Friday, 29 August 2014

Restaurant Bigwigs Bet Big on Home Deliveries and Takeaways, Airport Retail and Promised Turnaround of Railway Stations

By Sourish Bhattacharyya

THE Indian Restaurant Congress 2014, organised for the fourth successful year by Franchise India, opened at the Vivanta by Taj in Faridabad with the overarching theme of 'Think Global, Eat Local' and the inaugural speaker, Lite Bite Foods Chairman Amit Burman, drove home the point by stating how just one innovation -- the introduction of masala papad as a side dish -- drove the per outlet sales of Punjab Grill up by Rs 2 lakh a month in Delhi/NCR.
Lite Bite Foods Chairman Amit Burman gave
an insightful start to the Indian Restaurant
Congress 2014 with his analysis of the challenges
and future growth areas of the restaurant industry.
Innovation. Consistency. Localisation. These were the buzzwords that kept coming up in the presentations by the leaders of the industry as they looked into the crystal ball to predict the trends that would define their business in the years ahead.
Burman started his talk by listing the "continual challenges" -- higher-than-ever real estate, ingredient and personnel costs -- which have confronted the industry since the past year. Food inflation peaked at 20 per cent in November 2013 and energy cost went up on average by 11 per cent, Burman added. He listed four strategies to find a way around these challenges: smart menu engineering, efficient real estate use, smart hiring and tighter cost controls.
"We earn for the government, real estate owners and banks," Burman said on a light note, adding that taxes sliced off 20 per cent of the margins of a restaurant business, and rents as well as repayment of bank loans with interest accounted for another 30 per cent. What he mentioned in passing, though, is an even bigger challenge. Indians still do not eat out as much as their counterparts in south-east Asia, for instance. Though we eat out twice as much as we used to in the recent past -- eight times a month, compared with four in the past -- we are way behind the residents of Hong Kong (3.2 times a day) and Singaporeans (41 times a month).
In this tight market, how can restaurant operators make money? For Lite Bite Foods, which has become a benchmark-setter in the restaurant retail business, the future is in airport retail, which, according to Burman, offers more consistent footfalls and growth than malls or the high street. The company is now looking at food courts at next-generation railway stations, as visualised by Prime Minister Narendra Modi, as the next big growth avenue. "More and more travellers are eating on the go," Burman pointed out.
Home deliveries and takeaways were the other growth drivers highlighted by speaker after speaker. Discussing the Yo China growth model, the 51-outlets-and-growing restaurant chain's CEO, Ashish Kapur, said that home deliveries and takeaways accounted for 40 per cent of its revenues, providing a cushion to the dine-in side of the business. A sound logic drives this mixed growth model: You're paying rent for the entire day, so why don't you make your most expensive asset sweat harder! "Maximise business, reduce transaction costs," Burman said, pointing to the obvious benefits of this mixed growth model.
K.S. Narayanan, CEO, Pan India Food Solutions, whose brands extend from Copper Chimney to Coffee Bean & Tea Leaf and Spaghetti Kitchen, made a strong pitch for "constantly innovating in the way we cook, serve, deliver and communicate". He made three points that the industry can ignore only at its peril:
* Food is very local, very culturally driven (hence, the new buzz phrase, 'eat local').
* Taste is an important driver of consumer preferences (hence, the salience of consistency).
* Consumers are becoming critics (hence, the paramount importance of communications).
Everyone talks about consistency, but it's easier said than done. For a single restaurant, it may mean, as Saurabh Khanijo, the man behind the successful trio of Kylin, Kylin Premier and Sartoria, put it: "standardisation of recipes and regular audits" to ensure that the recipes are followed without deviation. Kapur at once gave the audience a reality check.
Consistency of the quality of food that is served at a restaurant depends entirely on the consistency of supplies and the consistent quality of ingredients, which are both big challenges. The supply chain, likewise, is dependent on the efficiency of the transport network and the consistency of temperature control, which are both logistical nightmares.
Kapur said that in an ideal world, it would make economic sense to prepare at a central commissary and transport the thousands of dim sum consumed daily at the many Yo China outlets in Delhi/NCR (all that these would then require is steaming or frying once orders are placed), but this enterprise would require a "chilled chain", which is a dream in our country as we still struggle to put a cold chain in place. In an imperfect world, it's not easy to be a restaurant operator, but the growth rates are too tempting for any entrepreneur to ignore.