NRAI, the National Restaurant Association of India, advised members on 18 March 2020 to close from the next day until 31 March, before any government order, Deccan Herald reported. NRAI cited the health risk to staff and guests, and sought relief including revenue-share rents, GST input tax credit, a loan moratorium and deferred licence fees.
On 18 March 2020, NRAI (the National Restaurant Association of India) issued an advisory telling its members to close their restaurants from the following day until 31 March. At that point no government order required them to. Deccan Herald reported the advisory at the time, along with the explanation NRAI gave in its press statement.
Why NRAI chose to close
According to Deccan Herald, NRAI said it took the decision because of the serious health risk facing the lakhs of people employed in food service and the millions of guests they serve. The association described an "unprecedented situation" that forced it into hard choices with "massive financial implications" for its members' businesses, made for the benefit of their teams, guests and communities.
The report adds that NRAI was particularly concerned that most food-service staff travel to work on public transport. It set that infection risk against the certain loss of revenue from shutting voluntarily, and decided to close anyway.
The relief NRAI asked for
The advisory also served as NRAI's first request for support from government, landlords and lenders. The requests reported by Deccan Herald were:
- Moving from fixed rent to a variable, revenue-share arrangement, so that landlords carried part of the cost of closure
- Input tax credit on GST, which restaurants have historically been refused, unlike most other industries
- A moratorium on loan repayments
- No interest charged for the period of the shutdown
- Lower energy costs
- More time to pay licence fees and taxes
NRAI presented these as matters to settle jointly with banks, financial institutions, landlords and government departments, rather than as a petition to any single one of them.
What this means for your restaurant
- Know which of your costs keep running when the doors are shut. NRAI's list of rent, loan repayments and interest, energy, licence fees and taxes works as a practical checklist.
- Read how your lease deals with a closure. A revenue-share rent, one of NRAI's requests, would move part of the loss onto the landlord.
- Think about how your team gets to work. Staff reliance on public transport was the specific risk NRAI weighed when it decided to close.
- Treat GST paid on your inputs as a real cost when you price the menu, since the report notes that restaurants have historically been unable to claim input tax credit on it.
Sources
This article summarises the reporting and guides listed above; the figures belong to those sources and are attributed in the text. Check anything that affects your business against your own platform agreements, payout statements and advisers.