Face-off intensifies between restaurants and land owners over rental discounts and refunds


According to report by Ratna Bhusan published in ET said that the face-off between India’s largest fine-dine restaurant brands and land owners over rental discounts, moratoriums and security refunds has intensified, with close to 150 restaurant companies collectively signing undertakings that they will not occupy each other’s premises without obtaining no objection certificates (NOC)s from vacating tenants either directly or through their landlords.

Some leading names which have joined forces on this include Lord of the Drinks, Warehouse Cafe, Social, Indigo, Smokehouse Deli, Mamagoto, Indigo and Tote on the Turf.

“Some of us have neither been given moratoriums nor any discounts on rentals, while many of us who have vacated premises have not been given back security deposits. Landlords are trying to swap locations which have been established by a brand to others but we stand in solidarity,” said First Fiddle chief executive Priyank Sukhija, owner of Lord of the Drinks and Warehouse Cafe.

Industry executives said commercials of the pre-covid era cannot remain a relevant benchmark and that the pledge is aimed at ensuring that landlords who use “pressure tactics such as non-refund, deduction of deposits and the court cases” are dealt with collectively.

Anurag Katriar, chief executive of DeGustibus Hospitality which operates Indigo Deli, Neel and Tote on the Turf, said the move is aimed at putting together a collective code of conduct for industry, to resolve urgent commercial concerns. “We are facing an unprecedented crisis and business volumes are expected to be very subdued for quite some period; it is critical for landlords and operators to arrive at fresh commercial terms at the earliest,” he said.

The companies said they have also pledged not to work with real estate consultants who pitch occupied premises to prospective new tenants at the behest of landlords without NOCs. The numbers of the collective pledge are expected to top 250 by the weekend.

“We are fighting simultaneous battles on different fronts; real estate commercials is perhaps the biggest battle we are fighting now,” Sukhija said.

Industry executives say even post-pandemic, they expect volumes of business to be just between 30-40% of the pre-lockdown numbers at least till there is a vaccine and consumer fears over the virus subside. The Indian government had called for a nationwide lockdown starting March-end to curb the spread of Covid-19, leading to a complete shut-down of malls, restaurants and hotels. While deliveries began a month later, the numbers have been very limited.

The industry has been engaged with landlords to invoke the force majeure (or act of God) clause, waiver of rentals and variable revenue share models since April. While some malls have worked on arrangements with landlords such as waiving off rentals for the April-June quarter, and subsequent quarterly discounts ranging from 80-30%, these are not uniform.

Multiple landlords ET spoke to said moratoriums and security refunds are being dealt with on a one-on-one basis, depending on their individual relationships with brands.

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