On November 8, Prime Minister Narendra Modi announced the replacement of 86 per cent of India’s cash by withdrawing large currency notes – Rs 500 and Rs 1,000 – as a part of legal tender in India. Demonetization was done to cut corruption, counterfeit currency, terrorism and move towards a cashless economy.
Even as consumers across India have lauded the Government’s move despite short-term inconveniences, the foodservice industry has been badly hit.
In an exclusive interview with Indiaretailing, India Head of Business, Barcelos, Rohit Malhotra said, “Markets like Gurugram have not been impacted much by demonetization – overall impact on the business is just 5-7 per cent – but markets like Hauz Khas and Khan Market, where more then 40 per cent sales are based on cash transactions, have seen the major impact. Only 10 per cent business has converted to cashless transactions. The remaining 30 per cent is simply loss.”
He however, said that demonetization was a good move, since it will help curb inexperienced restaurateurs opening eateries only to convert black money into white. The future, Malhotra says, seems bright since after three or four months, the currency flow will improve.
“Meanwhile, to encourage people towards cashless economy, we have started accepted payments through cheques and we have also tied up with various e-wallets including Paytm,” he added.
Other Industry Trends
The foodservice industry has observed many other changes in the past few years, a big change being that eating out has become popular. People are spending more money in restaurants since incomes of middle class and nuclear families have increased.
“Eating out more has resulted in 25 per cent growth of the industry in the past three years and there are clear signals that it will continue growing in next three-four years at the same ratio,” said Malhotra.
He added that at present, the foodservice industry is growing at a very fast pace. However, after demonetization, new restaurants might not open but there is sure to be a growth in terms of consumers.
Currently, places catering to youngsters are doing well, including coffee shops, pubs and casual dining restaurants. Also there is quite a growth in the family restaurant as well. More than food, people these days are looking for experiences.
“In last 10-15 years, many coffee brands have set up shop in India and they have been doing fairly well. New pubs and eating out joints have also opened. I can safely say that there is a lot of growth in this industry,” he concluded.