Restaurants to steer towards delivery & takeaway model impacted by long road to recovery post lockdown

Bengaluru: Digital delivery and pre-order takeaway will gain prime focus of restaurants in post Covid era to stay financially viable amid strict social distancing norms, said leading hospitality firms such as Massive Restaurants, Jubilant Foodworks, Wow! Momo Foods and Chaayos at a webinar hosted by Retailers Association of India (RAI) on the future of food business.
The major thrust on delivery as the new business model comes as restaurateurs jointly estimate that the industry will easily take about 6-9 months to recover.

“Although I have been against home delivery model until now, I will scale it up as food safety and hygiene is key going forward. Consumer sentiment is low. There is wealth dilution. Established brands will get the bigger chunk of the pie driven by trust factor,” said Zorawar Kalra, founder of Massive Restaurants that owns Farzi Cafe, Masala Library, Pa Pa Ya and Made in Punjab across India, Middle East and UK.

The premium dining firm said the positive response from reopening an outlet in Qatar a month ago for takeaways and deliveries convinced Massive to increase its existing 7-8% share of digital delivery and takeaway business this year.

Recently, top five-star chains such as The Oberoi-Bengaluru, Indian Hotel Company’s Taj chain and The Park Hotels also started delivering food to homes from their in-house restaurants, in a bid to create an alternative revenue stream amid the long road to recovery.

The restaurant sector, estimated to be a Rs 4 lakh crore industry, was at a standstill for two months following the nationwide lockdown starting March 25. Malls and restaurants were among the first casualties of the country’s phase-wise lockdown. The government, however, allowed restaurants to be open for online ordering.

QSR chains such as Domino’s Pizza noted that as consumers become more discerning about hygiene, they will move from street vendors to the organised sector with keen preference for delivery model.

“Consumers, especially in smaller towns, who were earlier hesitant are adopting digital delivery now. The ticket size has also increased, indicating that delivery will be a long-term trend,” said Pratik Pota, CEO of Jubilant Foodworks that operates Domino’s Pizza and Dunkin Donuts.

Last August, several restaurants had logged out of online food delivery and dine-in aggregators including Zomato protesting what they said was unsustainable deep discounting. At the webinar, restauranteurs emphasized on recalibrated conversations with aggregators about commissions, discounts and delivery experience of the customers in post-Covid times.

“We will need to work hand-in-glove with aggregators now. Most restaurants will find the discount model difficult as we will have bigger costs to cover to keep business viability intact,” said Nitin Saluja, founder of tea cafe chain Chaayos.

According to apex body NRAI, or the national restaurant association of India, the hospitality industry employs 7.3 million people and is the second largest employer of human capital in India after agriculture. Even as lockdown is lifted completely, food and beverage sector is expected to be hit the hardest within discretionary categories due to low consumer sentiment and reduced discretionary spend due to pay cuts.

Sagar Daryani, cofounder of QSR brand Wow! Momo Foods, said, “India will be the fastest country to bounce back. About 75-80% of our population lives hand-to-mouth on a daily basis.”
Restaurants are drawing up new rules of customer engagement once lockdown ends and business resumes.
Anurag Katriar, president of NRAI, said, “Dining out will never go out of fashion. However, no business can be conducted on the terms of pre-Covid era.”