80% percent of restaurants yet to open and 40% may never open again, says sector body HRAWI

It’s been a week since restaurants and bars in Maharashtra were allowed to reopen by the State government. But not all have been able to do so.

 In an interaction with Moneycontrol, Pradeep Shetty, Senior Vice President, Hotel and Restaurant Association Western India (HRAWI), said that 80 percent of the restaurants have not been able to open yet due to staff shortages and lack of finance.

 The HRAWI represents hotels and restaurants across the Western region, covering the States of Gujarat, Goa, Madhya Pradesh, Chhattisgarh and Maharashtra, and the Union Territories of Daman & Diu and Dadra & Nagar Haveli (Silvassa).

"Restarting properties that have been shut for six months poses a unique challenge, especially after the extraordinarily heavy monsoon season, and therefore entails huge costs,” said Shetty, who is also the Director of Maharaja Restaurants/Hotels.

For the ones that are open, lack of public transport for movement of staff is another problem, he added.

It will take another month for more restaurants to open, said Shetty. In fact, he added, on a sombre note, at least 30-40 percent of restaurants will remain permanently shut, while the rest will struggle to stay afloat given the uncertainty sparked by the continuing pandemic.

Shetty expects around 40-50 percent of restaurants to open by the first week of November.

Working capital concerns

The six-month shutdown, with the owners left to fend for themselves has severely dented the finances of restaurant owners said Shetty.

 The industry lobby has written to the authorities for a waiver of property tax, relief in electricity dues, and funding of employee paychecks through ESIC (Employee State Insurance Corporation) reserves.

 “We are also constantly engaging with the Union Finance Minister (Nirmala Sitharaman) to look into the woes of the hospitality industry as ours has been the worst affected and is likely to take a lot of time to recover,” said Shetty.

 In a recent virtual meet with Tarun Bajaj, Secretary, Department of Economic Affairs, Ministry of Finance, the association expressed concern that most banks were not willing to extend working capital support and restructure loans under the one-time restructuring scheme of the government.

 Shetty also raised concerns fresh loan support is being refused to new clients from the industry as the hospitality business is in the negative list of many rating agencies.

 “The time for working capital infusion is now and nothing really has come. But the bigger challenge will be going forward and sustaining as servicing debts, managing people and the business will be an absolute uphill task. Hence, the availability of soft loans at very low interest rates is one thing that we have pleaded for with the State and Central governments,” said Shetty.

Banking on festive season bump

So far, footfalls have been “pretty low”, said Shetty, adding that most restaurants have witnessed 15-20 percent of their normal customer footfalls in the first week.  He expects this to gradually improve from the coming week.

Shetty is hopeful that the festival season will have customers walking into hotels and restaurants in large numbers again.