Restaurants, eateries and hotels in the country have been forced to re-think their plans after new government directives threw plans to capitalize on the long Easter weekend holiday into disarray.
As revealed by Big Square CEO Lawrence Mudachi who is also the Chair of the Retail Traders Association, the effects of President Uhuru’s address on Friday, March 26 immediately sent ripples through the sector.
He stated that hotels and restaurants faced collapse over the implications of the directives; which include a ban on in-house dining with only delivery and take-away orders allowed, further reduction of operating hours and suspension of alcohol sales.
The Big Square fast food chain, for instance, with 10 of its branches in the one-zoned area is expected to suffer a big revenue hit.
Mudachi noted that unlike in the first lockdown in 2020 when tax relief measures were also introduced, loans restructured and some landlords slashed rents, the most recent pronouncements came at a time when all taxes and operating expenses including rents were back to normal.
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He stated that wage cuts and business closures would be inevitable for many in the sector who picked lessons from the first wave last year when they adopted a ‘wait and see’ approach.
“Majority of landlords from December have gone back to normal…so we are still at full rent…Let’s not forget there were some minor tax benefits which are no longer in place. We are planning for statutory deductions; NHIF, NSSF, for us in the industry training levy and then VAT, PAYE and we’re preparing for all of it. I have to point out that the restaurant business is no different from any businesses.
“Everyone was looking forward to cash in on Easter so we will meet a crunch,” he noted.
He noted that recovery plans for hotels and restaurants were no longer feasible as they had to rethink their operations to be able to meet their obligations.
“We will meet a crunch and we are going to suffer greatly but our biggest concern is will we be there to trade? Will we survive? That is the elephant in the room,” he noted.
To adapt, he noted that restaurants had to ramp up their delivery and take-out businesses although it was not guaranteed to be enough.
He highlighted that in response to the pandemic, Big Square grew delivery and revenue as a share of its revenue from 16% to 35%.
Watch Mudachi discuss the challenges facing the sector in the interview below:
