The restaurant industry was one of those industries that were the hardest hit in both the two consecutive waves of the pandemic. According to a report by the National Restaurant Association of India (NRAI), the Indian food services industry has gone down by nearly 53 per cent and more than a quarter of the restaurants have been permanently closed. But the industry is hoping that consumer sentiments change and they will again start coming to restaurants. Along with this, the ramped-up pace of vaccination may lead to a recovery of about 85 per cent of pre-pandemic levels in FY22.
As per the report, in FY21, the restaurant industry declined by 53 per cent and was estimated to be worth ₹2,00,762 crore, compared to ₹4,23,624 crores in FY20. However, the industry body expects that in FY22, the sector will see significant resurgence and is expected to reach a size of ₹4,72,285 crores.
“In FY21, restaurants were not allowed to operate for an average of 100 days. Over 25 per cent of restaurants have been shuttered and more than 23 lakh people have lost their jobs, reprimanded Kabir Suri, President, NRAI, and added that employee counts are not expected to get back to pre-Covid levels in the near future.
The restaurant industry also saw a marked decrease in average revenue and profitability across formats due to Covid-induced restrictions. When compared to pre-Covid times, average revenue dropped by 46% after the first lockdown, and average profitability dropped by 88%.
The most noteworthy reduction was witnessed by fine-dining restaurants and pubs, bars, cafes and lounges (PBCL) segments compared to quick service restaurants and casual dining restaurants. However, post the second lockdown, industry players’ revenue saw a growth of 33 percent compared to the first lockdown, but is still far from getting back to pre-Covid levels.
In the meantime, with consumers switching to digital platforms, the share of deliveries and takeaways for restaurant players increased on average from 13 per cent during the pre-Covid times to 33 per cent during the post-Covid times. The report added that the average order value also rose by 43 percent during the pandemic.
Restaurants in the southern, western and northern regions were more harshly affected as compared to the eastern region. The sector faced the biggest force of the pandemic in New Delhi and Mumbai due to severe restrictions around seating capacity and operational hours.
The food services industry has started to show signs of recovery by the end of the second quarter of FY22, based on reduced cases, better consumer sentiment, and a higher pace of vaccination.
The industry body has also reiterated its demand for the provision of an input tax credit facility with a 12 per cent GST to help bring down fixed operating expenses and improve the bottom line. NRAI has also said that there is a need for a level-playing e-commerce policy to prevent aggregators from misusing their dominant position.