Eateries report 20% dip in trade as GST takes hold

In a course correction bid many restaurants have slashed menu prices by 5-10 to bring them at par with pre-GST rates But they still await footfall to normalize
  • Franchise India Buereau
Restaurant India

The Goods and Services Tax (GST) has caused a 10-20% dip in customer footfall at eateries in Pune. These include fine-dining restaurants and lounges. Many attribute this to the 12-18% GST on food bills.

Before GST came into effect, many AC/non-AC restaurants had opted for the composite VAT scheme, which meant VAT was being paid by restaurants, while a 6% service tax was being charged to customers. In a course correction bid, many restaurants have slashed menu prices by 5-10% to bring them at par with pre-GST rates. But they still await footfall to normalize. “The biggest factor is the 18% on food as against the 11% tax charged earlier,” said a city-based restaurateur in Aundh. “Customers now feel that eating out has become dearer, and have cut down on this luxury,” said the restaurateur, whose customer inflow dipped from 200 per day to 150 since July 1.

Smaller restaurants in areas like Deccan, Karve road, JM Road and Camp have also been affected, with a 10% drop in customers, said Ganesh Shetty, president, Pune Restaurants and Hoteliers Association (PRAHA). “Before GST, smaller restaurants did not have service tax. They only had the 5% VAT, which was included in the menu prices. After GST, the separate tax of 12% or 18% is putting off customers,” said Shetty. John Chen, owner of Kimling restaurant, said, “We try to explain to the customers that with GST’s implementation, they have no option but to pay the GST regardless of which AC restaurant they visit,” he said. “This is not the case only for smaller restaurants, but also for those in Koregaon Park and Mundhwa,” said, Vikram Shetty, PRAHA vice president.