With indulging in fine cuisine with a pleasing or entertaining ambience has become a much looked forward to experience among those who have higher disposable income, the fine-dine restaurant space is certainly touching higher peaks.
More money to spend, a curiosity to experience the finer things of life, and the need to upgrade one’s social status are few of the factors scoring high for the fine dine restaurants in India. “The market for fine-dine is huge, especially if the restaurant excels in a particular cuisine instead of trying to be a master of all,” says Arpan Gupta, co-founder of Anglo restaurant
BUSINESS MODEL
So what does it cost to open a fine-dine restaurant in a metro city? According to Jagjit Singh, COO, Pind Baluchi, the overall investment of a fine dine restaurant could range anywhere between Rs 90 lakhs to Rs 1.2 crore depending on the location. Since fine dine restaurants need large seating space and kitchen areas, the space could vary anywhere between 2,500 – 4,000 sq. feet. For instance, Pind Balluchi has two fine-dining formats – Pind Balluchi Village Restaurant and Pind Balluchi Grills and Platters for which the investment is Rs 90 lakhs to Rs 1.1 crore and Rs 1.5 crore respectively.
The brand also charges a one-time franchise fee of Rs 30 lakhs for its Village Restaurant and Rs 40 lakhs for grills and platters. While the investment excludes land rentals, the investor will have to spend Rs 30-35 lakhs on interiors, lighting and décor. An investment of Rs 30 lakhs would have to be made towards kitchen equipment, crockery and other equipment like TV sets, air-conditioners, etc. Further, licenses and taxes could cost as much Rs 3-5 lakhs depending on the format and location. The remaining Rs 20 lakhs could be taken up in stocks, marketing, promotions and other miscellaneous expenses.
Further, a restaurant owner will have to bear a fixed cost of up to Rs 5-6 lakhs for rent every month for an average 2,500 sq. feet restaurant, while the electricity bill alone could make up to 25% of sales every month. The salaries will range between Rs 3-3.5 lakhs every month and other operational costs include stocks (depending on sales) and water, sanitary bills, and other taxes. On an average, the monthly cost to run a fine–dine could vary between Rs 30-40 lakhs and the restaurant can generate sales up to Rs 60-75 lakhs. The franchise owner of a successful restaurant can earn 20-22% net profits.
Zorawar Kalra, Managing Director, Massive Restaurants provides an interesting tip to potential investors: he says that the land rentals should not take up more than 15% of the gross sales in order to remain profitable. Massive Restaurants is the owner of the Masala Library brand. He suggests that weekly auditing of sales and arresting the expenses early is the key to survive in the business in the long run. “Take control of stocks, wastage and expenses that can be cut down. With a weekly auditing process, an investor will understand if he needs to spend on research and development or marketing or cut down stock costs,” he says.
Singh suggests that locations that have corporate clientele base, good residential and customer base, a modern marketplace which can be the source of high footfall, commercial viability, and locations that facilitate smooth flow of traffic are often the most preferred locations for a fine-dine restaurant.
FRANCHISE MODEL
Commenting on why the franchise model is an integral part of the food and beverage industry, Kalra says the franchisees often get value-added benefits that may not be available for an investor who has had no experience in this industry. He says, “Through the franchising model, a franchisee would get the expertise of the brand, the concepts are ready, personnel are usually trained, recipes are quickly accessible, and operations management gets easier. For brands, an investor who can locally support them often results in faster growth. Hence, both benefit from franchising.” While the brand has a solid franchise model, Kalra says they choose investors with deep pockets with the concern that the investors should be able to sustain the business in the long run.
SUSTAINABILITY
At a time when online food delivery has changed the food culture in India, restaurateurs believe that although online aggregators are impacting the dine-in culture, restaurants that are not quick to adopt the online model will eventually fade out from the business. For instance, online orders and home delivery is an integral part of Pind Balluchi that introduced the home delivery service many years before the delivery aggregators took over the market. “For early entrants like us, there has been no deep impact as such,” Singh says. However, all the brands agree that in the long run, accepting food orders online will become crucial for the restaurants to sustain the business.
STARTUP COST: 90 lakhs - 1.2 cr
OPERATIONAL EXPENSES: 30-40 lakhs
MONTHLY REVENUES: 60-75 lakhs
GROSS PROFITS: 30-35 lakhs
BREAK-EVEN TIME: 24-36 months
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