Economy

NRAI urges mall owners to support restaurant industry

Meenakshi Verma Ambwani New Delhi | Updated on May 19, 2021

A shopping mall in Coimbatore wears a deserted look (File photo) .   -  The Hindu

In a letter, it has asked landlords to switch to a “pure revenue share” lease structure

The National Restaurant Association of India (NRAI) has urged mall owners to support the restaurant industry through complete waiver of rental and common area maintenance fee for the period outlets are shut for unrestricted dine-in operations.

It has also urged the landlords to switch to a “pure revenue share” lease structure for the time period that restaurants are only being allowed to do deliveries, open for limited hours and need to follow limited occupancy guidelines.

In its open letters to prominent mall owners, the industry body pointed out that the restaurant sector continues to fight a grim battle for survival.

“For an industry already burdened with massive losses of the last year, the second pandemic wave has come as a body blow that many will not be able to withstand unless actively supported by all stakeholders. A large part of the industry managed to somehow survive the first phase of lockdown and sailed through due to collective efforts of all stakeholders and similar efforts are once again required to prevent fresh rounds of business mortalities and job losses in the sector,” it added.

Also read: Delivery disruption: Restaurants forced to serve differently

Crippling blow

Anurag Katriar, President of NRAI stated that while both the waves of the pandemic have dealt a crippling blow to the sector, the ongoing second wave is expected to hurt the industry even more in the long term due to low and subdued consumer sentiments.

“With high fixed overheads, expected restrictions on operating hours, revised social distancing norms and reduced capacity utilisation, any drop in consumer sentiments can be catastrophic for the sector. We surely have a grim battle at hand and the most potent and effective way to fight this is to redefine our mutual relationship and business model. I reckon that for the survival of F&B industry through this second wave, revenue share is a very fair model that will ensure that malls don’t lose out if we see an unexpected early surge in business volumes,” he added.

Suggestions made

The industry body has asked for complete waiver of rentals and CAM till the time restaurant businesses are unable to operate dine-in services. It has also asked mall owners to adopt a pure revenue share lease structure for the time period that restaurants are permitted to operate with restrictions.

Also read: NRAI shelves food delivery platform plans

Other measures suggested include, no minimum guarantee rents for six months post the lockdown-like restrictions are lifted. “For stores with a longer past occupancy record, this revenue share can alternatively be linked to their sale as a percentage to their past period sale. CAM during this period to be maintained at 50 per cent of the agreed rate,” the industry body added.

The size of the restaurant industry is pegged at ₹4.25-lakh crore providing annual turnover of direct employment to over 7 million people.

“NRAI will soon initiate similar proactive dialogues with other stakeholders in the food service space such as aggregators, various State governments and the Union government,” the industry body added.

Published on May 19, 2021

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