As it was announced by the Romanian Government on 17.03.2020, the activity of restaurants and public places is suspended in Romania, leaving the possibility to carry out only food delivery activities at home or other activities that do not imply the presence of customers in the premises.
More specifically, the Ministry of Interior announced on Tuesday evening that: the activity of serving and consuming food and alcoholic and non-alcoholic beverages is suspended, activity organized by: restaurants, hotels, cafes or other public places in the spaces intended for this purpose, from inside or outside the location. It is permissible for these economic units to organize the activities of marketing food and alcoholic and non-alcoholic beverages that do not imply staying customers in the spaces intended for this purpose, such as drive-in, room service or customer delivery.
Therefore, this field is put in front of the suspension of activity, that is in front of the situation of obtaining income 0, in the context where: rents, staff, food stocks still exist on the activity of the company. In general, rents occupy an important place in costs because restaurants occupy well-located positions (central areas, shopping centers, malls).
What measures could entrepreneurs take or what measures would help them survive?
- After the decision to suspend the activity, all avoidable costs should be suspended. We pay the strict necessary to survive.
- The state should reimburse with priority the VAT to be recovered from the VAT payments. Most restaurants buy 9% VAT food and have other expenses that deduct 19% VAT but sell the food at a 5% priority, being in the situation of having VAT to recover in the VAT refunds.
- The payment of taxes to the state should be postponed for a period of several months, until the resumption of activities (we expect today, 18.03.2020 the publication of the measures ordered by the Government)
- Finding solutions for employees: possible a form of technical unemployment paid to the employee in a lower percentage, in which all the 3 parties are involved: the entrepreneurs, the state and the employees: the state by supporting a percentage of the unemployment benefit and the exemption of taxes, the entrepreneur by supporting the rest of the allowance, and the employees by obtaining a diminished income under crisis conditions.
- The renegotiation of the rents with the owners of the premises – through the reduction of the rent during the closing of the activity. Because the rent is the result of a contract between the parties, the provisions of the contracts in situations of force majeure must be analyzed. Also, any space owner should consider that it would be better to get a diminished income than not to get it at all.
- Focus on home delivery activity – if possible within the respective company. Even if it will not bring too much revenue in the next period, it is still an alternative source that can still produce cash for various expenses.
- Value the stocks of food left in the unit or storage in good conditions to avoid losses due to the perishable character.