Gurugram: Pubs, bars left high and dry as Covid wave eats into business

According to officials, the liquor licence fee for a five-star hotel in the district is ₹25 lakh per annum, for bars and restaurants it is ₹24 lakh per annum , and for microbreweries ₹10 lakh per annum. Excise officials said it is the first time the industry is so badly hit that licencees have had to surrender their liquor licences

The multiple waves of Covid-19 and consequent lockdowns have spelt doom for the hospitality industry as at least 51 bars and restaurants across the city have surrendered their licences and shut operations over the past couple of years, said officials from the excise and taxation department.

The district administration has issued orders against late night serving of alcohol in Indore. (Arun Mondhe/HT photo)

According to officials, the liquor licence fee for a five-star hotel in the district is ₹25 lakh per annum, for bars and restaurants it is ₹24 lakh per annum , and for microbreweries ₹10 lakh per annum. Excise officials said it is the first time the industry is so badly hit that licencees have had to surrender their liquor licences. “The excise department is the highest revenue generator in the state. The Covid-19 pandemic hit revenues, the impact of which will be felt when we renew licences in June,” said VK Beniwal, deputy excise and taxation commissioner (east) .

In 2020, 327 restaurants, pubs and bars were operating from prominent areas such as Cyber Hub, Golf Course Road, Sector 29 and Sohna Road.That year, the excise department waived off the licence fee for the first quarter (April-June) and offered a 20% discount on advance payment of the fees for the third and fourth quarters to revive the hospitality industry. But the sector suffered huge losses, said officials. Currently, there are 276 pubs, bars, and restaurants operating in the city.

Over the last two years, fear of the pandemic coupled with the restrictions on seating capacity and social distancing norms led to a steady decline in footfall at restaurants. Many owners had to let go of their staff as it became difficult to keep operating with so many overheads. The second wave of Covid-19 killed all possible hope of revival and revenues went down again in 2021. Prominent outlets shut down and some of restaurant owners started virtual kitchen services, which are doing much better with limited resources and less overheads.

“I had to close my restaurant in Galleria Market as I could not afford the running cost. I decided to start delivery services and began a kitchen in a developing sector, which was very economical compared to what I was paying before... I am now earning more than I was at a full-fledged restaurant,” said a kitchen owner in Sector 65, requesting anonymity.

“We were finding it difficult to pay rent for the space and salaries of our employees as our revenue was not even 20% of what it used to be before the pandemic struck in 2020. The footfall at our restaurant had reduced by 80% and the cost to run operations was the same. So we think it was wise to surrender the licence and switch to online deliveries,” said Arvind Kumar, one of the owners of a restaurant in Sector 29.

Restaurant owners said it is still a challenge to run a dine-in place as people get more discounts online and still do not feel safe to step out of their homes, despite all the precautionary measures in place. Earlier, a restaurant catered to over 300 guests in a day on average, which has now reduced to 20, said owners, adding they need at least 50 guests every day to make ends meet.

According to an October 2021 report by National Restaurants Association of India (NRAI), the Indian food services market saw a degrowth of 53% in fiscal 2021 as compared to 2020. Revenue and profitability took a significant hit due to Covid-19, with average revenue post lockdown in 2020 seeing a degrowth of 46% compared to pre-Covid levels, and an average profitability degrowth of 88%.

Ashish Dev Kapoor, the founder of Whisky Samba Bar and Grill, said bars have their own challenges. “In our business, there is no takeaway or delivery option. A lot of breweries have expiry issues with beer, which increases the cost. The last two years have been very difficult for bar operators. Hence, a lot of people decided to surrender their licences and shut their operations and get into more Covid-19 friendly operations, such as running a kitchen with lower overhead costs,” said Kapoor.

Inderjeet Banga, owner of Prankster and Pirates of Grill and the head of NRAI, Gurugram chapter, said that all the cashflow in the food business dried up during the pandemic. “Covid-19 has led to a paradigm shift in the city with major corporates working from home. This has led to large restaurants and bars closing down,” he said.

“The current financial year (2021-22) witnessed two waves of the pandemic, which hit the hospitality sector so badly that there was significant loss of jobs and many outlets had to permanently shut down. We expect the government to share the responsibility of rebuilding the sector through progressive policy measures and rationalising fees,” said Rahul Singh, trustee, NRAI.

Udit Batra, vice-president of Frictions in Sector 29, said even new players are jittery about entering the market now due to the uncertainty.

VK Beniwal, deputy excise and taxation commissioner (east), said the department tried to support the owners by extending the deadline for paying the excise licence fee from March to June. “Last year too, we extended the deadline by 40 days.We have also relaxed some of the conditions, such as waiving the fixed quota to sell liquor and food, based on which the licence is renewed,” said Beniwal.

Excise officials said it will take at least two more years to recover the losses. “The situation has improved this year, as can be witnessed from the last two months. Restaurants are competing for more customers as they open their doors once again. The second half of 2022 looks to be promising, both in terms of revenue and footfall,” said Beniwal.