Restaurant industry urges malls to work on revenue-sharing model and scrap CAM

On Friday, the National Restaurant Association of India (NRAI) sent letters to all major landlords and mall owners urging them to amend rental agreements to support the industry as it faces restrictions on operations in all states due to the rise in Covid cases amid the Omicrowave conducted.

The industry body said the restaurant sector is overwhelmed by the massive losses of the past year and that the third wave presents itself as “a heavy blow” that many will not be able to withstand unless they are actively supported by all stakeholders.

Kabir Suri, Chairman of the NRAI, said: “Unfortunately the ongoing third wave has brought us to exactly where we were at this time last year. To compound the problem, companies now have a lot of depleted resources, making the situation grimmer. We again need the support of all stakeholders to survive and we are sure that we will have their support as always. While we don’t know how long this third wave and related restrictions (occupancy restrictions/hours, curfews) will remain in place, we are certain that activity will take some time to normalize once that we will be out of the grip of this third wave. ”

The industry body said landlords and shopping center owners should offer a full waiver of rentals in case restaurants are asked to shut down dine-in services altogether. Additionally, he urged malls and landlords to work on a pure revenue sharing model during the time the industry faces restrictions such as delivery only, limited opening hours and use. limited capacity.

Maintenance costs for common areas

“No guaranteed minimum rent for three months after that and instead work on a pure revenue sharing model. For stores with a longer occupancy history, this revenue share can also be tied to their sale as a percentage of their prior period sale. CAM (Common Area Maintenance) charges during this period of restrictions should be maintained at 50% of the agreed rate,” he recommended.

“While the first two waves of the pandemic left us severely crippled and scarcity of resources forced many restaurants to close, we see greater concern with this third wave as it may actually hurt consumer sentiment in the short term. , which is already visible. With high fixed overheads, planned restrictions on opening hours, revised social distancing standards and reduced capacity utilization, any drop in consumer sentiment could be catastrophic for the industry. Surely we have a dark battle at hand and the most powerful tool to fight against it is to redefine our relationship and business model,” Suri added.

The NRAI has written individually to all major mall owners and an open letter to other owners suggesting these immediate actions due to the uncertainties. It said it has received several representations from its members requesting intervention in resolving issues related to trade terms.


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Cecil N. Messick