Running a restaurant is no mean task. Though it may seem glamorous, especially with all the #foodgasm posts on Instagram, many restaurateurs have actually been bleeding money. The operational cost is high, while margins are low. In fact, coronavirus is not the first blow but possibly the final blow to this industry, believe experts. One of them is Riyaaz Amlani, CEO, Impresario Handmade Restaurants, which operates restaurant chains including Social, Smoke House Deli, Salt Water Café and Mocha. In this candid interview, the veteran restaurateur takes us through the underlying problems of the F&B sector, impact of the COVID-19 lockdown and what lies ahead for the industry in these testing times.
What are the key challenges that restaurant owners face in India?
First, rents across Indian cities are pretty high. For instance, the rental cost in Mayfair or Times Square is comparable with that of Khan Market in Delhi or Linking Road in Mumbai. While you are paying as much as a restaurateur in a developed market would, you are pricing your products differently. The purchasing power here is only about one-third of what it is in those cities. Moreover, we expect great service for that price. We expect someone to open our door, someone to park our car, someone to regularly top up our half-filled glasses and someone to take away the ashtray that has just one cigarette butt. For that, the restaurant has to employ a lot more people than they do in the West. Meanwhile, this industry is probably the only one that cannot claim input tax credit on GST. Typically, other industries are allowed to set it off against payables. But the restaurant industry hasn’t been given that privilege. So, even though our expenses have gone up by 18%, there is no input tax credit.
You have also been vocal about the industry being highly “over-regulated” and even compared it with “opening an arms factory” in terms of licences…
To run a restaurant, we need about 36 different licences that have to be renewed annually. Virtually, we are spending every day dealing with some or the other government organisation, instead of focusing on our business. Some of these laws are archaic. So, it gets very difficult to operate a business within the parameters that the government wants us to operate in.