The Indian food industry may see an increase in its profit margins after the lockdown — currently in place to stop the spread of the novel coronavirus infection — is over, said entrepreneur and restaurateur Prateek Pawan.
Bengaluru-based Pawan explained that there are several reasons this could happen. And this could include information technology (IT) companies letting their employees continue to work from home (WFH).
India has been under near-total lockdown since March 25 to stop the spread of Covid-19. The lockdown was to end on April 14, but Prime Minister Narendra Modi extended it to May 3.
Over the past couple of weeks, authorities have allowed restaurants to function, but only for takeaway or home delivery. However, that may not be enough as people are ordering 40-45 percent less online while cooking at home, said Pawan.
Bad news for small restaurants
Pawan, who founded Internet Kitchens Pvt Ltd, told Times of Food that the industry will see at least 25-30 percent of small restaurants unable to sustain themselves. These will fold before the lockdown is over.
His views mirror those of the National Restaurant Association of India (NRAI). The restaurant body has already written to the Central government to bail out eateries.
The closures will leave a lot of restaurant workers jobless. And those that will continue to have a job may have to take a pay cut, explained Pawan.
One way to help such people would be to set up manpower agencies dedicated specifically to the industry, he said.
Indian food industry stands to gain?
The Indian food industry right now is a low-margin industry, said Pawan. However, that may change due to closure of these small restaurants, he said.
For one, new entrants could negotiate better on real estate, citing teething problems and the Covid-19 fallout.
Secondly, they could seek out and buy second-hand equipment for cheaper, and use it in their business.
Third, he said, they could price their food nominally, and build their brand identity around safety and hygiene. With even the Central government enforcing norms regarding these, people will lean towards cleaner food, cost notwithstanding, said Pawan.
Another factor will be the pick-up in online orders once the lockdown is partially and then wholly lifted. Pawan feels this one will be even more important for restaurants to increase their profit margin.
With WFH culture slated to continue through partial lockdown and even later, many people staying at home will not have time to cook. This means more and more of them will order online, which will boost the industry, said Pawan.