COVID-19 impact: If lockdown extends, nearly 50% of the restaurants across the country may shut down

This is the time when the reality is hitting hard. We are well aware of how COVID-19 pandemic has affected the lives of people and businesses. From the travel industry and airlines to the food industry, all have been hit in the guts by the virus. Because of the nationwide lockdown in India, the restaurant (including online delivery) businesses in India have also come to a halt. If the situation remains the same and the lockdown extends beyond April 14, chances are that more than 50 per cent of the restaurants across the country would be shut down.

The National Restaurant Association of India (NRAI), in a statement, said that they are expecting 500000 members to lose up to INR 80000 crore in 2020. In India, almost 90 percent of restaurants function on lease, which means that nearly 15 to 20 percent of their income is spent on rentals.
Keeping this in mind, the association is now asking landowners, including malls, to waive off rentals and the Common Area Maintenance (CAM) fees for around 100 days (till June end). Big mall owners including the Forum, Lulu Group, Vegas and Lodha Group have voluntarily cancelled the rentals for some time.

According to NRAI, there are only a handful restaurant chains that have enough reserved cash to sustain the lockdown losses. Anurag Katriar, president of NRAI said, "We are looking at 50 per cent restaurants to shut down if this lasts till May. There are only 5-6 chains that have cash reserves to sustain more than a month. That's because restaurants work on about 15 per cent EBITDA (earnings before interest, taxes, depreciation, and amortization) margins."