Card is king; small eateries struggle to retain clients

November 16, 2016 07:48 am | Updated December 02, 2016 03:49 pm IST - Mumbai

Chains like McDonald's that accept cards are just fine, as evident at this outlet at Peninsula Mall. Photo: Smaran Shinde

Chains like McDonald's that accept cards are just fine, as evident at this outlet at Peninsula Mall. Photo: Smaran Shinde

Mumbai: Much of Mumbai lives to eat, and restaurants across the city are doing something they have never done before: turn away customers.

Not only are their regulars too busy queuing up outside banks to deposit and withdraw cash, but restaurants are refusing to accept Rs. 500 and Rs. 1,000 notes, which is very often how their customers pay them. The result: business is down, in many cases, by up to half.

“We are facing a financial crunch,” said J.M. Shetty, proprietor of Maji Sagar Hotel at Tardeo. “We have to refuse people because many are still unaware that they cannot use Rs. 500 and Rs. 1,000 notes. I give those I know personally a chance to pay later, but we can’t do that for everybody.”

President of the India Hotel and Restaurant Association, Adarsh Shetty, confirmed that business is down by about 60 per cent ever since the monetisation policy was announced. Limits on encashment have left restaurateurs’ “hands tied,” he said. “We aren’t getting money from either side.”

Smaller food joints that only accept cash have been hit the hardest. “Plastic money is not even an option for them. We are hopeful about the situation improving in the coming week as more people will now have money, and the RBI is said to have released notes of Rs. 500 again.”

The cashier at Twenty Nine restaurant at Cumballa Hill Road, Sameer Sheikh, agrees with Mr. Adarsh. “After waiting for so many hours in queues and getting only Rs. 4,500, how will anybody be able to spend on restaurant food? The ones who can afford it do come. But they give us notes of Rs. 2,000 for a bill of Rs. 500, and it’s hard to give them change.”

Mr. Shaikh said restaurants were hopeful the situation would improve once banks started exchanging money, but that was just a temporary reprieve. “Now even that has stopped, and only withdrawals are allowed.”

Ganga Prasad, the owner of Aaswaad Jhunka Bhaakar Kendra at Nariman Point, too says his business has dropped by half, even though he accepts Rs. 500 and Rs. 1,000 notes. “I make one of my boys stand in the bank queue and exchange the notes. But people are cash-starved. Moreover, they believe we won’t accept Rs. 500 and Rs. 1,000 notes.”

Mr. Prasad said he operated on credit for people who worked nearby or for his regular customers. “I would get 50-60 customers every afternoon and evening. This has now come down to 20-30. Premium customers directly hand out Rs. 2,000 notes, but I don’t have the change to give them.”

Naveen Singh Vohra, owner of Hot Oven at Thane, said he has been compelled to accept Rs. 500 and Rs. 1,000 notes for the past two to three days. “I used to get 15-20 customers a day, but now very few turn up.”

The restaurant owners, however, aren’t bitter about this. “I always make my customers happy. We may be inconvenienced today, but if our customers have to go through it, it will impact us badly,” says Mr. Prasad.

He believes the restaurant industry will take a while to recover from this. “This business runs on cash. Often, it is people who earn in black who render services for us. Customers come on word of mouth, and this is what generates healthy profits for us.” With the curbs on black money, he is worried about how the industry will sustain.

The writers are interns with The Hindu


Business was affected for two days, but by Friday, it was back to normal. Our restaurant isn’t one where people think twice before coming. We have very few cash transactions and people pay by either cash or card without much ado. I wish people were allowed to use Rs. 500 or Rs. 1,000 for maybe a week.

— Gauri Devidayal, Co-Founder, The Table

For the moment, business is a little down but we attribute that to the general uncertainty and feel it should rebound shortly. Anyway, most of our spending is through credit cards. There are some difficulties with local markets, but it is a small price to pay for the good we are imagining will come from these measures.

— A D Singh, Managing Director, Olive Group

There has not been much change. We have fairly high transactions on credit cards. It is too early to tell if there’s an impact on overall consumption. I hope this gets sorted out soon and the situation is better in terms of liquidity. We have tried to help our employees who may be in trouble regarding cash.

— Sameer Seth, Partner, The Bombay Canteen

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