Today, going digital and cashless has been instilled in everybody’s consciousness, which will surely pave the way to take the food service industry from unorganised to a more organised existence By Tarun Raj
Demonetisation was an unprecedented topic (discounting the fact that the first demonetisation move took place a few decades ago) for the entire economy of the present generation and hospitality was greatly affected by it. However, while it created a churn in the business environment, leading to a lot of loss in our balance sheets. It also ensured that we are taken to a far more progressive direction where our efforts to earn money and build a brand/ nation don’t fail against those who don’t wish to take an organised route. I might sound too sceptical to you, but I am hopeful that the hospitality industry might be benefited with remonetisation in the coming months, paving the way for the next few years.
I firmly believe that the effects of demonetisation, although now subsiding in present terms, with new currency notes coming into circulation fairly and minimising the adverse effects of doing cash transactions, the average middle class would soon realise the benefits. In fact, even the hospitality industry will get a level-playing field. How can I say that? Here are a few reasons I wish to point out to, out of many, which I can’t discuss in detail due to space constraints. Indians did struggle a lot with this entire episode of banning of the high-value currency notes. Immediately after this news was broken by our Prime Minister on November 8, 2016, the markets and restaurants went berserk. Cash was suddenly a highly prized commodity, and of course the low currency notes. We did see how several sectors were challenged to address consumer requests, rather consumers’ demand fell sharply overnight. The choices went into a different direction and essentials were on the only priorities, negating the leisure and impulsive buying proposition from the consumption pattern.
In the short-term, India’s hospitality sector – which has been booming – had to respond and take prompt action to sustain the possibilities anticipated before demonetisation. QSRs went through a below par business during the subsequent weeks and hospitality, overall, started to witness a shortfall in business. The income had dipped in some weeks and sales were hit significantly. However, people in general were optimistic and even honest entrepreneurs could read the growth that they could realise in the imminent future. If you have read reports in the past two months, you would have realised that hospitality, which is expected to grow at eight per cent annually, is going to see a brighter tomorrow. I would like to quote the figures stated by the National Restaurant Association of India (NRAI) report where the food service industry was quoted to achieve over Rs 4.9 trillion revenue target in 2021, contributing significantly to the gross domestic product (GDP) of the country.
My point is that this industry, which is arguably the third-largest within the service sector today, is largely unorganised. This demonetisation initiative, hence, has definitely forced the entire nation towards a digital revolution. This also means that no longer the unorganised part of our food service business (beyond QSRs) can continue to remain so, if it really wants to emerge strong and grow. It will automatically come under the ambit of organised loop, which will definitely fillip the industry into becoming even larger and substantially put it on the economic road map. Subsequently, we will receive more attention and might find a reference in the General Budget, addressing our demands, which we tend to miss year-after-year.
So, I have seen demonetisation in a positive light, even if my assessment may seem far-fetched to many. However, for the optimist I am and the optimism I carry for the industry, there is no reason why I should not believe so. We all know that scores of unaccounted money has done more bad than good to the hospitality industry, which has even given it a bad name. Many people have, due to their stash of black money, become fly-by-night operators easily in this industry giving it a bad reputation and with no check whatsoever. These sets of people only use this industry as a short-term gain tool, rather than making it a potential place to make their name. This badly affects the entire ecosystem of food service segment – as a lot of people depend on it for the livelihood. Many people leave their secured jobs to join new players and lose their opportunity to sustained livelihood when they face the reality of fly-by-night operators or new entrants with no serious game plan to do good to the society.
The food service industry, I feel, has a much greater role to play. When I see and work with noted restaurateurs, chefs and others, I feel proud to be a part of this industry. They are sensitive towards the society and want to bring about a change. The remonetisation has certainly brought a change to fillip these entrepreneurs’ wish to change. We can now see that the plastic or e-transactions have gone up high and reversed its ratio to cash transactions in favour. That is certainly a change we should celebrate. That is also a change towards accountability; a change to ensure that money paid/ received is always accounted for, protecting both customers and honest entrepreneurs’ interests against those who should be nullified.
The writer is founder & CEO, Customized Kitchen India (CKI)