The National Restaurant Association of India has said that a revenue-share model will ensure that neither parties stand to profiteer at the cost of the other.

Restaurant association initiates dialogue with mall owners seeks rental waiver
Money Hospitality Wednesday, May 27, 2020 - 18:21

The restaurant industry, led by National Restaurant Association of India (NRAI), has initiated a dialogue with mall owners to resolve bilateral concerns between both industries.

NRAI says that it doesn’t expect the volume of business for the restaurant industry in the post-pandemic period to be more than 30% to 40% of the pre-lockdown numbers. Considering that the proportion of fixed operating expenses in the restaurant business is very high, this may lead to massive operating losses to many businesses unless the expenses are brought down significantly and a critical expense like rentals is converted into a variable cost.

NRAI says it received several representations from members requesting intervention in resolving this issue and has communicated two principal concerns to all malls that need immediate attention.

The lockdown forcing them to shut shop and preventing malls to allow entry to restaurant guests, staff or suppliers is a clear case of force majeure, says NRAI and therefore wants all charges of rentals or CAM for the duration of the lockdown to be waived off entirely.  

NRAI says that 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 profiteer at the cost of the other,” it said in a statement.

NRAI has said that it soon initiate similar proactive dialogues with other stakeholders such as food service aggregators and individual landlords as well.

“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,” Anurag Katriar, President of NRAI said in a statement.

He further added that the restaurant industry understands that the malls too have huge costs to take care of, which is not easy with reduced cash flows. 

“Our appeal is aimed at playing a constructive role in resolving these issues at the earliest. Most of our members have expressed their unwillingness and inability to restart the business unless these issues get firmly and proactively resolved,” he added.

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