24 Lakh Jobs Lost After Over Half Of The Eateries Closed Down During COVID Lockdown In India

The coronavirus-induced lockdown had severe impact on many industries across the world, but the one which saw the worst time of all, has been the food service industry. Lakhs of jobs were lost as the restaurant industry was gravely hit by COVID-19, and this further led to job losses and restaurant closures.

As restaurants had to pivot to an online-only model to survive, many closed down, but while evidence so far was anecdotal, a report published by the National Restaurant Association of India (NRAI) showed that in FY21 (Apr 2020 to March 2021), the Indian Food Services industry declined by 53%.

What led to the crisis?

That is more than half of the eateries across India! Stringent Covid curbs, exacerbated by protracted lockdowns, broke the backbone of India¡¯s food services industry with a quarter of the restaurants closing down which in turn rendered an estimated 24 lakh people jobless, says the new report.

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In FY21, the size of the food services industry in India shrank by 53% to Rs 2 lakh crore from Rs 4.23 lakh crore in a year flat, says NRAI, which represents the interests of five lakh restaurants. Its latest report is titled Covid impact on the food services industry 2021.

Which were the worst-hit areas?

Location-wise, Delhi and Mumbai were the worst-hit while Bengaluru and Kerala also witnessed closure of several eateries, including popular ones. ¡°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,¡± says the report.

According to NRAI, food service has been one of the worst-hit businesses worldwide and India is no exception. Within the industry, the worst affected were small operators in the unorganised sector.

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¡°Due to hygiene and safety issues as well as lack of working capital, small businesses suffered,¡± notes the report.

How have the revenues & services been impacted?

Revenues of restaurants took a beating due to the pandemic, and according to the report, the average revenues of restaurant after the first lockdown was down by 46% as compared to pre-pandemic levels. Presently, after the second wave, there is an increase in business as compared to after the first lockdown, it said.

While dine-in services took a hit, the share of deliveries and takeaways for restaurant players increased on an average from 13% during the pre-Covid times to 33% now. The average order value, too, rose by 43%.

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Is there a road ahead?

The return of diners may be the reason why the report is bullish about the years ahead, predicting that the organised sector will achieve a compounded annual growth rate (CAGR) of 8% to crank up a total turnover of Rs 6.21 lakh crore in FY2025.

NRAI is hopeful that the industry, one of the major job creators employing around 73 lakh people, will recover as most Covid restrictions have been eased.

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It pegs the market size to touch Rs 4.72 lakh crore in FY22, adding that in a normal fiscal, the size would be Rs 5.5 lakh crore. The road ahead, however, is likely to be bumpy as the average revenue after the second Covid wave is just 72% and profitability at 54% of pre-Covid times.

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