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NRAI initiates dialogue with mall owners to resolve commercial concerns of the F&B sector

The industry body was categorical in its expectations saying that they don’t expect the volume of business in the post-pandemic period to be more than 30% to 40% of the pre-lockdown numbers.

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Last Updated: May 27, 2020, 01.51 PM IST
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NRAI will soon initiate similar proactive dialogues with other stakeholders such as food service aggregators & individual landlords as well.
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NEW DELHI: Keeping in mind the interests of the severely impacted F&B sector in the wake of the Coronavirus pandemic, National Restaurant Association of India (NRAI) initiated a dialogue with mall owners to resolve the various bilateral concerns.

The industry body was categorical in its expectations saying that they don’t expect the volume of business in the post-pandemic period to be more than 30% to 40% of the pre-lockdown numbers.

It stated that the proportion of fixed operating expenses in their business is very high which may lead to massive operating losses unless the expenses are brought down and a critical expense like rentals is converted into a variable cost.

The industry body received several representations from their members requesting intervention in resolving this critical issue. The following two principal concerns were communicated to all malls needing immediate attention:

• This is the biggest crisis faced by mankind. The mandated lockdown has forced us to shut shop and prevent the malls to allow entry to our guests, staff or suppliers. This is a clear case of force majeure and therefore all charges of rentals or CAM for the duration of the lockdown needs to be waived off entirely.

• The engagement contours in the post-Covid era needs to move towards a totally variable model. Such revenue-share model will ensure that the fortunes of both parties, i.e., the restaurants and the malls are firmly inter-linked. This will ensure that neither parties stand to profit at the cost of the other.

Speaking on the subject, Anurag Katriar, President of NRAI said in a statement, “While we continue with our advocacy efforts with the Government for strong stimulus packages, NRAI is steadfast in its belief that no business will be able to sustain itself post resumption on older terms of engagement. These are extraordinary times and we need to think anew and think differently with a singular purpose of saving each other, the industry at large and all the jobs that we have created. You cannot operate on old costs with less than half of older revenue. Therefore, I reckon that 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."

He further added, “In the absence of any/less revenue, every business has been compelled to use its reserves or raise capital via debt or equity to fund the losses during this lockdown period. It is no different for malls too, though the announced moratorium on loan repayment surely gives them some respite from cash flow concerns. Most of our members have expressed their unwillingness and inability to restart the business unless these issues get firmly and proactively resolved. There is an overwhelming feeling that it makes better sense to close down now and cut our losses rather than risking massive operating losses in future. This will be most unfortunate for everyone; the business, malls and employees."

NRAI will soon initiate similar proactive dialogues with other stakeholders such as food service aggregators & individual landlords as well.

The restaurant industry with an annual turnover of approximately Rs 4.25 lakh crore and providing direct employment to over 7 million Indians is in a very precarious situation currently due to the ongoing lockdown, fighting a grim battle for its existence.

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