Restaurants keen for a revenue-share model in light of ongoing pandemic

In light of the rising COVID-19 cases in India due to the new Omicron variant, restaurants are urging mall owners and landlords for a revenue-share model. The National Restaurant Association of India (NRAI), in a letter, has sought support for the industry.

Restaurants across India are facing restrictions on operations because of a possible third COVID-19 wave – rising positive cases led by Omicron. NRAI highlighted that the restaurant sector is burdened with massive losses of the last year. The association described the third wave as a “body blow” that many will not be able to withstand unless actively supported by all stakeholders.

Most restauranteurs said business is 40% of what it was in November 2021, when the third wave-induced restrictions were to kick in. Sagar Daryani, CEO and Co-Founder at Wow! Momo, said the golden weeks have been crucified due to the new wave. “December and January form the backbone of a restaurant’s profitability.” Rahul Singh, Founder of Beer Cafe, pointed out that after being battered through two waves, the sector was on the brink of recovery. “What’s hurting us the most are the knee-jerk curbs and curfews.”

Experts say a restaurant earns about 20% of its annual revenue in December and half of that in the last week of the year due to Christmas, New Year celebrations and a general feeling of festivity among consumers. Restaurateurs highlighted that while the delivery business has supported food businesses during the pandemic, it is a low-margin and high-commission business. The dine-in category has been severely hit.

Kabir Suri, President of NRAI, said the ongoing third wave has brought the sector to the same time last year. “To aggravate the problem, businesses have much depleted resources now, making the situation grimmer. We need support from all stakeholders once again to survive, and we are sure that we will get their support as always.” Suri said they know that business will take some time to normalize once India is out of the grip of the third wave.

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However, the industry is hopeful for a quick recovery compared to the previous two COVID-19 waves. The NRAI believes landlord and mall owners should offer complete waiver of rentals in case restaurants are asked to completely shutdown dine-in services.

It has urged malls and landlords to work on pure revenue-share model for the period that the industry faces restrictions such as delivery only, limited hours of operations and limited capacity utilization.