Hit by the coronavirus crisis and the nation-wide lockdown, the National Restaurant Association of India (NRAI) has urged landlords in the food and beverage (F&B) or restaurant industry to waive their rents and the common area maintenance charges till June or till the lockdown lasts.
In an open letter to the landlords in the food and beverage (F&B) business, the industry body representing over 5 lakh restaurants said that although the shutdown may remain for a month two, the industry will take many more months to revive.
“While this shutdown may continue for a month or two, we will take many more months to get back on our feet and we will not be able to sail through this period smoothly without your support,” said the letter.
NRAI also sought that the common area maintenance charge should be taken at 50 percent of the agreed rate for the six months after the lockdown ends. It also said that there should not be “minimum guaranteed rents for six months post that and instead work on a pure revenue share equivalent to 50 percent of the agreed terms up to a maximum of 10 percent of monthly revenues.”
Anurag Katriar, President, NRAI said: “This appeal is aimed at ensuring our mere survival during such extraordinarily troubled times. We aren’t trying to be profiteer at the expense of the landlords. As long-standing business partners of ours, we are hopeful that the landlords will extend their support in these times of unprecedented crisis.”
Acknowledging the recent relief measures by the government including the deferment of GST return filings, he said that the sector would require a larger stimulus package to revive the sector and support its over 70 lakh employees.
“We will need a much bigger stimulus package from the government whenever we get back to the stage of rebooting our business,” he added.
Earlier, the industry body had written to the Finance Minister seeking economic relief for the restaurant industry in view of the disruption caused by the coronavirus scare in the country.
Reacting to NRAI’s initiative and pro-active stance on the issue, leading players from the restaurant industry have come in support of the NRAI’s stance.
Vipul Hirani, Co-Founder, Crafters, said: “I am grateful to the NRAI for taking this step proactively on the matter. NRAI’s discussion with the Maharashtra State Excise has already borne fruit in terms of the relief provided with respect to the license fee payment. With regard to its discussions with the landlords, we hope that most of the landlords will be sensible when it comes to taking care of their tenants after the lockdown is over. I think that most brands will have to discuss with their landlords on a case by case basis as everyone will have their opinions and points to be considered. Also, not to forget the landlord’s opinion as even they will have their own incomes to take care of. In the coming few days, I expect the NRAI to reach out to the central government in order to come up with solutions with the landlords in order to save the restaurant industry and to ensure its smooth functioning post the COVID-19 effect. This discussion can be more effective if NRAI provides examples of what countries like the UK have done on the subject to the government.”
Sneh Jain, Co-Founder and Managing Director, The Baker’s Dozen, said: “The call made by NRAI to the landlords in the F&B and restaurant industry will be very helpful to the founders and the owners of many brands and will be beneficial for the industry as well. This will be a concrete step in helping navigate this crisis and will help in better functioning of the industry. This will also help owners of different brands in ensuring that the layoffs are delayed or avoided, as this will help them to utilize the same amount of money to pay the staff salaries and for vendor payments. This will also significantly help them to take care of their normal expenses without compromising on any aspect of the functioning.”
According to Gudiya Chadha, Owner and Proprietor, All Elements, “We need a waive-off for the next 2 months as all staff have gone to villages. People with low earnings won’t be spending on restaurants, and the hoarding of essentials food stock will further discourage people to eat out. We all will need to begin from the ground level and yet pay salaries, electricity and basic fix cost. We need the support from the government because in the current situation, restaurateurs can’t afford to pay both salaries and rent.”
Senil Shah, Founder of New York Burrito Company, believes that “restaurants will only start operating after May 15 and that also with 30-40 percent of sales and it may also take some time to gain customer’s confidence again. Honestly, the consumer’s confidence will come only once the medicine to the virus is found. 50 percent of the charges on common area maintenance are important in malls because this is how fewer people will walk in as they are the most crowded places. 10 percent revenue on rental places is a perfect way to go forward and 15 percent is fine for restaurants to come back in good shape.”
Subbaraju Penmatsa, Managing Director, Prost Brewpub, Bangalore and Hyderabad, said: “At this point, the entire country is facing a financial crisis and the steps taken by NRAI are highly appreciable. Most F&B brands will see a revenue downfall for 3-4 months because of the panic situation India is facing right now. If the landlords reduce the rents to 50% for the next six months or encourage a fixed amount that doesn’t distract the P&L of the brands, it will help the entire industry to sustain for a longer period of time. Reducing the common maintenance charge will help brands to have the better working capital to run the show. The Government of India should consider helping brands and landlords to overcome this tough phase amidst the lockdown till the time things are back to normal.”