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Covid shrinks India's restaurant industry by half: NRAI report

Our Bureau New Delhi | Updated on October 26, 2021

It was estimated to be worth ₹2,00,762 crore

The restaurant industry, which was one of the hardest-hit by the two consecutive waves of the pandemic, contracted severely. According to a report by the National Restaurant Association of India (NRAI), the Indian food services industry has contracted by nearly 53 per cent and more than a quarter of the restaurants have been permanently closed. But the industry is now pinning hopes on positive consumer sentiment and ramped-up pace of vaccination to see recovery to get to about 85 per cent of pre-pandemic levels in FY22.

As per the report, in FY21, the restaurant industry declined by 53 per cent and was estimated to be worth ₹2,00,762 crore compared to ₹4,23,624 crore in FY20. However, the industry body expects that in FY22, the sector will see significant resurgence and is expected to reach a size of ₹4,72,285 crore.

Kabir Suri, President, NRAI said, “In FY21, restaurants were not allowed to operate for an average of 100 days. Over 25 per cent of restaurants have been shuttered and more than 23 lakh people have lost their jobs.” He added that employee counts are not expected to get back to pre-Covid levels in the near future.

Average revenue decline

The restaurant industry also saw a marked decrease in average revenue and profitability across formats due to Covid-induced restrictions. The average revenue post the first lockdown witnessed a de-growth of 46 per cent and average profitability saw a de-growth of 88 per cent compared to pre-Covid times. The most significant reduction was witnessed by fine-dining restaurants and pubs, bars, cafes and lounges (PBCL) segments compared to quick service restaurants and casual dining restaurants. However, post the second lockdown, industry player’s revenue saw a growth of 33 per cent compared to the first lockdown but is still to get back to pre-Covid levels.

Meanwhile, with consumers switching to digital platforms, share of deliveries and takeaways for restaurant players increased on an average from 13 per cent during the pre-Covid times to 33 per cent during post-Covid times. The report added that average order value also rose by 43 per cent during the pandemic.

Restaurants in the southern, western and northern regions were more severely impacted compared to the eastern region. The sector faced the biggest brunt of the pandemic in New Delhi and Mumbai due to severe restrictions around seating capacity and operational hours.

“The food services industry has started to show signs of recovery by the end of second quarter of FY22, batting on reduced cases, better consumer sentiment and higher pace of vaccination,” the report stated.

The industry body has also reiterated its demand for provision of input tax credit facility with 12 per cent GST to help bring down fixed operating expenses and improve bottomline. NRAI has also said that there is need to have a level-playing e-commerce policy to prevent aggregators from misusing their dominant position.

Published on October 25, 2021

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