Archit Patel Shares His Views on the Impact of COVID-19 on F&B Industry: Restaurateurs Talks
We are glad to connect with Archit from Ahmedabad, founder of Happy Rolls to discuss the impact of COVID-19 on F&B industry.
Can you please tell us about your restaurant?
Archit: I run Happy Rolls, it has been about 3.5 years since I have started. Happy Rolls is located in Ahmedabad.
How this pandemic has impacted your business?
Archit: Our sales have been decreased, and there is no major revenue coming in.
If you want to understand general industry-wise problems then I can list down a lot, but the major problem is the staff.
Around 40-50% of staff in restaurants in Gujarat are from Rajasthan, and they have gone home. Other than that 20-25% of the staff were Nepali and even they have left for their home. The border tensions with Nepal are rising due to which the probability of returning of the Nepali staff is less.
In most of the restaurants with Punjabi and Chinese cuisines, Nepali chefs were employed, and now they’re facing a major issue.
Other than this smallest percentage of staff which comprises 10-15% of employees were from Bihar and UP and even they have gone home.
So, most of the restaurants here are facing major problems of staff, and because of the lockdown, they faced so many issues that they will not be going to return anytime soon.
Another issue is safety. Even with strict measures like temperature check of the delivery partner or staff, sanitisation and mask, there are always asymptomatic cases, and the customer knows this. So, no matter how many time sanitisers you use, how many thermal checks you do, there is always a probability and a factor of risk at least in the mind of customers. Due to which orders have drastically stopped.
After you reopen Happy Rolls what will be your strategy to increase sales?
Archit: It’d be to follow standard hygiene practices and at the same time make customers aware that we are following these practices. Since we have been in business for a long time, we have a good brand and reputation. But, the issue that we are facing is that the food we serve wraps, Frankies and rolls, so most of our clients you know were students, hostelites, working professionals, and the majority of the clientele has gone home.
Therefore, the places from where the orders were coming are not here. Another challenge that we’ll be taking up is to try to get more orders from local audiences. We may have to change our menu a bit to cater to the changing audience because Ahmedabad is one of the major hotspots, and almost all of the students and working professionals have gone home.
In this pandemic, how are you trying to support your staff?
Archit: In March and April, we paid full salaries. In May and June, we paid half of salaries and the reason being that we helped them with rations. The thing is that my staff have been with me from the past 3 to 4 years, so they understand the situation, and they are quite accommodating with that because even they have seen how their friends in this industry have been laid off. Therefore, they understand that they are lucky to be getting something, and the situation is quite pathetic.
What steps would you suggest industry folks survive this pandemic?
Archit: Well, I think that our government intervention is badly needed at this time. In many countries, the government has agreed to pay partial pay for the employees employed by the restaurant and the tourist industry. The dilemma we are facing is whether to fire staff or not, most of my staff are old, and also we are on very good terms.
Their family is dependent on me, so I just can’t cut them off. The thing is there is no revenue source for me, but I at least have to pay living wages on which they can survive. Not just for me, I mean for the whole industry this is a huge issue. Until the government decides to take proper relief measures or at least announce an order saying that no rents will be taken for at least 6 months, it's hard for us to survive. Landowners are forcing the restaurants to pay rent while on the other hand, they also have to pay salaries even though it’s lesser. There is a huge outflow of expenses and zero income.
It’s soon going to be very tough to survive unless space is owned by the restaurant owner, and it’s not on rent. But, as I know most of the restaurants operate on rent. As for restaurants, the measures will be taken like social distancing, proper hygiene, contactless menu, and make people aware of their practices in terms of hygiene.
The complete hospitality industry was expecting some relief measures. But they’re offering loans, but it’s not a solution. Most of the small to medium enterprises are not even able to avail those loans. The banks have now become strict and the loan is not a relief.
What is your opinion on the unemployment rate due to COVID-19?
Archit: Nobody knows how many people were employed as the hospitality industry is an unorganised sector.
Even if you’ll talk only about the restaurants in the unorganised sector, even chaiwalas and pakorawalas and moriwalas and waiters are a part of this industry, and we don't even have any data as to how many people were actually employed by this sector, but it sure is a very very big number. If you combine everyone from waiters to chaiwalas to dabbawalas, etc, and the total number of jobs that have been lost, there is no data to confirm the number to back that up.
Nobody knows this, but it’s a very huge number. Due to this pandemic, at least 50% of the restaurants have shut down, only in Khan Market, 45% of restaurants have been shut. The entire staff has been laid off, and restaurants that are functioning are operating at a minimal amount of staff strength, which is barely 25% because walk-ins are less, and due to which most of the waiters are laid off, and only the kitchen staff is operational. The situation is very critical for all those who are associated with the hospitality industry.
What is your opinion on the kind of commission Zomato and Swiggy are taking even at this time from restaurants?
Archit: Zomato and Swiggy are not there to help restaurants, they are there to please their shareholders who have invested billions in their company. When they started they came up with the premise to the restaurants - that you get associated with us, and we’ll help you increase your orders.
That was their initial offerings, and the orders increased and their commission was low as well. Also, what they did they never shared any customer data with restaurants, so say you’re ordering from me, I would not know where you are staying, your address, your phone number. Once they gathered enough data they started their cloud kitchens based on those data analytics, and due to which they know which customer has ordered what.
This is unfair trade practice because they started as a platform, delivery food partner, but now they have started delivering their food items. You either can be a restaurant, or a delivery service provider, because if you become a service provider, and own your platform then there will be bias, as they’ll showcase their restaurants on the platform at the top and frequently. Also, they have more data about the customers in comparison to other restaurants.
Not only commissions but they also started the discount rates that are 30% & 40% which was not good. Now imagine there are thousands of restaurants most of them were offering discounts, and hardly anyone used to order from those places who didn’t offer discounts. Because of the discounts, most of the restaurants were forced into this discount practice. So imagine restaurants have to pay 25-30% commission and give 30-40% discount and 25-30% is the food cost, so where is the profit margin in delivery?
What would you suggest to aspiring restaurateurs?
Archit: I have been contacted by many people who wanted to start a food business. So the biggest misconception among people is that if I cook good food, then I can do business with it.
For example, if someone makes the best butter chicken, then people think that they can start a business with that and it’ll bring revenue with it. But the truth is that it doesn’t happen in that way. The product is just one part of the total game, and there are many things that come into the picture. It is the toughest business to survive in the current time.
And currently, due to COVID-19, the impact on the business is direct. Even if this problem is solved, due to wide job losses the discretionary spending of general people has reduced and will continue to reduce until the economic scenario improves. So, unless people have a good amount of discretionary spending, they will always cut down outside food from the budget. Therefore for aspiring restaurateurs, I’d say that focus not only on your product, I mean there is a combination of various aspects like the product, pricing, marketing, target audience, and how you plan exactly to reach them, what platform do you want to use.
In this business, there are no Sundays and no off days, and many people despite knowing that they do not fully understand the impact of this decision. During Diwali, Dussehra, Holi, etc people will be celebrating with their family, but restaurant owners will be working hard. Also, there are no timings and the margins are pretty limited, and the ability to work at odd hours and management skills are required.
What is your advice on entrepreneurship to people in general?
Archit: My advice is that before starting any business have some monetary backup that is the first thing. You can’t do business now if you don’t have enough capital because at this time, no matter what you’ll do the start will be slow. And if you don’t have capital, you’ll be worried about how you are going to survive the next day, and that will impact your ability to make decisions.
So, I’d say that in the current climate unless you’re extremely dedicated to becoming an entrepreneur, right now is a very difficult time to become a new entrepreneur, because people who have already jumped into entrepreneurship are having the toughest time of their lives, and if you have enough capital then also challenges are there as we don’t know when the post COVID world will be and what the post COVID world will be.
Therefore my advice is to be extremely cautious, maybe wait and see for a couple of months, and see what's happening and what will be the new requirements.
There are chances that the business one might want to jump in would become completely obsolete.
*Please Note: This interview was taken during the lockdown and now most of the places have been reopened with the necessary precautions.