-CB Edit Desk
As restaurants face mounting losses following their closure in most parts of the country due to the second wave of the COVID-19 pandemic, the National Restaurant Association of India (NRAI) on May 20 sought a rental waiver from landlords. It has also suggested shifting to a revenue-sharing method till the time operations remain restricted as reported by CNBC TV18.
In letters to all prominent mall owners and other landlords, the restaurants’ body has sought relief to prevent further financial distress and job losses.
According to NRAI, the restaurant industry, which has an annual turnover of approximately Rs 4.25 lakh crore, provides direct employment to over seven million people in the country. However, the second COVID-19 wave has come as a double whammy for the industry that was yet to recover from the losses it incurred last year with restaurants remaining shut for nearly seven months as the nation witnessed the first wave of coronavirus infections.
NRAI has urged mall owners to waive fixed outgoings completely till the partial lockdown across several states lasts. It has also pitched for moving towards a variable model of revenue sharing during this period, following which, the restaurant body said, neither party will stand to profiteer at the cost of the other.
“I reckon that for the survival of the food and beverage industry (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. I am fairly certain that as long-standing business partners of ours, the landlords will once again extend their support in these times of unprecedented crisis,” Anurag Katriar, President of NRAI said.
In the letter to landlords in the foods and beverages business, NRAI has sought a complete waiver of rentals and common area maintenance (CAM) till dine-in services at restaurants remain suspended. It has also urged landlords to not demand a minimum guaranteed rent for six months, and work on a pure revenue share model post that.
For stores with longer past occupancy records, NRAI has suggested that revenue share can alternatively be linked to their sale as a percentage of their past period sale and that the CAM during this period be maintained at 50 percent of the agreed rate.
In its letters, NRAI stressed that while the first wave of pandemic crippled the industry and resource crunch forced many restaurants to shutter down, the second wave presents a larger concern of hurting long-term 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,” Prakul Kumar, General Secretary of NRAI wrote.
The restaurants’ association added that going forward the business can no longer be looked at from the prism of pre-pandemic times as the volume is bound to drop. This could mean restaurants will be forced to do fresh budgeting of their incomes and expenses and make them commensurate to the reduced business volumes, it said.
NRAI will soon initiate similar proactive dialogues with other stakeholders in the foodservice space, including aggregators, state governments, and the Union government.
