Hit hard by pandemic, hotels realign operations

Some are cutting down on expansion; over 2,000 small, medium and big restaurants have shut in the last two months

December 15, 2020 01:38 am | Updated 01:38 am IST - CHENNAI

High and dry: Lower footfalls and labour shortage have affected the business.

High and dry: Lower footfalls and labour shortage have affected the business.

The COVID-19 pandemic has transformed the restaurant business in Chennai. Those who are in this sector are realigning their models, cutting down on expansion plans. Some have even downed the shutters.

The data provided by industry experts and various associations show that over 2,000 small, medium and big restaurants have folded in the last two months. The reason — lower footfalls, labour shortage and the inability to pay rents and salaries and repay loans.

“The city has over 8,000 eateries, including bakeries and coffee shops. Of them, over 2,000 have wound up. Many more are on the verge of closing down,” said M. Ravi, president of the Chennai Hotels Association and chairman of Vasanta Bhavan Hotels India Pvt. Ltd.

Minimal staff

He said many big restaurant chains had cut down the number of outlets, while many had paused their expansion plans. “If you look at our own business, we are streamlining our branches and we are learning to operate our branches with minimal staff,” he said.

A quick search on social media forums and OLX will throw up dozens of advertisements, posted in the last 90 days, saying restaurants are up for sale. Those tracking the business in Chennai said many players were looking for investors; some were even willing to shed stakes to get the money needed to run their business.

A restaurant owner, who had put up an advertisement for sale, said, “My hotel (40-seater) is situated right near the Koyambedu bus terminus. My business has dropped by 70% and my expenses are more than what I’m making each day. So I have decided to sell the assets and do the same business from home and sell through delivery apps.”

Cooking is a hobby

The proprietor of another restaurant at Choolaimedu said that after the lockdown many families started cooking food at home; even those who came to hotels tightened their belts. “Men and women who had never cooked before took to cooking as a hobby during the lockdown with the help of online videos. They have seen the cost difference and are in a saving mode now,” he said. “I was planning to sell my business for ₹13 lakh, and no one is coming forward; I’m now pitching the sale for ₹7 lakh-₹8 lakh so that I can clear my loans.”

Most of the restaurants that have come up for sale are located near information technology hubs, business corridors, schools and colleges. Four different restaurant owners who had put up advertisements on OLX and social media platforms to sell their business said they did not expect crowds until the vaccine was out. “Several unorganised home-caterers have mushroomed in the last few months. This has also taken its toll on restaurants,” one of them said.

‘A lesson’

K.T. Srinivasa Raja, managing director of Adyar Ananda Bhavan Sweets India Pvt. Ltd., said the volume of business had reached 70% of the pre-COVID-19 levels. He said that while many restaurants had closed, many had opened new branches. “COVID-19 was a lesson for the industry to rethink business strategies. Hopefully, in 2021, the business will fully reach the pre-pandemic levels,” he said. He has reopened only 80% of his branches. The pandemic had taught the industry how to run the business with the existing workers and how to make a good output with lesser resources, he said. “We would not have imagined all this if COVID-19 had not happened.”

A hotelier at Vadapalani, who has shifted from Arcot Road to a nearby location, said smaller spaces would make sense in future. “Takeaways constitute over 60% of my total orders. So it made an economic sense for me to shift from a big premises to a less expensive small space,” he said.

Sathish D. Nagasamy, managing director of Dindigul Thalappakatti, had a different story. For him, 80%-85% of the business is back; even during the lockdown, he opened seven new branches. “We are opening 10 more branches by March 2021 in Coimbatore, Vellore and Palakkad, among other places,” he said. Mr. Nagasamy said the sales had been better in Tier-II towns than in the cities. The only challenge for him was staff shortage.

Many restaurant owners said that even now they were managing daily operations with a local talent pool as staff members were yet to return. “Even if we call them they are reluctant to return. They prefer working at their home towns,” Mr. Ravi said.

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