing your own thoughts in the comments below.

1,00,000,00,00,000

1 lakh crore. That’s the projected loss that the restaurant industry has faced during the lockdown in India that began on March 25, 2020. The industry employs seven lakh people and its total turnover is pegged at INR 4.2 lakh crore.

While almost every industry is fighting for survival under the onslaught of the coronavirus, the F&B industry has been hit particularly hard. Its very survival depends on people coming out and celebrating but that’s not likely to happen anytime soon. Exacerbating this is the fact that the government has not pushed any reforms to help the sector more than 100 days after imposing the lockdown. (Today is Day 103, in case you wanted a count).

This has led to many restaurants shuttering with no hope of coming back. Indeed, according to the National Restaurant Association of India (NRAI), almost 4 in every 10 restaurants will not survive the impact of coronavirus.

One of the biggest factors in restaurants deciding to close up is the rent that they need to shell out every month. In cities like Delhi and Mumbai, it is often when restaurants and bars are running to full capacity that the establishment can make profits. Rent takes up half and more of the fixed costs that restaurants have to pay.

The first hint we got that things aren’t going to have a happy ending was when Pooja Dhingra shut Le15 in Colaba. As she wrote in this piece, “I was celebrating Le15’s 10th anniversary and patting myself on the back for making it this far, but in the back of my mind, I wondered how the coronavirus would impact us. By 9 March, one of our investors told me to prepare for bleak times ahead, that the economy would be severely damaged.”

As the month progressed, I got a first-hand view of how landlords were bullying their restaurant tenants into submission. I’ve known Mohit Chotrani of The Sindhi Kitchen since we first met while working for Living Foodz and have spent countless hours in his kitchen looking at how he juggled his passion for Sindhi food with the reality of running a business. It was, therefore, shocking when his landlord demanded rent or forfeit his deposit despite knowing that the place had been shut since lockdown began. He even changed the locks as an intimidatory tactic.

Chotrani had no option but to cease operations and clear out of the space. While he contemplates doing weekend-only Sindhi food deliveries from his house, Chotrani knows that he isn’t going to open his kitchen anytime soon, if at all.

Just yesterday, social media was flooded with posts of Mirchi and Mime and Madeira and Mime shutting down over rental disagreements. Many patrons, including me, loved the vibe of these places and cheered the management that employed persons with special needs at these establishments. All of that has now been wiped away.

Just like Mumbai, Delhi has been facing the rental problem in the F&B industry as well. Places like Greater Kailash, Connaught Place and Khan Market are slowly seeing restaurants and bars shut one after another.

Khan Market has already lost Smoke House Deli, Café Turtle and Sidewok but that isn’t surprising. According to Cushman and Wakefield’s annual report on the world’s most expensive shopping streets, in 2019, Khan Market was the 20th most expensive in the world, with annual rents averaging INR 18,500 per square foot at current exchange rates. Other popular places aren’t too far behind.

Restaurants inside malls are facing uncertainty as well with all parties playing a wait and watch game at the moment. Some others have taken the initiative and tried to deal with landlords amicably for the time being – although how long this largesse will last is anyone’s guess.

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Given all this, it’s apparent that the industry needs clarity from more than one concerned party. Starting with the government, which should also offer sops to ensure that the F&B industry isn’t decimated, there has to be a pan-India policy that allows restaurants to breathe easy even as they pivot to new avenues such as home delivery and food kits.

Landlords need to show empathy and look at the bigger picture. They might have their own reasons for pushing tenants but at this juncture, actions matter and helping tenants to whatever extent possible will go a long way in ensuring that the industry doesn’t buckle under.

Restaurants themselves will need to pivot hard and generate sales from deliveries. Whether its adopting digital advertising or promoting themselves amongst their community, bars and restaurants will have to quickly find their groove.

Lastly, it is up to us as consumers to help out our favourite drinking and eating joints in whatever manner possible. Sign up for their delivery, donate directly to them or simply buy redeemable vouchers for the future, every small bit of action that we take directly impact’s the health of the industry.

Let’s ensure that every concerned stakeholder does their best to avoid more restaurants from shutting down. It’s the least we can do for all the good times we’ve celebrated with them.

PS: If you’re a beverage professional who wants to use our platform to have their voice heard, we’d love to discuss your ideas. Send us a DM on Instagram or email at gurgl.site@gmail.com and let’s get started. Perks include having your own author box and having your stories shared by us across social platforms.  

Loves to travel and taste drinks around the world

Favourite drink - Vietnamese Coffee
Favourite spirit - Turkish Raki

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