The new norms of social distancing and less demand are hurting the restaurants
Khan Market is one of the world’s most expensive retail high street places. But over the past few weeks, many cafes and restaurants including Café Turtle, Full Circle Bookshop, Smoke House Deli and Sidewok Restaurant have announced that they are shutting. Owners said that they were not able to come up with an understanding with the owners on the rent of their shops. They said that they couldn’t afford India’s most expensive commercial space amid the new norms of operations under the cloud of COVID-19.
Why are restaurants leaving Khan market?
Nationwide lockdown hit the restaurants hard. Some restaurants have managed to focus on delivery services while many were not able to adapt due to an unviable model that required high costs of running kitchens and overheads such as water and power bills. Also, the public demand for food was very less. Restaurants are now allowed to open only with new norms like social distancing, limited capacity and sanitizing the premises. This has increased their cost of operating.
Also, due to the fear of coronavirus people are not dinning or ordering food online citing hygiene and sanitization. Some have lost their jobs or had pay cuts which are ultimately making the restaurant unaffordable for them.
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Is anything different in Khan Market?
Khan Market is the most expensive commercial space in the country, has the highest fixed costs. Cushman and Wakefield ranked Khan Market on 20th position in the annual report of most expensive shopping streets in 2019 with annual rent averaging Rs 18,500 as per current dollar to rupee ratio per square foot. This means that the rent for even a 100 sq foot space would be more than Rs 1.5 lakh every month.
For some restaurants, rent was almost 50 percent of their costs. Many had to lay off their employees, send them for unpaid leaves or pay them a certain percentage of their salaries. Overall it is the combination of low revenues and high rents that is making the Khan Market shops either shut or shift to some other place.
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