40 % decline in restaurants’ business

The immediate fallout of the steep rise in price of vegetables has been a 40 per cent drop in business, and hoteliers say the worst is yet to come.

“The regulars have virtually stopped coming to our hotels, families who ate out thrice a week have now reduced their outings to once a month,” says Rajpal Singh Gandhi of the Great Punjab Hotel.

In the last two months, over 20,000 hotels and restaurants in the city have been witnessing a fall in businessranging from 25 to 40 per cent. Faced with a mini Asian economic crisis, hoteliers have begun cutting costs. Some hotels have begun retrenching employees. Those employing nearly 50 workers have now cut it down to 35.

A hotelier gives an example of some workers who returned to the hotel from their holidays to be told their services were no longer required. Some hotels have begun shutting down for three hours in afternoon to cut costs.

The free onions and lemons, once dished out by the plateful have now vanished. “We’ve also begun making thinner chutneys,” confesses a hotelier. But hoteliers dread the prospect of hiking prices.

“Our customers are very sensitive. Even a 10 per cent hike will bring business down by a further 15 per cent,” says S M Shetty, President of the Indian Hotels and Restaurants Association (AHAR).

Hoteliers say their business graphs began dipping from January this year, reaching alarming levels in April and May. A slight 10 per cent increase last month was immediately offsetby a fall of nearly 40 per cent in business. “Our earnings are not keeping pace with the increase in commodities,” Shetty says.

“Which explains why there have been no new restaurants opening up in the last two to three years,” says Jagannath Nayak who owns the Anand Bhavan restaurant in Matunga.

Last year the state government slapped a 10 per cent tax on food, a 14 per cent tax on liquor and roped in small restaurants into the tax net.

The frantic hoteliers began negotiations with the state government in April this year and finally decided to observe a day’s token strike on Monday which could be followed by an indefinite strike.

Meanwhile, hoteliers have been gnashing their teeth at the brisk business being conducted by roadside stalls which dish out everything from zunka bhakar to Chinese cuisine and even liquor at half the cost. “They have no overheads like electricity, they pay no taxes, are not bothered about hygiene and rents,” says Prakash Shetty who runs the Lalit Bar and restaurant inMumbai Central.

The grim alternative facing hoteliers is either shut down or change over. Nayak is considering changing his 43-year-old restaurant into a fast food joint.