The letter suggests certain immediate measures in favour of the restaurant fraternity

The restaurant industry with an annual turnover of approximately Rs 4.25 lakh crore and providing direct employment to over seven million Indians is currently in a very precarious situation due to the restrictions imposed on account of the third wave of the pandemic. The sector continues to fight a grim battle for its survival. 

Just when it seemed that the industry was recovering from the travails of the first two waves of the pandemic and bracing for some normalcy, this third wave of Covid19 has come as a rude shock. For an industry already burdened with massive losses of the last year, this has come as a body blow that many will not be able to withstand unless actively supported by all stakeholders. A large part of the industry managed to somehow survive the first two waves of lockdown and sailed through due to collective efforts of all stakeholders and similar efforts are once again required to prevent fresh rounds of business mortalities and job losses in the sector.

Therefore, as a responsible industry body, NRAI has written individually to all prominent mall owners and an open letter to other landlords suggesting certain immediate measures to prevent instant death of businesses, which leave behind a trail of unfulfilled dreams, job losses and lastly, massive unwanted litigation. Uncertainties around the virus and signs of low consumer sentiments are very visible and that doesn’t augur well for anyone, be it property owners or business operators.

NRAI realises this is going to be a big challenge and on behalf of the restaurant fraternity, NRAI assures all stakeholders that the Association is committed to walk together with them through these challenging times with all resources at our command and we seek a similar assurance from all stakeholders. NRAI received several representations from its Members requesting our intervention in resolving this critical issue. Therefore, as a responsible Industry body, NRAI has initiated dialogue with all Mall Owners and Landlords on behalf of the Restaurant Fraternity. Notwithstanding the individual commercial terms between individual landlords and tenants, we suggest following broad guidelines to the Landlords in order to resolve this issue:

1. Complete waiver of rentals and CAM in case F&B businesses are completely shut for dine-in.

2. Pure revenue share for the period when restricted operations are imposed. Restricted operations shall mean things like delivery only or limited hours of operations or limited capacity utilisation etc.

3. No minimum guaranteed rents for three months post that and instead work on a pure revenue share model.

4. For stores with a longer past occupancy record, this revenue share may alternatively be linked to their sale as a percentage to their past period sale. 

5. CAM during this period of restrictions to be maintained at 50 per cent of the agreed rate.

“Firstly, I would like to take this opportunity to thank all our Landlords & Mall Owners who were very generous and made a significant contribution to our survival through the troubled times of the first two waves of the pandemic. I profusely thank them for their generosity. Unfortunately, the ongoing third wave has brought us to exactly where we were the same time last year. To aggravate the problem, businesses have much depleted resources now, making the situation grimmer. We need support from all stakeholders once again to survive and we are sure that we will get their support as always. While we are not aware how long this third wave and consequent restrictions (occupancy/timing restrictions, curfew) will remain in place, we are certain that the business will take some time to normalise once we are out of the grip of this third wave,” said Kabir Suri, President, NRAI. 

He went on to add, “While the first two waves of pandemic crippled us badly and resource crunch forced many restaurants to shut down, we see a larger concern with this third wave as it may actually hurt consumer sentiments in the near term which is already visible. With high fixed overheads, expected restrictions on operating hours, revised social distancing norms and reduced capacity utilisation, any drop in consumer sentiments can be catastrophic for the sector. We surely have a grim battle at hand and the most potent tool to fight this is to redefine our relationship and business model. If the sector survives, we all will survive and perhaps hope to prosper later. I am fairly certain that as long-standing business partners of ours, the landlords and Mall Owners will once again extend their support in these times of unprecedented crisis”.

NRAI will soon initiate similar proactive dialogues with other stakeholders in the food service space such as aggregators, various state governments and the Union Government.