Restaurant Franchise Opportunities

Investment Jul, 19 2017

How Restaurant Industry Has Changed

Restaurant industry can bring disruptive change in the existing segment.

By Charu Sharma
Feature Writer

If we look at the investments that have been gone into this industry till date, there are some trends that have changed over the period of time. QSRs are upgrading themselves to casual dining and fine dining is shifting to casual dining format because customers’ preference has changed; they’re enjoying this format and ethnic dining more often than earlier. “A lot of brands are coming to Indian food and beverages market and asking Indian entrepreneurs to be there master franchisee and these are large successful brands,” shares Sriranjan Seshadri, Director, Gaja Capital Partners.

The good thing is that the expectations are shared on day first between franchisee and franchisor. Therefore, the chances of success get high. Also the venture capital ecosystem is going through a substantial shift. Over the last three to four years, a lot of investment has came to India and invested in food technology and in restaurant’s space. Today, master franchisees want to bring global brands to India whether it is in casual dining or QSR format. But the expectations must be decided at the upfront between the parties. The logistics of delivery of food is also considered important in this market. India is one of the largest markets being convenient and ordering food from home. “Restaurant’s core business is making food and creating an experience that is how logistics is the variable cost that they would rather outsource. Therefore, logistics become an important part for the business”, adds Seshadri.

Restaurant industry can bring disruptive change in the existing segment. If it is that then how much passionate one is about his venture? “Passion is a vital factor in restaurant business because that is what defines sustainability and for me sustainability means that one is going to survive for next ten years at least in the industry”, points Pushkar Mishra, Deputy General Manager at Small Industries Development Bank of India [SIDBI], Pune. Also, if the business is sustainable how can one scale it up is the key to drive this buisness. Restaurant industry is gradually changing but restaurateurs need to keep a watch at logistics, kitchen hygiene, service experience etc.

One of the things which investors seek is consolidations and companies which are doing well in CSRs, picking up other brands, additional chains and it’s always one side easy to recognize evaluation and the asset that investor is going to buy. “There has to be very clear disassociation with the brand because what if a brand picks up litigation and liabilities. Then of course investor wants to insulate himself from that complicated process”, says Ashish Alexander, Leader at Nishith Desai Associates. Brand should make sure that they return something to investors to run a successful business. Investor looks for what value a brand is bringing on the table to the end of a consumer and how they are positioning themselves. Also, if they can sell it back to the entrepreneurs or promoters at a pre determined agreed price which have been decided at the upfront. Investors absolutely focus the bottom line of a brand. 

Related: Raw Pressery to invest into healthy snacks and nutriments

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