Restauranting in the Time of Coronavirus

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Restauranting in the Time of Coronavirus

BY TAMISH GIRI

Just weeks before the nation-wide lockdown in March which aimed to contain the coronavirus outbreak, which has brought some of the mightiest countries of the world to their knees, the Nepali coffee chain Himalayan Java inaugurated its new outlet in Chhaya Center, Thamel. Back then, Bota Mo: Mo also had opened two new outlets of Bota and another two additional Mo: Mo-Guru outlets in Kathmandu and Chitwan respectively. Today, most of those restaurants, among others across the country, are struggling to sustain their investments.

According to the Restaurant and Bar Association of Nepal (REBAN), there are over 3,500 restaurants in Nepal, out of which 450 are its member restaurants in Kathmandu, Pokhara, and Sauraha.

REBAN office bearers say that the COVID-19 pandemic has forced many restaurants to close. So far, over 35 restaurants have closed in Thamel alone including The Ship, Hot Breads and Bakery Café, informs Arniko Rajbhandari, president of REBAN. Likewise, Trisara, one of the associate members of REBAN has been compelled to postpone its expansion in Kathmandu.  

Sovan Bir Malakar, co-founder of Trisara Restaurant informs that the pandemic has affected the hospitality business extremely. He adds it has completely shattered the operation of Trisara. “The outbreak has affected the world economy entirely, but hospitality business particular in such regard has been affected the most and Trisara is not an exception to it, we are observing an unprecedented loss in terms of business,” he informs.   

Trisara currently has three outlets - Lazimpat, Durbarmarg, and Pokhara. Trisara, along with many other restaurants during the initial phase of the lockdown, had started take away and home-delivery services to keep the business afloat. “We were receiving an overwhelming demand from our customers and were leading all restaurants almost by 60 percent in take-away and home delivery demand within Kathmandu. However, the demand slowly started to decline with the surge of COVID inside Kathmandu,” Malakar adds.

After the lockdown, Trisara has observed an 80 percent fall in sales and profit while its outlet in Pokhara has closed.  

Like Trisara, Bota Mo: Mo was also receiving enthusiastic demand for takeaway and home delivery during the lockdown. Despite incurring losses Bota was at break-even point through its takeaway and home delivery. “During the lockdown, we were receiving a massive demand for frozen momo and so we initiated delivery with a minimum order of Rs 700 inside the Ring road. We didn’t take any delivery charges for orders above Rs 700. Lately, we also delivered steamed momo with limited menu through Bhoj and Foodmandu,” informs Junesh Pradhan, operation manager of Bota Mo: Mo.

Bota Mo: Mo currently has ten outlets of Bota and, two outlets of Mo: Mo Guru. Bota has sold three as a franchise and the remaining nine are owned by them. However, the demand and sales of Mo: Mo in Bota declined due to the surge of the virus.

Pradhan informs that despite implementing robust sanitation and hygiene measures, the sales and demand before the second lockdown had declined by as much as 40 percent due to the fear of the pathogen. “Then the lockdown restarted hampering our entire sales,” he adds.

Likewise, Himalayan Java started take-away and home delivery during the lockdown.

“COVID has hit us very hard in terms of revenue, cost. We didn’t have any transactions for almost three to four months during the lockdown. We were not eligible to operate during the lockdown, despite being a coffee shop and bakery we didn’t fall on the list of 44 industries permitted to operate,” says Surendra Saud, general manager of Himalayan Java.

Due to the hectic government compliances, Himalayan Java didn’t take any initiation to approach the government for the permit. The café went almost four months without any business. Himalayan Java currently has 27 outlets across Nepal, 17 are sold for franchises, and 10 are self-owned.

“Even though we are okay with the lockdown because the government is concerned about safety. However, they need to do it with a plan. There is a huge chunk of daily wage working population in Nepal including in Himalayan Java. The improperly planned lockdown has affected these workers,” Saud adds.

According to Rajbhandari, restaurants create 70,000 to 80,000 direct jobs in Nepal. “Before COVID, restaurants used to make a daily transaction of Rs 80 million while Rs 40-50 million was spent on vegetables sold by farmers across the country. COVID has jeopardised the entire ecosystem - farmers, restaurants, employees and owners,” he adds.

However, Malakar, Saud, and Pradhan say that they haven’t laid off any of their employees so far. Himalayan Java, Bota, and Trisara have been employing more than 500, 260, and 270 people respectively, out of which only 20 percent are active while the other 80 percent are on unpaid leave.

Himalayan Java, along with Bota, is currently focused on cost control. “We are working on a model where having less manpower will make effective production staff. I think we are currently in a transition from switching from table service to self-service,” says Saud.

However, the restaurants have been receiving a mixed reaction from the customers. During the initial phase, while the restaurants initiated takeaway service, many of the customers had requested to let them enter the restaurant and enjoy the coffee.

“We are utilising this time to educate our customers about the coffee culture as we want to change the experience of drinking coffee of our customers. We have already started it in some of our outlets and are planning to expand it all over. We are studying our customers and taking their feedback and, if our customers are willing to adapt to this model we will switch to it where we try to save money in production and manpower. Our ultimate goal is to hygiene, excellent service, quality, and value for money,” says Saud.

Similarly, Malakar says that the restaurant business won’t return to normal unless the vaccine for COVID is introduced. “People will have a fear of going to restaurants until they have the assurance of the vaccine. Trisara is more into entertainment and in such instances, we don’t see people coming in normally until January 2021. Being patient is our only strategy to combat the impact of COVID,” Malakar adds.

While most of the restaurateurs are adapting to take-away and delivery service, Malakar in such regards opines that Trisara cannot sustain with earnings from take-away and delivery service. As such, Trisara has recently started a bakery service.

“Having our bakery was under our expansion plan for a long while and we have utilised the current situation on it. Bakery products last longer than normal foods and it gives us the leverage to keep our staff engaged,” he adds.      
In the meantime, Saud says that he has been receiving enquires for new franchises from investors despite the unprecedented circumstances. “This is an overwhelming experience and we thank our customers for it. However, we are reluctant to undertake such offers and are more focused on sustaining our current businesses. We have completely switched our priority from expansion to sustainable mode because we want to help our business including our franchise to sustain in the long run” he expresses.

Restaurateurs had some minor expectations from the government in terms of wavier on tax and VAT as support to face the current economic slowdown which has hard hit the restaurant business. “We know they cannot do a lot but some leverage in terms of extension of tax and VAT payment could have helped us and our employees a lot. The government has failed to bring in such mechanisms and this can hamper the entire ecosystem of the economy,” says Pradhan.

The government has allocated Rs 50 billion for the soft loan on a 2 percent interest rate for SMEs. However, restaurateurs inform that the banks hesitate to speak about it with them, while most of them inform that banks are sceptical to share the procedures to apply for the loan.

Both Malakar and Saud were sceptical about whether the government has introduced the soft loan for implementation or announcement only. Malakar informs that restaurateurs are currently filled with anxiety and a soft loan in such regards would support them a lot. “It could have supported restaurateurs to cover the rent expenses.” he opines.

However, Rajbhandari informs that the government has been providing soft loans to airliners and hoteliers only. “The government has emphasised more on tourism sectors. Restaurants being dependent on tourism do not fall under the category. It is because we are not registered under the tourism department. We have been trying for a while to register under it but the compliance is complicated, however, Nepal Rastra Bank has assured that restaurants will also be eligible for the loan under the monetary policy,” he adds.

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