40% restaurants may not reopen at all in India: Zomato

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40% restaurants may not reopen at all in India: Zomato

Last Updated : 20 Aug 2020 12:16:54 AM IST

Zomato

While the online food delivery space is somewhat returning to normal, the dining out industry in India has been hit hard and is operating at only 8-10 per cent of the pre-Covid levels, a new Zomato report revealed on Wednesday.

Out of the 83 per cent restaurants that are not open for business, 10 per cent have already shut down permanently.

"We anticipate an additional 30 per cent restaurants to not reopen at all. Remaining 43 per cent are closed right now but are likely to open as the situation becomes better," said the 'Indian Restaurant Industry - Mid COVID-19 Report' released by the online food delivery platform.

The slump in the dining out industry is largely driven by markets being in lockdown, consumers not stepping out due to fear of transmission and restaurants not opening up, even if the city is not in lockdown.

"Even in cities where restrictions have been lifted, only 17 per cent dining out restaurants are open for business at the moment which are also running at low capacity," Zomato said.

Most of the customers plan to decrease spending on dining out in the near future and some of this spend will shift to online food delivery.

"Nearly 60 per cent restaurateurs said they estimate to retain less than half of their original business volumes for a few months even post-Covid," the findings showed.

In the meantime, the online food delivery industry has largely recovered, with the overall sector clocking around 75-80 per cent of pre-Covid GMV (gross merchandise value).

Recovery trends are strong and Zomato estimated that the online food delivery industry would hit the pre-Covid levels of business in the next 2-3 months.

"Predictably, residential areas are doing 50 per cent better than commercial areas. Restaurants in and around commercial districts are expected to take the longest to recover," Zomato said.

The leading food delivery platform said it has delivered seven crore food orders since the lockdown started on March 25.

"We estimate that between other food aggregators and direct restaurant channels, Indians have ordered 20 crore times since the lockdown," the report mentioned.

The number of restaurants offering food delivery is at 70 per cent of the pre-COVID levels. Out of this, about five per cent restaurants did not offer food delivery services pre-Covid.

With companies giving employees the option to work from home, there has been a mass exodus of people from metros to other cities across India.

"One in every five Zomato customers in metros (pre-Covid) have opened their app from a smaller town recently. Out of these relocated folks, one third have already started ordering food again from their new location," the Zomato report noted.