Independent restaurants' Covid struggle to be long haul; lack of manpower, funds crippling recovery
Independent restaurants' Covid struggle to be long haul; lack of manpower, funds crippling recovery

For nearly 15 years, The Mughals restaurant has occupied a squat, stucco building on a corner along Mahatma Gandhi Road in Ranchi. Sleek carts and coffee shops have erased most of the neighbourhood’s grit, but the Mughals, as locals call it, remains the same: classic retro looking restaurants serving biryani and kormas with love. The tiny kitchen churns out 50 Kg Biryani for 16 hours a day, 365 days a year. The wait for food can run up to two hours, but the clientele doesn’t seem to mind. 

Recalling the business, the owner said that in 2019, business boomed, and the Mughals closed for only two days: one for equipment failure, the other for a staff picnic. But as the coronavirus pandemic took root, neighbouring restaurants shut down, and the Mughals ended up closing for 77 days in 2020, and 88 days in 2021. Even when it opened, it hobbled along on takeout and a few outdoor tables. 

There are half a million small independent restaurants and bars like the Mughals. They account for three quarters of all the country’s eating and drinking establishments. To operate a restaurant under ordinary circumstances is a perilous endeavour. To operate during a pandemic proved nearly impossible. For restaurant companies with multiple outlets and large formats, survival through pandemic looked different, with different demands and needs. But, for single outlet restaurants or small individual outlets, the survival instincts have been completely different. 

Big restaurant chains have largely recovered from the coronavirus pandemic, but the rest of the industry is taking longer to bounce back, according to a Bank of America study. Small chains and independent eateries tend to be casual dining and fast-casual establishments, while large chain restaurants range from full service to fast food. The closure of dining rooms and the shift to social distancing has hit the casual dining and fast-casual segments harder.

“I’m not seeing a lot of silver linings for independent operators out there. They’re just not well-capitalized. They don’t have a stockpile of cash or large private equity or banking relationships. They don’t have a team of people advising them or a corporate infrastructure to ramp back up and figure it out. They live off the credit they’re given by their food vendors,” Gyanesh Shah, a restaurant owner from Ahmedabad said. “And food vending will be a whole different world after this. They will be a lot tighter on their accounts receivables. This will be a big struggle for a while.” 

The most frustrating piece of this crisis, he adds, is that it completely erodes the independent sector’s growth made prior to the outbreak progress that came largely to the detriment of the casual dining segment, which retrenched for the first time in 2017. 

In addition to not having the liquidity or the infrastructure in place to weather the storm, many (most) independents are struggling with a number of other challenges during the slowdown as well. Chief among them is the high commission fees third-party delivery companies collect from restaurant partners in some cases fees that are as high as 25 to 30 percent. Delivery has become a critical channel for survival during the pandemic, and restaurants that pull in razor-thin margins just don’t have the room for those costs.

“The expectation from the government is to provide better relief programs and more loan instruments for startups so that we can survive this course in case of any emergencies.

Also, utilities that are necessary for running the business like electricity or internet should be made available at subsidised rates. From customers, I think spreading the word about businesses if they like the services can be very helpful. Even little things like leaving a rating and review on Google is very instrumental. Plus if sometimes a business has under-delivered they must be slightly considerate given that a lot of businesses are currently operating with less staff or reduced resources which sometimes makes things a little difficult. Give feedback and see if you can help promote them in any way,” Vandita Purohit, founder, Mauji Cafe expressed.

At Mauji Cafe, the team, however, haven’t been bothering to think about the negative impact of Covid instead have been focusing on making processes better, working on menu, services, marketing strategies etc. “We are utilising this time to experiment and run trial and error and work on making our services better, such that when the market opens, we will be better prepared to expand and grow our services,” Purohit added.

For Ramya Ravi, co-founder of RNR Restaurant in Bengaluru, which opened its doors amid pandemic, staffing was the most difficult task. “Due to the fear factor covid had created; we weren’t able to get staff that would stay with us for long. We couldn’t set up our in house delivery at the start as riders were multiple times stopped and questioned by authorities during lockdowns; hence we had to rely on aggregators. Small businesses need support to stay afloat,” she commented.

On the other hand, fast-food giants such as Domino's, McDonald's and Dunkin' are eyeing real estate opportunities presented by independent restaurants struggling to stay open during the coronavirus pandemic. The pandemic is paving the way for chains to take over the restaurant industry. As independent restaurants struggle to stay afloat, the looming domination of chains seems inevitable.

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