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Zomato says food delivery is returning to pre-COVID levels, but several dining out restaurants face an uncertain future

Food delivery platform, Zomato, said that the food delivery industry has “largely recovered”, with the overall sector clocking around 75-80% of pre-COVID gross merchandise value. In its second mid-COVID report, published on Wednesday, the company estimated that the industry will hit pre-COVID levels of business in the “next 2-3 months”. However, it also showed that dining out restaurants are looking at an uncertain future, as several of them have already permanently shut shop.

Dining out industry will take a lot of time to turnaround the pandemic’s impact: While it’s no secret that the COVID-19 pandemic has hit dining out restaurants hard, food delivery company, Zomato’s latest report showed just how gloomy the picture actually is: the company estimated that around 40% restaurants in India, that remain shut owing to the lockdowns, might not be able to reopen at all.

Zomato said that the dining out industry is operating at a meager 8-10% of pre-COVID levels. Even in cities where lockdown restrictions have been lifted, less than 20% of restaurants are open for business, and even those are running on low capacity. In Delhi-NCR for instance, only a little over 10% of restaurants are currently open for dining out, according to Zomato. Restaurants in and around commercial districts are expected to take the longest to recover, the company said.

Source: Zomato

Zomato also said that most of the customers plan to decrease spending on dining out in the near future and some of this spend will shift to food delivery. It said that 60% restaurateurs estimate to retain less than half of their original business volumes for a few months even post-COVID. The company also said that since March 25, it has delivered 7 crore food orders, and estimated between other food aggregators and direct restaurant channels, Indians have ordered 20 crore times, in the same period.

Dining out is better in some international markets: Zomato’s dining out transactions in markets like New Zealand, UAE and Portugal are already back to pre-COVID levels, the company said, while adding, “However, recovery in India will be slow and would largely be driven by industry’s ability to build back consumer confidence”.

Impact of work from home norms: With companies giving employees the option to work from home, Zomato said there has been a mass exodus of people from metros to other cities across India — it claimed 1 in every 5 Zomato customers in metros (pre-COVID) have opened their app from a smaller town recently. Out of these relocated people, one third have already started ordering food again from their new location, the company said.

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