While the online food delivery space is somewhat returning to normal, the dining out industry in India has been hit hard and is operating at only 8-10% of the pre-Covid levels, a new Zomato report revealed on Wednesday. Out of the 83% restaurants that are not open for business, 10% have already shut down permanently.
"We anticipate an additional 30% restaurants to not reopen at all. Remaining 43% are closed right now but are likely to open as the situation becomes better," said the 'Indian Restaurant Industry - Mid COVID-19 Report' released by the online food delivery platform.
In the meantime, the online food delivery industry has largely recovered, with the overall sector clocking around 75-80% of pre-Covid GMV (gross merchandise value).
Recovery trends are strong and Zomato estimated that the online food delivery industry would hit the pre-Covid levels of business in the next 2-3 months.
"Predictably, residential areas are doing 50% better than commercial areas. Restaurants in and around commercial districts are expected to take the longest to recover," Zomato said.
The slump in the dining out industry is largely driven by markets being in lockdown, consumers not stepping out due to fear of transmission and restaurants not opening up, even if the city is not in lockdown.
However, Zomato claims in the report that there have been zero reported cases of COVID transmission due to food delivery.
"Even in cities where restrictions have been lifted, only 17% dining out restaurants are open for business at the moment which are also running at low capacity," Zomato said.
Most of the customers plan to decrease spending on dining out in the near future and some of this spend will shift to online food delivery.
"Nearly 60% restaurateurs said they estimate to retain less than half of their original business volumes for a few months even post-Covid," the findings showed.
Zomato said it has delivered seven crore food orders since the lockdown started on March 25.
"We estimate that between other food aggregators and direct restaurant channels, Indians have ordered 20 crore times since the lockdown," the report mentioned.
The number of restaurants offering food delivery is at 70% of the pre-COVID levels. Out of this, about 5% restaurants did not offer food delivery services pre-Covid.
With companies giving employees the option to work from home, there has been a mass exodus of people from metros to other cities across India.
"One in every five Zomato customers in metros (pre-Covid) have opened their app from a smaller town recently. Out of these relocated folks, one third have already started ordering food again from their new location," the Zomato report noted.