The restaurant industry, crippled by the pandemic, reported a 53% decline in business in FY21 with the market size shrinking to ₹2 trillion from ₹4.2 trillion in FY20, the National Restaurant Association of India (NRAI) said in a covid assessment report released on Monday.
In FY22, the Indian food services industry might manage to reach more than 85% of pre-covid estimates. NRAI estimates that in a normal fiscal, the industry would have touched nearly ₹5.5 trillion. This has been revised down to ₹4.7 trillion.
The restaurant industry faced causalities on the back of several lockdowns imposed to contain the spread of coronavirus. This was true of both organized and unorganized chains.
In FY21, 25% of restaurants shut shop completely and more than 2.3 million people employed in the sector lost their jobs, NRAI president Kabir Suri said.
The food services market also saw a skew towards home deliveries as convenience took precedence for consumers and restaurants alike.
The study captured insights from food business operators and their partners including aggregators, manpower and staffing agencies, logistics partners, and others affected by covid.
The industry will take time to recover fully and crawl back to pre-covid levels despite normalcy kicking in amid the steady vaccination drive, according to NRAI estimates.
The substantial decrease for FY21 pre and post covid is a measure of how severely the industry has been hit.
Not surprisingly, restaurants in larger cities with a high caseload suffered the most. These include Delhi and Mumbai.
“Food business outlets in the country’s top two cities have been the most affected with covid-19 affecting these two cities in a severe manner because of the population density and economic activity, among other factors. State governments had imposed complete lockdowns both during the first and the second wave of covid. Even on operational days, there were restrictions on seating capacity and hours of business. This means food services business hardly operated without restrictions since the start of covid,” the report said. Even when restaurants reopened, they worked under timing and capacity restrictions.
Tier-2 markets, on the other hand, reported a faster recovery. Several restaurants reported quicker recovery in markets such as Chandigarh and Indore.
“The industry is going through intense restructuring to adapt to the challenges posed by covid. The NRAI report aims to highlight several trends that have emerged over the last 18 months and act as a compass for policymakers to provide a much-needed boost for the industry,” said Chaayos founder and NRAI managing committee member Nitin Saluja.
A restructuring is happening with more orders shifting online or to takeaways. Pre-covid, the average contribution of deliveries to overall share of revenue for restaurants stood at 10%. This grew to 29% after the first unlock and continued to grow to touch 33% after the second unlock.
However, as the covid situation improves and things normalize, the delivery segment is expected to shrink from the current levels but remain well above pre-covid levels, the report said.
There has also been a surge of cloud kitchens in some of the country’s top cities during the lockdowns.
The industry employs 7.3 million people and is one of the largest employment generators for the economy
Subscribe to Mint Newsletters * Enter a valid email * Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!