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operations 2015-03-30

Why sales in Indian restaurants are dropping?

However, with new outlets coming up, it is also believed that the increase in competition has increased the eating out option for the consumer.

By Deputy Features Editor
Why sales in Indian restaurants are dropping?

In the last two years, restaurant industry has seen several ups and downs, with closing of more than 500 restaurants in the country. Despite new and global brands entering the space, Indian restaurants have witnessed a drop in sales at their outlets.

Brands like Yum, McDonald’s, Costa Coffee, which have ruled Indian QSR segment for more than a decade now have seen a drop in their quarterly sales, forcing them to cut the size of their stores or close down a few of their outlets. Moreover, steep rise in service tax in the recent budget have further chopped off their growth, as food lovers find eating out more expensive now.

Reasons of drop in sales

The political and the economical scenario in the country are making the sales drop in Indian restaurant industry, believe experts. The beef ban in Maharashtra and Haryana is another deterrent to the growth of restaurant industry in the country. Many food joints have to cut down their beef and steak menu amid the state government’s ban on the consumption of beef resulting in a heavy loss to the eateries in heavy tourist areas like Mumbai, Pune, Goa and some parts of Haryana. 

Commenting on the same, Chef Sabyasachi Gorai, Owner, Fabrica by Saby and Celebrity Chef says, “I think there is an overall depression in the Indian economy because of the political and the financial scenario that is making the sales drop in Indian restaurants. We have a restaurant in Goa and it was noticed that there were no tourists and there were many questions thrown that why tourists didn’t come up, but in result, there were no tourists and we did no business.”

The restaurant industry has suffered majorly and is still suffering and in fact, many hotels and restaurants in Goa, Kochi, Mumbai, Pune and Delhi is shutting down this year as they don’t have the money to survive.

Meanwhile, consumers today are not willing to pay extra penny on their food and there is some kind of feeling about spending money making it a reason for drop in sales at the restaurants in last two to three years.

However, with new outlets coming up, it is also believed that the increase in competition has increased the eating out option for the consumer, making it tough for the existing players to increase frequency of their customers or make them comeback customers.

According to Vaneet Wadhera, Golden Tulip Hotels, “Sales in restaurants are not dropping, but being shared by the new restaurants which are opening up thus creating a situation where the supply is more than the demand. With more variety of restaurants available, people also tend to try the new eating house which leads to loss of revenue for one and gain for the other. This effect over a period of time leads to stabilising the sales for a restaurant depending upon the popularity among the locales.”

Sharing his view on the same, Chef Alok Anand, Executive Chef, Taj Coromandel, comments, “The situation is very relative because earlier there was less competition and customers also were not so demanding, so few restaurants could charge as per their wishes. In earlier days in India, visiting a restaurant was considered to be a luxury. Nowadays, there are quite a few restaurants in each locality. People also have travelled more, so they understand food in a better way as compared to old days.Hence, some older establishments are finding it difficult to inflate the prices and charge a premium so they say that sales have dropped. Actually, the volumes and the number of people visiting restaurants have increased manifold.”

And hence, it is no secret that restaurants need more customers to make their business healthier and sustain in a competitive environment.

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