It’s not just the people directly employed in the restaurant industry who are hit by the pandemic. Those down in the supply chain such as vegetable growers, grocery suppliers, butchers are also suffering.

Pankaj Khatri, 29, owns a company which supplies crockery, tissue paper and toothpicks to at least 25 restaurants in Jaipur city. Khatri says the sales began to drop even before the lockdown. “Right after the first case of coronavirus was reported in the city in March, the occupancy of restaurants fell because people preferred staying at home. This hurt our business directly and our sales started to go down almost a week before the lockdown.”

In recent days, news reports have detailed how it has become hard for people in the food services supply chain like farmers, butchers, green grocers, and milkmen to sell their produce.

Khatri complains that its sudden imposition left suppliers with no time to prepare for the lockdown. “I believe the next three to four months will be very difficult for us,” he says. “And then it will take considerable time to get back to business as usual.”

Good times are past

It isn’t surprising that the bulk of India’s food service industry is concentrated in metros, given their vast populations and relative prosperity. Delhi alone has at least 95,287 restaurants, Mumbai has 87,650, Bengaluru 42,307, Kolkata 38,838, according to the NRAI report.

In major cities especially, despite the shocks of demonetisation and the Goods and Services Tax , the food service industry has boomed in the past decade, thanks in good part to the popularity of online delivery services, which helped restaurants expand their customer pools while generating jobs, even if mostly for gig workers . As per the NRAI, the sector attracted investments of around $2.4 billion in the past six years. The growth was reflected in tax collections. In 2018-19, the organised food service sector alone paid an estimated Rs 18,000 crore in taxes, according to the NRAI report.

Still, the last two years have been tough for the industry, especially the organised sector, owing mainly to the denial of input tax credit on GST which has raised operational expenses, points out Anurag Katriar, CEO of deGustibus Hospitality, Mumbai, and president of the NRAI.

‘A scary scenario’

Sidhant Kapoor, 25, studied culinary arts in New Delhi, and worked at several top restaurants in Delhi for over two years. Sometime last year, he decided to start his own restaurant in Amritsar. After a few months setting it all up, he planned the launch for April 3. It wasn’t to be.

“Starting my own venture was a crazy journey full of sleepless nights, long and tiring days planning the minutest details of ambience, decor, the floor plan of the kitchen, the dishes to be served, the recruitment of staff, even the crockery,” he says. “But I suspended all activities on March 20. I foresaw a prolonged lockdown after seeing what was happening in other countries. I will resume all operations for the launch only after the situation stabilizes.”

Sidhant has invested most of his savings in his restaurant but it is mired in uncertainty now. “The economy is going for a toss, and every single person will take a hit,” he says. “For sure.”

Katriar agrees. “We employ over seven million people in this industry which makes us one of the largest job providers in the country. But, at the same time, the restaurant business model is the most vulnerable because we have very high operating expenses. So, the chances of going down with even minor revenue fluctuations are high, and presently we are virtually looking at zero revenues,” he says.

What’s his assessment of the impending damage? “At this time, it’s difficult to say how many companies will be able to pull through, but around 30 percent job losses is definitely a reality if this crisis continues beyond a month,” he responds. “Many small companies are expected to shut down since they might not have the money to keep going. So, if we have 30 percent job losses, for example, that means well over two million people going out of work. That is a scary scenario.”

More worryingly, Katriar points out, it would be hard for the laid off workers to find another job anytime soon since Indians working in the food service industry abroad are also coming back. “Suddenly, we have a scenario where businesses are shut and there’s uncertainty as to when it will get back on its feet. Then, there’s an oversupply of manpower in an industry that cannot afford any fixed expenses. It is a very tough and grim scenario.”

So, what can be done to mitigate the damage? “The government has to come into the picture now,” Katriar says. “First, they can defer all statutory payments and EMIs. Deferring statutory payments would leave us with enough cash to deal with the problems of the people. At a time when most of India is on EMIs, deferring the clock by a month can also help. Once the pressure of EMIs is taken away, the basic necessities of the people in this country can be taken care of.”

In addition, the labour ministry needs to provide compensation of some kind to workers covered under the Employee State Insurance Act, he argues. “This is a war like situation and the government has to open the war chest to fight this. So that, in the immediate term at least, the problems of the people are taken care of,” he explains. “As far as larger commercial problems are concerned, we do not really know the extent yet, we don’t know what the future holds for us.”