In a letter written to landlords and mall owners, the National Restaurant Association of India has asked for a revenue share model, no minimum guaranteed rent for six months and more.

Servers in a restaurant wearing masks readying the tables no customers in restaurant
Money Coronavirus Thursday, May 20, 2021 - 13:51

The National Restaurant Association of India has now written to landlords and mall owners for a waiver of rent and other reliefs after restaurants were struck hard by the coronavirus second wave and subsequent localised lockdowns in several states.

The restaurants’ body said that a large part of the industry managed to survive the first round of lockdowns “due to collective efforts of all stakeholders” and stated that similar efforts are required to prevent a “fresh round of business mortalities and job losses in the sector.”

Terming the second wave as a “body blow that many will not be able to withstand”, NRAI said it represents the interests of over 5 lakh restaurants and has an annual turnover of Rs 4 lakh crore employing 70 lakh people. 

In its letter to landlords and to malls, the body sought a complete waiver of rentals and common area maintenance (in malls) until such time that unrestricted dine-in is not allowed.

Restaurants in many states are only open for deliveries and takeaways. NRAI asked for a pure revenue share model as long as restricted operations (delivery only, limited working hours, limited capacity, etc) continue. In a revenue share model, the restaurant shares a percentage of the revenue it makes with the landlord. NRAI also asked for a no-minimum-guaranteed-rent model for six months after this as well. 

To landlords, NRAI said that for restaurants with longer past occupancy records, this revenue share “can alternatively be linked to their sale as a percentage to their past period sale”.

In its letter to mall owners, NRAI said the second wave may hurt long term consumer sentiments. “With high fixed overheads, expected restrictions on operating hours, revised social distancing norms and reduced capacity utilisation, any drop in consumer sentiments can be catastrophic for the sector. We surely have a grim battle at hand and the most potent tool to fight this is to redefine our relationship and business model. If the sector survives, we all will survive and perhaps hope to prosper later,” it said.

Anurag Katriar, President of NRAI said, “While both waves of pandemic dealt a crippling blow to us, there is a big difference this time. While resource crunch was at the core of our problems during phase one and forced significant mortalities, this second wave may actually hurt us more in the long term due to low and subdued consumer sentiments. It is a much deeper problem.”

“With high fixed overheads, expected restrictions on operating hours, revised social distancing norms and reduced capacity utilisation, any drop in consumer sentiments can be catastrophic for the sector,” he added.

To mall owners, NRAI asked that fixed outgoings for the duration of the lockdown be waived entirely and that the model of engagement needs to move towards a variable model. 

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