Tepid F&B business in unlock 2.0 due to COVID-19 fear psychosis, say experts

The government has initiated unlock 2.0 as it intends to open up the economy albeit with appropriate safety measures so that businesses can continue to function. However, the question about how successful this can be remains. One sector that has been severely affected by the lockdown is the hospitality space, especially in a country like India where food is revered almost like a religion and people just cannot distance themselves from it.

People across the country definitely miss venturing out with near and dear ones to that favourite restaurant, pub or roadside eatery to indulge in some soul food. Although unlock 1.0 did come up with a standard operating procedure (SOP) for the food and beverage (F&B) industry, restaurants across India have opened up in a few cities for dine in customers. However, the initial demand has been tepid.

F&B outlets seem to be dealing with fear psychosis of COVID-19, which now is imaginably deeply rooted in the minds of the people, making them sceptical about venturing out to socialise over some good food.

Anurag Katriar, President of National Restaurant Association of India (NRAI) expressed concerns over the present scenario and said, "While there are too many unknown variables currently that have significant bearing in driving footfalls and demand to restaurants, safety and hygiene, the absence of a vaccine/antidote and reduced disposable income are crucial reasons for subdued demand."

Apart from fear in the minds of the people, restaurants are also dealing with operational issues that have risen due to the lockdown. From skilled labour shortage to increased prices of raw material, F&B business outlets are finding it hard to sustain.

According to Pradeep Shetty, Joint Honorary Secretary, Federation of Hotel and Restaurant Associations (FHRAI), business at restaurants across the industry has picked up by merely 10-30 percent of pre-COVID levels. "There are issues regarding manpower challenges, additional compliances, add-on costs of operating. Also, operational timings are restricted across the country with majority places being asked to close down by 7 pm which means the main biz dinner section is not happening and breakfast & lunch are always negligible. Quite a few restaurants who opened up have shut down owing to commercial viability to operate under the above circumstances," Shetty said.

Echoing the same sentiment, Zorawar Kalra, Founder of Massive Restaurants said, "The early closing time of restaurants is the biggest challenge currently because most of restaurants do 80 percent of their business during dinner and with the current restrictions, the dinner business is badly impacted. As a result, sales are extremely low and lunch sales barely contribute to overall revenue. So, we are hopeful that with unlock 3.0, normal times would be restored and restaurants can bounce back on their feet."

Home delivery of food has been allowed under unlock phases as announced by the government and restaurants have reportedly witnessed a rise in deliveries compared to pre-COVID levels. Zomato and Swiggy are also helping F&B establishments reach out to their customers easily. While people are unsure about getting out of their homes, they certainly seem to feel more comfortable ordering food. So does this mean that until a vaccine for COVID-19 is found, home delivery will be the better option than dine in? There seems to be a mixed response from the industry.

According to Katriar, despite SOPs being followed for both forms of services, dining out is decidedly safer from a product perspective. "The service for in-room dining is carried out under a controlled environment where all precautions are 'visible' to you, whereas for delivery, there is a packaging box, pick up delivery person who is largely on the move, so your food travels in a box which is being used for multiple orders/purposes and it journeys through security and elevators, before it finally reaches you."

However, Kalra said that the commercials and economics of restaurants are built with dine in sales and no amount of delivery will be able to ensure viability of a restaurant as revenues cannot be achieved by just delivery or take away. "Home delivery and take away is eating into the share of dine in till the time the fear of the psychosis exists, but it is definitely not a threat to the dine-in culture," he added.

Nonetheless, Abhishek Kalgude, owner of Bhoir Hotel, a chain of small scale restaurants in Thane, said that for restaurants across Mumbai and adjoining areas where a majority of COVID-19 cases are asymptomatic, it will be extremely difficult to operate even after complying with SOPs and new hygiene norms as the fear of transmission of the virus will be long lasting. "Also, to train the staff about the hygiene norms related to dine-in is a tough ask. It is thus safe for us to switch to home delivery of food and take away."

While home delivery of food is certainly winning the race amid the coronavirus pandemic, the industry feels that the dine-in culture will return to normalcy once a cure for COVID-19 is found as there seems to be no substitute to dine-in services.

"The number one priority for the restaurant industry is the safety of its consumers and colleagues. Dine in remains a challenge as it will take some time for consumer sentiment to change but hopeful that with time and appropriate safety measures employed at our restaurants, people will feel safe in venturing out and will start visiting restaurants like they used to before," Kalra explained.

Overall, sentiments across industries seem to be weak given the current economic conditions that are hurting the hospitality industry as well. What everyone across the world are awaiting for is a miraculous vaccine that can be mass produced for a speedy recovery of businesses.