More bitterness for F&B businesses

Curfews add more bitterness to Bengaluru F&B businesses

As another popular restaurant downs its shutters, Metrolife takes stock of the crisis facing hotels and restaurants since mid-2020

The Tao Terraces, an Asian diner inside a mall on MG Road, announced its closure on Saturday. Dismantling has begun. The brand had to shut Mamma Mexicana, another of its outlets in the same mall, last year. DH Photo: Pushkar V

At least 30% of restaurants and hotels in Karnataka have shut down since the pandemic broke out in 2020. 

Bengaluru, with 24,500 F&B and hospitality venues, has taken the biggest hit, losing 5% of its businesses, Metrolife has learnt from industry bodies. 

The Tao Terraces, an Asian diner located inside a mall on M G Road, is the latest victim. It downed its shutters on Saturday when Bengaluru went into a weekend lockdown.

Industry bodies held a press meet on Thursday to demand a rollback of the night-time and weekend curfews. They also proposed measures to operate full-time without overcrowding.

Restaurants 

According to P C Rao, president, Bruhat Bangalore Hotels Association, about 2,000 restaurants and hotels in Bengaluru suspended operations during the second wave, which peaked in May, 2021. Of them, only half have reopened.

If restrictions continue, 10-15% of the existing places may go out of business across Karnataka, fears Madhukar Shetty, general secretary, Karnataka State Hotels’ Association. 

There is a pattern to these closures. Many are upscale venues where the dining experience is as important as the food. Some are located close to IT parks and schools and its customers are at home or back in their hometowns.

In high rent hubs like ITPB and Bellandur, a darshini pays Rs 1 lakh, and a fine dining over Rs 2 lakh towards monthly rent. Inflexible landlords are adding to the woes. “Some have reduced rents by 5% to 20%,” says Suresh Hari, chairman of Credai Bengaluru. But that is not enough to keep businesses afloat.

That is why restaurant owners are looking to enter into a revenue-sharing model with landlords, says Mukesh Tolani, Bengaluru head, National Restaurant Association of India. “The fixed rental agreement won’t work any more,” he says. 

Among hotels, single-owner properties are struggling more than group businesses, says Rao. Many are working with half the manpower. They are running one restaurant from their boutique of three or five, offering a la carte over buffet. Occupancy of rooms is down to 30% from 75% earlier. 

“During the second wave, 80,000-90,000 staffers went to their hometowns. About 50,000 haven’t returned,” says Rao. 

The government hasn’t done much to help, business insiders say. “I closed my hotel for eight months in 2020 and I still had to pay Rs 60,000 or so towards fixed electricity charges every month,” says Ramesh (name changed), a hotel owner in the city. He has now switched to power-saving LED lighting. 

Bars and pubs

Bengaluru has 3,500 of the total 11,500 bars, pubs and wine stores in the state. Of these, at least 200 are shut temporarily and 100 have wound up for good since the second wave, says Karunakar Hegde, vice president, Federation of Wine Merchants Association, Karnataka.

The small-sized, no-frills bars have resumed 90% of their pre-pandemic business but the high-end outlets are finding it hard to run the show.

“They depend on the IT crowd and the youth. Most have left the city and others can’t step out late. Bars and pubs have lost business hours equivalent to nine months to lockdowns and curfews,” he says.

Mukesh explains the impact: “A normal bar pays about Rs 9 lakh towards excise licence every year, and microbreweries pay Rs 20 lakh to Rs 30 lakh. But we are not allowed to serve after 10 pm, and sometimes, we had to stay shut for months. We are asking the government to waive the fee for the period we were not allowed to open. This model can save some businesses Rs 75,000 to Rs 2.5 lakh a month.”

To save on the excise fees, Ramesh closed the bar at his hotel last year.

Before 2020, bars and pubs in Karnataka would do a turnover of Rs 60,000 crore per year, of which, Rs 24,000 crore would go to the government as excise tax. Sixty percent sales happens on weekends.

“Earlier we used to shut outlets by 1 am in Bengaluru. With this 10 pm curfew, we are losing 25% business every day. How is the government okay with people travelling in buses for seven-eight hours but not with two people dining on a table for 40 minutes in restaurants with 50% seating?” Rao wonders.

Other outlets

Some fine dining and QSRs (quick service restaurants) have also disappeared from the malls, battered by high rentals and thin footfalls.

“Their rentals are Rs 300-Rs1,500 per sq feet as opposed to Rs 150-Rs 300 on a high street,” explains Mukesh. 

F&B chains and catering services operating in tech parks don’t have to pay rent but they are up against a bigger problem. “They can’t reopen until the employees return. We were told we could resume this month but now even April looks impossible,” says Rao, whose company runs staff canteens, cafeteria and food courts. Over 500 F&B formats, including sandwich and juice tuck shops, catering to IT parks are on hold, he says. 

Popular outlets that have closed

The Tao Terraces, Mamma Mexicana, and Fort Kochi, 1MG Road Mall; The Permit Room, Ashok Nagar; Caperberry, and Fava, U B City, A Hole Lotta Love, Koramangala, Forage, Indiranagar; Egg Factory (all outlets), Smally's, Aga Abbas Ali Road; Yellow Submarine, Bannerghatta Road; Guzzlers, off Brigade Road.

What next?

Yogesh Mokashi wound up his 12-year-old chain Egg Factory in February 2021. High rentals were his nemesis. Today, he advises dining venues and runs a tech platform. It was difficult to move on. “I could only sell two of the six branches (he co-ran). We dismantled the rest. We lost 90% of our investment,” he says.

Rhea Dacosta downed the shutters on A Hole Lotta Love, her English breakfast venue in Koramangala, last year. “We were bang opposite a college and there was no certainty when it would reopen,” says Rhea, who is now overseeing a new outlet of her family-owned cafe.

Ramesh runs a hotel on his own land in Jayanagar. “It is still not easy. I am working with 90 staff members as against 130, I have switched to power-saving LED lighting. I renovated our popular restaurant with a new menu recently but then came the curfew.”