Covid impact: Big restaurants may walk out of malls to high streets

Some marquee brands are looking at moving back to streets from malls because of Covid-19.

Covid-19 is starting to reverse the trajectory of modern retail in India — from streets to malls was the big shift that started in early 2000, now at least some marquee brands are looking at moving back to streets from malls.

Leading the reverse movement are some of the most popular dining and QSR chains — McDonald’s, Speciality Restaurants, deGustibus and Lite Bite Foods.

Their reasons are, first, restaurants in high streets may open before those in malls, which are considered most high risk for infection spread. Second, even when malls open, business timings may be restrictive and consumer apprehension high, and, third, street stores typically have lower rental costs.

Some restaurants chains are also hoping standalone stores may offer, in some locations, drive-through facilities, an alternative to both sit-down and home delivered meals.

That is the logic for Sanjeev Agarwal, chairman of Connaught Plaza Restaurants Ltd (CPRL) which runs 155 McDonald’s restaurants across north and east India. He said McDonald’s has begun drive-throughs lanes in the north and east in 17 of its restaurants, with more in the works.

Industry executives say they expect business volumes in restaurants to be just 30-40% of pre-lockdown initially. Anjan Chatterjee, managing director of Speciality Restaurants which operates Mainland China and Oh! Calcutta, said high-street stores are not dependent on external factors like mall footfalls and they offer not just lower rents but also don’t attract common area maintenance charges that mall stores have to pay.

NRAI Airs Commercial Concerns

On Wednesday, industry body National Restaurant Association of India (NRAI) wrote to mall owners to “urgently resolve” commercial concerns, asking for waiver of rentals and variable revenue share models.

Anurag Katriar, president of NRAI and Chief Executive Officer of deGustibus Hospitality which operates Indigo, Tote and Dakshin Rasoi, said, “We will walk out of any operationally high-risk location.” He, too, cited higher mall rentals as another factor.

Rohit Aggarwal, director at Lite Bite Foods which runs Punjab Grill, Street Foods and Zambar, said: “We will shut down stores in any mall where rentals are unaffordable.”

Cafe Delhi Heights co-founder Sharad Batra said he is also considering such a move. “High streets are easier to operate,” he said.

Mall owners are of the view there can’t be collective bargaining with one industry association.

Deepak Zutshi, head of Select Citywalk Mall, said negotiations with brands will be on one-on-one basis since relationships “are different with different brands”.

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