• Report
  • CRISIL Research
  • Covid-19
  • Covid-19 pandemic
  • Organised Sector
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May 14, 2020

Deadly bite

Covid-19 to devour half of dine-in revenues this fiscal

Heartburn getting worse


The Rs 1.5 lakh crore organised restaurant business will take at least a year after the lockdown is lifted to recover from the Covid-19 pandemic, a CRISIL Research estimate shows.


That’s because, diners are unlikely to get back to relishing their favourite Paneer Tikka Masala or Tsing Hoi Chicken or Neapolitan Lasagna at a restaurant in a hurry after the lockdown is lifted.


Consequently, the organised dine-in segment’s revenue may be chopped 40-50% this fiscal.


The reasons for the heartburn aren’t difficult to fathom. For starters, dine-in and public entertainment venues in cities such as Mumbai, Delhi National Capital Region (NCR) and Bengaluru have been shut since March 13-14, before the nationwide lockdown came into effect on March 25.


The online delivery option is only available in a few cities and that too at low service levels. While Mumbai, Delhi NCR, Bengaluru, Kolkata, Pune and Bhubaneswar have operational online deliveries, these are not available in Hyderabad, Ahmedabad, Visakhapatnam, Indore and Lucknow because of safety guidelines and restrictions by state bodies, unavailability of workforce and non-operational kitchens.


According to industry interactions, only 20% of the restaurants listed on online delivery platforms – including casual dining, quick service restaurants and cloud kitchens – are open for delivery currently. And these are operating at just 40% of normal sales volumes.


The total organised restaurant sector volume has dipped 90% during the lockdown.


What’s worse, service pick-up is expected to be slow and delayed, especially in the dine-in segment.


Mumbai and Delhi NCR, which account for nearly 50% of the total organised restaurant market, are both in the red zone. As on May 11, the two cities accounted for over 30% of the total Covid-19 cases in the country. Given this, restrictions on public movement and gatherings are likely to be extended; and hence, restrictions on dine-in restaurants will likely continue or operations may be allowed at low service levels.