‘Restaurant industry was the worst-hit by lockdown’

Gurbaxish Singh Kohli, Vice President of The Federation of Hotel & Restaurant Associations of India, talks to Eeshanpriya M S about the recovery made by hotel and hospitality industry following the pandemic, long-term repercussions of the lockdown on the industry, and measures the sector is undertaking to recover from the hit it took due to Covid-induced restrictions.

What have been the repercussions of the pandemic on the hotel and hospitality industry that are being felt even today?

Ours was an industry that was the most affected by the lockdown. There was dearth of labour, working capital had exhausted on paying salaries and trying to keep afloat during lockdown… all this with zero help from the government added to the woes. It is a misconception to think that deliveries/take-aways helped maintain the balance. Ideally, deliveries/take-aways form 8-12% of a restaurant’s turnover, which isn’t enough to suffice for the expenses. Yes, it did help us keep the kitchen fires burning at the homes of our staff. (But) All residual capital was wiped out.

Landlords were tight-fisted; very few of them were sympathetic and let go of their rentals or reduced them to a large extent. There were many who did not relent, which, in many cases, forced the outlets to shut down. For a large period, the staff was paid in full followed by partial payment and then in fraction. However, as the lockdown went on and on, it caused layoffs and shutdowns.

When asked whether eating habits have changed, I have always maintained a no. One has to understand that man is a social animal and come what may, once they are free to mingle, they will. Period. That’s exactly what has happened. People came back with a bang and that can be seen with the serpentine queues outside restaurants today. Hopefully, all this will go on and we can expect a bounce-back to pre-Covid times faster than expected.

How has the pandemic changed the industry?

We have had to rebrand ourselves. Chains sought this as an opportunity to get assets below their worth; distress sales were lapped up by larger chains – those with a stash of saved cash. Other changes include staff training and efforts towards retention, more stress on hygiene, use of technology to reduce human input, which was also necessitated by non-availability of staff.

Prices in hotels are still low but that (increase in tariff) will depend on the demand-and-supply situation, which, I reckon, will improve as travel resumes. Yes, attractive offers to woo guests do feature in agendas of all hotels but then, there is only so much of a price drop one can do. All this has resulted in a win-win situation for the guests because they are getting to choose the best from among a bunch.

Two-tier and three-tier towns and cities are leading the revival along with holiday destinations like Jammu & Kashmir, Rajasthan, and Himachal Pradesh. Hill stations continue to drive the economy. As we proceed, I can see that domestic travel will increase along with foreign travel. This is good for the industry as a whole.

Are post-pandemic sales matching pre-pandemic times?

Surely, sales have got better and back to pre-pandemic times. (But) one must realise that even if sales have increased, profitability hasn’t because of drastic rise in rates of everything. Raw materials and freight prices, etc have hit the roof. So, even if sales have increased, the margins have decreased and no one is really complaining because the key word now is revival and survival. Only if you survive can you then seek increased profits.

What measures is the industry undertaking to get back on its feet?

There is no specific formula. The pandemic has taught one to be frugal and hygiene is now the top priority. Restaurants have adopted technology and has taken hygiene to higher levels. Staff training is also at a high. There is now also more stress laid on retaining staff and inculcating loyalty amongst them. Besides, more stress is now being laid on guest experience and satisfaction.

How many hotels and eateries shut down permanently as a result of the pandemic?

Almost 30% of hotels and restaurants have shut permanently around the country.

Did it kickstart a round of layoffs?

During the peak pandemic period, due to rampant migrations and shutdowns, layoffs were at an all-time high. Another factor was the feeling of uncertainty attached to hospitality jobs. Many workers switched to other industries and most who migrated have not yet come back for various reasons. Some have returned since but there seems to be a huge deficit, especially of semi- and unskilled hospitality workers even today.

Was there a particular type of restaurants that were affected more than others?

Both individual and chains suffered – while chains had to shut down certain outlets, individual restaurants wound up entire operations. Fine dine restaurants took a huge hit. These restaurants paid very high rentals, salaries, and had enormous overheads…But once everything was back on track, all restaurants bounced back almost immediately.

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