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Feb, 04 2014

Relish the real taste of profits

If the experts are to be believed, F&B industry is set to grow for many years to come; given the rising disposable incomes; a greater population of younger people; the growth of consumers in smaller towns and the widening exposure to new cultures and cuis

Interestingly, the casual dining formats along with QSR together account for 74 per cent of the chain market, cafes make up 12 per cent while fine dining places are reserved for families with lesser per cent of the F&B market.

Evolution

The dining culture in India has evolved over the time with huge infrastructural growth and expanding middle-class in the cities leading to an increase in disposable incomes. A fine dine restaurant is characterised as a full service restaurant offering food of a specific cuisine or multi cuisines, whereas casual dining serves moderately priced food in a casual atmosphere.The higher frequency of eating out has evolved the Indian market for the food services sector.

Burgeoning market

The revolution in the Indian F&B market initiated in late 90s with International QSR brands like McDonald's, Pizza Hut, Domino's Pizza, and Subway forayed in the country. Since then, the food services market has been continuously growing and is expanding via franchising. But casual and fine dine sectors have evolved predominantly by the Indian F&B brands. Spaghetti Kitchen, Mainland China, Royal China, Bon South, Goa Portuguesa, karim's Dosa Plaza, Moti Mahal Deluxe, Waza, Sagar Ratna, ShreeRathnam, Sankalp, Swagath and many more are some of the leading players that have predominantly established their market in casual and fine dine section of F&B sector. The Indian F&B industry which is still largely unorganized offers abundant opportunities for the investors in the casual and fine dine restaurant industry.

Chawla Chicken, that boasts to be a renowned player in the chicken sector operates via casual dine and fine dine format. The brand has more than 100 outlets across India, all through franchise route and the brand is looking forward for aggressive expansion.

Divjot Singh, Director, Chawla Chicken says: “Our quality and taste personifies the success story of our brand that attracts customers and the demand of brand's outlet in every nook and corner of the country.” He adds, “We have more franchisees for casual dine format as it is the fixed investment option for investors with economical space cost.”   

The fine dining destinations are no more limited to metros and tier -I cities, and have percolated to tier II and III cities as well. Subsequently, many restaurant chains are now vying to tap this market. Moods Hospitality Pvt Ltd., a homegrown Chinese restaurant brand is offering franchise opportunities pan-India for its fine dine restaurants in the name of Yo! China or Yo China Café or Dimsumbros. It also offers franchise for counters in the food courts of the various leading malls apart from its casual or fine dining options.

The brand boasts of being India's largest chain of Chinese restaurants with 60 points of presence across 20 cities. Mohan Agrawal, Vice President, Franchise Business Development, Moods Hospitality Pvt Ltd. says: “Yo! China by offering a mix of authentic and signature dishes in an international dining experience with display kitchens and cheerful interiors is way ahead in the performance in Indian market, to its many international counterparts.”

The Cooking Culture and Varso are two new brands of Aromen Group that has emerged as a major player in the casual and fine dine sector. Mrudang Jambusaria, Partner, Aromen Group asserts: “There are no international counter parts in the segment which brands of Aromen Group are. The Cooking Culture being a multi cuisine fine dine, there are no such brands internationally and there are very few domestic brands in the same segment and being a 100 per cent vegetarian restaurant the competition is not much.”

Another indigenous brand, Umak Hospitality Pvt. Ltd., is currently operating four casual and fine dine restaurant brands, namely, The Great Kabab Factory, The Spice Factory, Indyaki and Superstars.

The Great Kabab Factory is the flagship Indian restaurant of the brand, which is operational since 1996. It's overwhelming success paved for its expansion via franchising and today it finds its presence with over 20 outlets in India and abroad. Its other three sub-brands, Spice Factory, Indyaki and Superstars are the latest restaurant concepts serving Indian cuisines, Teppanyaki style of cooking with Indian food and Indo-American cuisine, respectively. Umak has recently opened an outlet of The Great Kabab Factory in Lucknow and has signed up three more in different cities via the franchise route. The food service chain is currently franchising the four restaurant brands pan-India and internationally.

Hindrances to growth

The key issues that continue to pose a challenge in the F&B industry include shortage of manpower, swelling cost of real estate, escalating food costs, patchy supply chain and over-licensing.

The study of NRAI reveals that despite the food services market accounting for only 19 per cent of the total organised market in India, it holds an estimated 30 million sq. ft. of real estate space. The rise in the space allocated to food services outlets in food courts and standalone spaces in malls reflect the growing confidence of real estate developers.

For Moods Hospitality Pvt. Ltd and Aromen Group, manpower with specific skill sets such as fluency in English and basic knowledge of the sector is proving to be a major challenge. While Jambusaria opines: “Staffing is the major challenge faced by the entire hospitality sector due to lack of talent. This challenge is being taken by us as a franchisor to find right talent for our franchisees.” However, Agrawal says: “We recruit people from our own data base and also through the external sources viz recruitment consultants and various job advertisements and thereafter train them through classroom training and onsite sessions.” He adds, “High real estate prices is another major challenge being faced, there is a shortage of quality real estate in India and due to  high demand real estate rentals have increased many folds during recent years contributing significantly to the increase in total cost of the projects.”

However, Umak Hospitality's foremost hurdle is finding the right candidate, specially the key staff. The second challenge is retention of staff. Ashna Kapur, Vice President, Brand Development Restaurants, Umak Hospitality says: “All of these issues are particularly important for us given the time and efforts we spend on training and establishing the brand name in the competitive market. Our recruits and the location are our first priority to handle with competency to make our brand a perfect amalgamation of wit and achievement. At Umak Hospitality, we are committed to provide support to our partners right from conceptualisation to commissioning and throughout the operational life of the restaurant to ensure its success.” For Chawla Chicken maintaining the standard and taste of their brand are the key challenges.

Food for thought

F&B is primed to multiply quickly with casual dining from $430 million as recorded in 2012 to $755 million by 2017 while fine dining from $190 million in 2012 to $335 million by 2017. (source: Technopak Advisors)

The casual dining restaurants, which are worth $430 million will continue to grown even in 2017, predicts Technopak, by when this segment will have grown substantially, to $775 million. It is this anticipated growth in the organised market that is fuelling interest.

Dine-in contributes the highest, 67%, to the total QSR sales and is followed by takeaway orders which account for 19% of the sale. Home delivery is also picking up with most chains offering this service to consumers within a defined catchment. On-the-go meals too seem to have picked up with about 34% of the total consumers flocking to them during office hours.

 

Tips for prospective franchisees

  • Yo! China (Moods Hospitality): The chain wishes to have 140 outlets in 50 cities in next five years and look forward to the prospective franchisees who wish to make big into F&B industry through the brand Yo! China in India. A prospective franchisee, looking for association with Yo! China, apart from having a sound financial status, is required to be having an orientation towards providing a total satisfaction to the customers through the high quality of food, unparalleled ambience and truly international standard service.
  • Chawla Chicken: The first and foremost step for any investor is to make thorough study of the brand of which he/ she is taking franchising of.
  • Umak Hospitality: With the introduction of more restaurant brands offering varied cuisines and strengthening the existing chain of restaurant brands, Umak aim to set up atleast 50 outlets pan-India and internationally. Although the F&B market is lucrative, the prospective franchisees entering in this segment should not forget their commitment and involvement in the restaurant that is very much desired.
  • Aromen Group: Customer satisfaction should be the main motto of the organisation, maintaining the standards in terms of quality, consistency and above all service, passion towards the business of serving people and food.

 

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