Trying to make the best of a really bad situation
By Dimithri Wijesinghe
With last week’s short-lived announcement to lift curfew, which has since been extended, we reached out to MSD Productions (of Sugar Beach, Sugar Bistro, Baillie Street Merchants) Director Dinesh Wijesinghe to get a general view into how the restaurant industry is going to look when the curfew is finally lifted and we all have to make attempts to reclaim even a semblance of the status quo.
Things are looking bleak
Dinesh, who is also a member of the Executive Committee of the Colombo City Restaurant Collective (CCRC), shared that the situation is by no means perfect and that what they are doing currently is to try to make the best of a really bad situation. About the eventual kick starting of their establishments to function as they would normally, or as normally as they possibly could, he said: “Unfortunately, we are going to have to suffer a lot of collateral damage.”
He said that as a whole, they have maintained attempts to have a continuous delivery. However, the delivery operations can in no way support their operations as it used to run before, he said, adding that even after they as a collective come out of this, when moving forward, downsizing would be an eventuality.
“We are under no illusions that we will hit the ground running when this is all over,” he said, adding that as it is now, people will lose their jobs while they will have to give up some of their locations currently run. “The day of recovery will come much later than sooner.”
Restaurateurs don’t often own real estate
Dinesh also shared that things would be a lot smoother if there are clear guidelines provided by the Government, and while it has granted moratoriums, there is one big concern shared by the entire collective of restaurateurs in the island – the struggle in obtaining working capital while the Government has instructed banks to grant soft loans. He said that most banks require collateral in the form of immovable capital. However in Sri Lanka, restaurateurs do not own any real estate; they do not own the property and so are unable to provide capital to obtain these loans.
He shared that a similar directive was issued last year in June when we suffered the Easter Sunday attacks and even then they were faced with this roadblock. However, Dinesh said that back then, they were fortunate enough to have had some cash reserves which they were able to utilise, but that they no longer have the luxury of dipping into a reserve.
“When we were recovering from these losses last year, we barely took pay cuts. From June onwards, we paid full salaries even though we were truly not making any profit until around December. We could not report on a green bottom line until late in December,” he noted. Now of course, if they had those reserves, they could have stayed afloat, but that is no longer the case and so all they can do is ask the Government to direct banks to grant soft loans without the condition of immovable collateral.
Substitute for collateral
Dinesh stressed that the situation is worsening day by day and business owners are facing a domino effect where the first chip has fallen and there is an eventuality of loss of livelihoods.
He said that to begin with, if banks could provide cash loans without the usual collateral, it would make a great deal of difference, adding that while state banks are willing to do so, the banks that they have spoken to – private commercial banks – still require the immovable collateral.
According to Dinesh, they are happy to reconsider the applications that they have already made, as they understand that unlike other countries, our Government does not have the resources to hand out grants to everyone who needs it. However, banks cannot be the only industry that remains profitable as “everyone must chip in at these times and make compromises”.
“We are happy to meet the interest and the loan term period, but we simply do not have the immovable collateral. But if they are willing to even consider movable collateral, we have millions of immensely valuable equipment in our operations and we are happy to consider that,” he said, also sharing how the situation is dire as in their collective, they can say with certainty not one restaurateur owns property.
Not the worst of it
Dinesh also shared that all of these requests they have made are only for those properties that they are hopeful will be able to carry out operations and that they are not even considering the properties outside of Colombo, such as their resorts, in which operations will have to be halted for the foreseeable future.
“We cannot draw comparison from last year because once we were able to recover, we started getting people in,” he said, adding that they need tourists for that market as those establishments are 90% tourist-reliant and if you look at the global status, it is impractical to assume that people will get on a plane to come and be exposed with great proximity to an unknown situation and so they do not think that area will recover any time soon.
“We have kept our operations in the South on hold; there is certainly no light at the end of the tunnel in that regard,” he stressed. However, if the authorities come through, there is a sizeable local economy in Colombo which they can rely on, if they are able to acquire working capital and make adjustments accordingly.