It has been 10 days after Prime Minister Modi announced the demonetization of the widely used Rs 500 and Rs 1,000 currencies, leading to widespread panic and chaos among all walks of citizens.
As people struggled to manage their daily expenses, many Indians who do not depend on digital ways for transactions curtailed their visits to restaurants in order to save their petty cash, which eventually led to a drop in sales and footfalls at restaurants.
Initially, restaurants owners were apprehensive of the actual impact of demonetization on restaurants, thinking that the curse is spelled for just a few days. Now, a lot of restaurant owners have begun to fear the consistent dip in footfalls even days after demonetization.
The cash crunch has hit small restaurants or Quick Service Restaurants (QSRs) the worst. Since such eateries offer food at budget-friendly prices, i.e. typically under Rs 500 for two, a severe drop in attendance has been witnessed at these places.
It is not just the small restaurants, but food outlets of all types have been hit by the effect of demonetization. Even restaurants in Delhi, the biggest food market, have seen a crunch. Restaurants in posh Delhi NCR locations like Gurugram have seen a 15 percent drop in their sales.
From juice stall owners who have been observing a drop of 75 per cent in their sales to an average of 20-30 percent drop in casual and fine dining restaurants, demonetization has trapped the entire F&B industry that has witnessed a 15-40 per cent crash in sales overall.
As reported by National Restaurant Association of India (NRAI), fine dining restaurants, organized food retail chains and restaurants at malls combined, have witnessed a nearly 40 percent drop in their business. Riyaaz Amlani, the president of NRAI, said that for two days after it was announced that currencies of Rs 500 and Rs 1,000 were no longer legal tender, business was down by 40 percent. Over the weekend that is 11th-13th of November, things improved a bit, but sales were still down by 20 per cent. This week again the decline in business was back to 40 per cent.
Though there are considerable sections of people who remain unaffected by demonetization and continue to make transactions via digital payments, a vast majority of people are struggling to manage their basic necessities and the bedlam prevails.
In this situational crises, you, as a restaurant owner can try the best from your end and seek for ways to beat the effect of demonetisation and manage your restaurant’s footfall and revenues.
While it is expected that the bustle is momentary, industry owners are concerned that it might take a few months for sales to pick-up. However, it seems like it may take a longer than anticipated for market liquidity to stabilize and the cash-flow to regulate. The final outcome is something only time can tell.