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Food For Thought: Hit by Covid Twice Over, Bengaluru Restaurants Await New Buyers

Image for representation | Credit: Reuters

Image for representation | Credit: Reuters

The blow of the second wave was so hard on the restaurant and hotel business that the final hopes of these businessmen faded like it didn’t existed.

Going out for no specific reason, sniffing the fresh aroma of coffee brewing in the various Darshinis and ultimately hopping into one to maybe have a crispy vada or a rava idli to go with it. This was a routine many in Bengaluru followed until the virus struck. Though everyone is waiting for the situation to ease and normalcy to return soon, “it may not be the same," say the hoteliers.

During the first wave, everyone was scared and restaurants voluntarily shut businesses. Employees went home assuming they will return if they managed to survive through the pandemic. Businesses closed, but life is more precious, so nobody complained. But this couldn’t go on forever since most people didn’t know any job other than what they were doing until then.

“But we waited for a very long time," says a rather tired Raghavendra Bhat, owner, SLV Restaurant, Basavanagudi, Bengaluru. “After the rules eased post first wave, we thought of picking up from where we left, and then the reality struck us. Our staff were not ready to return to Bengaluru, the building rents were still to be paid, electricity and water bills never stopped coming and people didn’t want to peep inside the restaurant, forget about a group meal."

This was the issue with most places. But gradually, things got better post November last year. Though, not full-fledged, business was still manageable for around 4 months, until the virus struck again.

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The blow of the second wave was so hard on the restaurant and hotel business that the final hopes of these businessmen faded like it didn’t existed. Many shut shops and packed their bags. The interiors, utensils, furniture and all necessary equipment were put up on sale. Majority of the restaurants function in rented buildings, so the businessmen are eager to clear the stuff as soon as possible to avoid another month’s rent.

Subramanya Aithal, who was working as a head chef in one of the city’s Darshini, left for his village last year. “I was too scared. Even if I turned out to be (COVID) positive and died, I wanted to spend time with my family. Also, the hotel was shut here. I did odd jobs at my village in Shimoga district. I worked as a farm labour, went to help the caterers, even took care of others’ cattle for a living. I was waiting to return to my job once things got better and buses started plying but the restaurant owner called me and told not to come. He had put up the restaurant for sale. He promised to find me another job, maybe request the buyer to hire me. But that never happened since the restaurant didn’t sell. He told he is planning to shift all the stuff into the basement of his house so that he can save the building rent at least. I have no words to console him."

P C Rao, President, Bengaluru Hotel Association said, “There are more than 24,000 restaurants in Karnataka, and Bengaluru alone has around 5,000 of them. Out of this, around 3,000 restaurants may still hold on to some hope to reopen in whatever way possible, but nearly 2,000 of them are shut permanently. These hoteliers are giving up their profession completely. There are no buyers even if we are ready to sell the restaurant set up for half the price. God alone must save us now. Government is not even waving off tax on us, no subsidies and no compensations either. But we struggle to move forward."

Situation is definitely not better in other parts of the country. Pradeep Shetty, joint honorary secretary, Federation of Hotel and Restaurant Association of India (FHRAI), told News18.com that most restaurants work out of rented spaces in cities like Mumbai. “Therefore, during the first wave, we saw a lot of arguments and disagreements between the owners of those spaces and the restaurateur tenants, who could not pay the rent due to the heavy losses they have incurred."

Shetty pointed out that by the second wave, the disagreements settled down because the owners also realized that the restaurateurs couldn’t pay the rent.

“They (the owners) are keeping the restaurants till they get other businesses to rent the place out. In Mumbai, rents of these spaces are very high, and it has not been easy to get a new tenant during this pandemic. Some restaurants have also entered into revenue-sharing arrangements with the owners, which allows them to keep the restaurant for the time being without paying rent, while in few cases hotel businesses have also been asked to vacate," added Pradeep Shetty. He pointed out that 30 per cent hotels and restaurants in the country have shut down permanently due to financial losses, and about 20 per cent haven’t reopened fully since the first lockdown. The remaining 50 per cent continue to run in losses.

The FHRAI estimates that the industry’s total revenue in FY 2019-20 stood at Rs 1.82 lakh crore and in FY 2020-21, approximately 75 per cent of the industry’s revenues got wiped off. That is more than Rs 1.30 lakh crore revenue hit for the Indian economy. Since April 2021, the revenue hasn’t even crossed 8-10 per cent.

Struggles of Loan Repayment

The FHRAI estimates that the total loan outstanding to the hospitality industry is over Rs 60,000 crore today. Unfortunately, due to the pandemic, many hoteliers and restaurant owners haven’t been able to keep up with their monthly instalments of loan repayment.

“Several hotels are shutting down because of the problems with the banks. They are bound to pay their monthly instalments as they have not got any relief from the banks. This issue has impacted small and big restaurants alike because if the repayment is not made according to schedule, banks have to take certain steps, and the operations of the restaurants immediately come to a standstill," pointed out Pradeep Shetty.

Liquor License Renewal

Indian Hotel and Restaurant Association President Shivanand Shetty told News18.com, several restaurant-cum- bars have also been unable to renew their FLIII (imported liquor) license during this period. “Out of the 2500 Mumbai permit rooms (bar and restaurants) which hold the FLIII license to serve foreign liquor, approximately 600 have not renewed their licenses, which also includes some five-star hotels. The other 200 to 300 restaurants have only paid 50 per cent of the renewal fee. Therefore, barely 50% have paid the entire fees, and the rest are struggling," said Shivanand Shetty

Scarcity of Unskilled Labour Post Lockdowns

“In Mumbai, there are approximately 5 to 6 lakhs individuals employed in our industry, out which only 20 per cent is currently working," pointed out Shivanand Shetty.

Due to the lockdown, many hotel staffs have also migrated to their hometowns, which is likely to result in scarcity of unskilled labors like washers, cook’s assistants. “We are in terrible shape. We have filed our petitions for reliefs in excise license and property taxes. However, the government will have to step in to save this industry," he added.

The situation is so bad everywhere that earlier it was lack of labor while reopening. But this time around, the hoteliers don’t want to call their staff fearing the third wave and another lockdown of it may occur. “No matter what the condition is, if our staff are here we will have to provide boarding facilities, food and at least half the salary. We are already immersed in huge debt, there is no strength left to take more” sighs Raghavendra Bhat.

(With inputs from Simantini Dey)

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first published:July 02, 2021, 19:30 IST