Coronavirus Effect: 6 Head honchos from the hospitality sector open up on losses, unemployment and more

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Hospitality and F&B businesses are suffering major losses due to Coronavirus pandemic and subsequent lockdown. Read on to know what is the current and future status of the industries.

The whole world is fighting with their might to stop the spread of the Coronavirus. Due to the deadly microscopic villain, there are restrictions and lockdown around the world and its effect on the economy is astounding. Aside from the worries of uncertainty and disease’ spread, a lot of predictions on Coronavirus led recession, inflation and mass unemployment have been giving sleepless nights and anxiety to many. Just like many sectors, F&B and hospitality business has also been affected badly.

Be it small, medium or large businesses, all are grappling with the present issues and planning to avert the consequences of the economic slowdown. Apparently, the cascading effect of the coronavirus pandemic can lead to crores of losses in the Indian hospitality industry. To know more in-depth about the cause and effect in this sector, we have asked 6 head honchos from the hospitality business to share in-depth about the losses that they are incurring and how the industry can bounce back among others.

Question 1: A lot of loss is being and will be incurred? Your comment?

Mr. Rahul Bajaj, Director, and Conceptualiser at Out Of The Blue and Deli By The Blue said:

“A lot of human loss is going to occur along with numerous restaurants closing down their shutters. This situation will lead to mass unemployment affecting a lot of people. All of us are going in the compact form running the restaurants to how it was 10 years ago. Back then, home delivery was a minuscule part. Now we have so many home bakers and kitchens that deliver food via Swiggy and Zomato. This is the new digital age where the restaurants have found a new way to incorporate this into their system.”

Ovais Patrawala, Partner at Meraki stated:

“Covid-19 is having an enormous impact on our Indian economy. The F&B industry having a turnover of 4 lakh crore rupees is, unfortunately, the worst affected by Covid-19.”

Mr. Jaasjyot Surri, CEO & Co-Founder, SJI Hospitality and Food Private Limited said:

“Financial loss is inevitable in this situation. However, what is most important in this situation is to ensure minimum possible loss of human life. We will have to come up with business models that can reduce or eliminate financial losses once operations commence, although that is going to be a difficult and long journey.”

Rochelle Kapoor, Owner of Chunky’s Cake Shop said:

“As a retail outlet, we depend on our daily sales for our income, our income is used to run our homes and expenses.”

Aditi Handa – Co-Founder and Chief Baker, The Baker’s Dozen said:

“For the hospitality industry, this financial year will be a very difficult one. While some businesses will just pull through, many will shut. The only way to stay afloat will be to reduce expenses and find some easy to execute pivots. Dine-in restaurants may want to build a business on takeaway or delivery. Various marketing campaigns focusing on deliveries, hygiene and safety will be very beneficial for the brands to overcome the losses and to stabilize the business in the future.”

Srihari Parthasarathy, Partner-Head Business Development at Frozen Bottle said:

“Yes, there is a dip of 75 percent and this will continue at least for the next 2 months as people would be apprehensive on coming out and eating.”

Mr. Rahul Bajaj, Director, and Conceptualizer at Out Of The Blue and Deli By The Blue

Question 2:  How it has impacted the employees?

Mr. Rahul Bajaj, Director and Conceptualiser at Out Of The Blue and Deli By The Blue said:

“Generally, the staff working in the hotel industry is not very educated. Apart from selective senior members in the departments, a lot of staff members belong to small towns and villages. A huge number of people are stuck waiting to go back to their hometowns. The fear that coronavirus may be the end, which is why they want to leave their last breath in their villages. The desperation of these people is because they are unaware of the impact of coronavirus.”

Ovais Patrawala, Partner at Meraki stated:

“The F&B industry employs more than 7.5 million people. Covid -19 has impacted direct jobs and also jobs of other employees depending on restaurants.The employees that fall in the lower pay bracket will be affected the most. Since their salaries have been stopped how will they pay their rentals and feed their family?”

Mr. Jaasjyot Surri, CEO & Co-Founder, SJI Hospitality and Food Private Limited said:

“There is an obvious sense of fear due to uncertainty. It is our responsibility to make them feel safe and secure to understand that this time will pass and we will all return to normalcy and continue having our livelihood.”

Rochelle Kapoor, Owner of Chunky’s Cake Shop said:

“In our area itself the police are not even allowing us to conduct online sales which by the Government’s Lockdown Mandate is allowed. They are beating our employes and forcing us to shut. We have no choice but to stay quiet and bear the brunt of their police brutality during these trying times.”

Aditi Handa – Co-Founder and Chief Baker, The Baker’s Dozen said:

“I think there is a lot of fear and demotivation amongst employees across companies facing different challenges. If companies that are not operational i.e. at 0% revenue or at a very low revenue choose to pay employees, then they may not have enough capital left to restart the business when the economy will pick up. They will need capital for marketing and developing more business. On the other hand, if they don’t pay employees or partially pay just enough for employees to sustain, especially the ones who work at a national minimum wage, it will be extremely difficult and traumatizing for the employees. 

In the companies who are operational since they are essential providers, there will be a set of employees who will not come to work and exercise the ruling of getting paid even without working. This is very demotivating to the sincere employees who consider it their moral responsibility and actually do come to work. There is no pay difference in the sincere one and the one who is taking the easy way out which would be extremely unfair.”

Srihari Parthasarathy, Partner- Head Business Development, Frozen Bottle said:

“There are a lot of pink slips given because of the fact that we need to look at our cash flows and take very adverse decisions.”

Mr. Jaasjyot Surri, CEO & Co-Founder, SJI Hospitality and Food Private Limited

Question 3:  How can the industry balance the losses and bounce back in the future?

Mr. Rahul Bajaj, Director, and Conceptualiser at Out Of The Blue and Deli By The Blue said

During these difficult times, people need to be more humane and explore ways to save their employees. People shouldn’t think of generating profits at this point or picking up the business as it is more important to help as many people in need than make money. At least for the upcoming 3 months, the industry can make sure that they can pay the basic salaries to their employees and make them happy. 

Ovais Patrawala, Partner at Meraki stated:

As restaurants are shut during this lockdown small efforts are being made to salvage whatever they can. There are certain restaurants that are offering coupons for a future dine-in meal.  Some restaurants have also resorted to online deliveries.  

For a restaurant to be operational it has to be financially sustainable to ensure payment of rent, salaries. Most of the restaurant owners who survive this crisis will spend 6-12 months to reach to what it was in 2019. 

Mr. Jaasjyot Surri, CEO & Co-Founder, SJI Hospitality and Food Private Limited said:

There will be an enhanced focus on food delivery. We will need to come up with business models that can sustain with social distancing compliant seating arrangements and reduced footfalls. There will definitely be a shift towards quality and hygiene like never before. The market sentiments and spending patterns will play an important role in the revival of the industry.

Rochelle Kapoor, Owner of Chunky’s Cake Shop said:

In the future we plan on opening multiple stores with a wide range of bakery products to balance this quarter’s loss.

Aditi Handa – Co-Founder and Chief Baker, The Baker’s Dozen said:

“Balancing losses will be one of the most crucial tasks for the industry in the future. This can be done by investing in marketing campaigns and practices which display hygiene and customer safety as the top priority. Some new businesses in the area of delivery, using technology in the purchase, supply chain, etc will come up that help hospitality businesses to reduce costs or develop new verticals. Making the customers believe about the safety and the brand’s care and concern for them will act as an emotional approach and will help to tackle the situation.”

Srihari Parthasarathy, Partner- Head Business Development, Frozen Bottle said:

“The industry can balance the losses by renegotiating their real estate costs, waiving off the rent for the period of the lockdown and cutting of indirect expenses.”

Srihari Parthasarathy, Partner- Head Business Development, Frozen Bottle

Question 4: What measures the government should take to improve and stabilise the hospitality business?

Mr. Rahul Bajaj, Director, and Conceptualiser at Out Of The Blue and Deli By The Blue said:

“The restaurants who are spacious enough to accommodate their staff should quarantine them within the restaurant premises. The government should allot a certain time for the APMC and other markets to stay open as it has for general and medical stores and also considers reducing the taxes. It would be great if they can also give subsidiaries to the restaurants and charge slightly nominal rates on buying goods in bulk and on government-owned vehicles for transportation of goods. 

The prices should even be lowered for common people as middle and lower classes are the ones who suffer a lot trying to make ends meet in these times. This will be a great initiative as people who also want to affirm a sense of charity and extend a helping hand will be able to take care of the ones in need in their surroundings. A streamlined and detailed process and easing the rates of groceries will really be of great help not to the hospitality business but also for common people.”

Ovais Patrawala, Partner at Meraki stated:

“The F&B industry is turning into ashes now and government intervention is the need of the hour. The government should:

1: introduce employee unemployment pay cover to make sure workers do not have to worry about salaries.

2: Defer rent and utility payments.

3: Moratorium on bank loans.

4. Restoration of the input tax credit on GST.”

Mr. Jaasjyot Surri, CEO & Co-Founder, SJI Hospitality and Food Private Limited said:

“There are various assistances with regards to taxation, loans, waivers and extension of license durations etc. that the Association bodies have already put forward to the Government. We can only request the Government to provide as much assistance as possible to enable a fair chance of revival of the industry.”

Rochelle Kapoor, Owner of Chunky’s Cake Shop said:

“Government should waive off GST for 6 months at least and Waive off licensing fees. And offer 6 months moratorium on all business loans.”

Aditi Handa – Co-Founder and Chief Baker, The Baker’s Dozen said:

“If there can be relief packages to reduce salary, rent burden, taxation relief, that would help. Maybe the government can provide platforms to cater to large B2B business opportunities to ensure turnovers don’t take a massive hit and are able to recover the fixed costs.”

Srihari Parthasarathy, Partner-Head Business Development, Frozen Bottle said:

The government would have to give working capital and short term loans with low-interest rates and a moratorium period. The government would have no interference in the landlord and business owner crisis otherwise this would lead to mass litigation. The government would have to give some relief in direct and Indirect taxes.  

Aditi Handa – Co-Founder and Chief Baker, The Baker’s Dozen

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