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Serving up a new course

Anoothi Vishal | May 08, 2004

It's the city's newest lounge-bar and no expense has been spared to make a gigantic hit. One evening the star guests are Virender Sehwag and his bride, the next day, top names of India's fashion fraternity.

But the owners of Delhi's Forum lounge-bar aren't retiring, food fanatics who slave over the kitchen stove for 18-hours a day.

On the contrary, they are party-going types themselves. Leading the way is Amit Burman, a scion of the Burman family, which controls the Dabur Group.

Also, amongst the well-heeled part-owners are Abhishek Khaitan of Radico Khaitan and the Somany Group's Abhishek Somany and other young friends, mostly from prominent Delhi-based business families. The cost: Rs 2.5 crore (Rs 25 million).

Or, look at industrialist V N Dalmia, who has wide interests especially in the travel trade. Dalmia has just poured in cash to open a Bollywood theme restaurant in Gurgaon.

"We don't have anything like Planet Hollywood," he argues. Dalmia isn't stopping with that. In the next 18 months he wants to throw open the doors of 10 restaurants in several Indian cities.

Cut to Bangalore where Prestige Constructions is on a furious building binge. The group isn't satisfied with putting up millions of square feet of glass and concrete. It's not just building malls but also looking at ways to fill them.

The company that already runs the Angsana Spa and resort (complete with a restaurant) near Bangalore, is now following this up with a multi-cuisine food court at its latest Forum Mall, one of the largest in India. It is spending Rs 3.5 crore (Rs 35 million) on the food court.

"We are very bullish about food. We will be focusing on restaurants and malls," says Nawabzada Omer Bin Jung, managing director, Prestige Leisure Resorts.

What is it about the restaurant trade? Once upon a time running a restaurant was a distinctly déclassé line of business. Not any longer. Today, people like A D Singh of Olive are arbiters of taste and fashion and sought-after socialites. And the scions of powerful industrialist families are seeking to follow in their footsteps.

It's important to keep one fact in mind. Running a restaurant isn't necessarily a small stakes business. It takes anywhere between Rs 1 crore (Rs 10 million) to Rs 3 crore (Rs 30 million) to open a ritzy eaterie that will pull in the big spenders.

In addition the running expenses can also be fairly substantial -- a high quality restaurant may be flying in the fish from Thailand and the pasta from Italy to ensure the freshest and best quality. Nevertheless, a string of entrepreneurs are trying their hand in the kitchen. They are moving from businesses like liquor, tiles to cement and even -- like Burman -- the fast moving consumer goods industry.

Take a look at the new menu that is being whipped up by Monish Bali, director, Mount Shivalik, a Chandigarh-based brewery. Mount Shivalik has just opened its first highway restaurant on the Delhi-Chandigarh highway. A chain is in the offing. Bali reckons the company will spend between Rs 75 lakh (Rs 7.5 million) and Rs 80 lakh (Rs 8 million) per restaurant and he believes the potential returns could be very high.

Says Bali: "The time is just right. People have really turned more adventurous, are going out more. In the next few years, with better infrastructure and roads, a lot more Indians will be travelling on the highway and we want to tap this market."

For some businessmen opening a restaurant is a logical extension because they already own property. Take the DS Group, for instance, which runs the fast-growing Ebony chain of department stores and has opened its first restaurant in Delhi.

It has hired hotel industry professional Rameet Trehan to spearhead its foray into this new segment and open a chain of outlets across north India. Says Trehan: "We decided to expand because of the restaurant boom specially since we already have the properties to set up the restaurants."

That's why many construction magnates are piling up their plates and heading out for a second helping. For most it is a natural extension of their current businesses.

In Bangalore, for instance, Prakash Nichani of the BJN Group moved from his family's traditional construction business to own what is today the city's largest restaurant chain.

He now runs a string of highly successful Aromas of China and other restaurants specialising in north Indian cuisine. The turnover has moved from Rs 1 crore to Rs 25 crore (Rs 2.5 million) in the last five years and now BJN is opening outlets in Australia.

It's a similar story with the Ansal Group's Deepak Ansal who came into the restaurant trade earlier than most others. Three years ago he started two eateries in Noida, the fast-growing Delhi suburb and roped in wife Divya to help. The two restaurants Superstars and Great Kebab Factory cost Rs 3 crore (Rs 30 million) to set up and now have a combined turnover of Rs 5 crore (Rs 50 million) annually.

Now Divya has persuaded another Delhi restaurant Sagar to open its doors in the same building. Also, she's in the process of setting up a food court at the Ansal Plaza in Vaishali, which is currently being developed. "It's a very different but a very good business," says Divya.

Is the restaurant just a fashionable fad -- a cross between a place to party and a way to make a splash on the society pages of newspapers? Top restaurateurs insist nothing could be further from their thoughts.

At Forum the owners take turns to babysit the premises every evening. And they talk about studies like one by KSA Tecnopack, which says that around 14 or 15 global chains are planning to enter the Indian restaurant market.

Says Burman: "We want to establish a brand so that when that happens we are in a position to have a tie up with these." If this first restaurant succeeds, the partners will look at a second in Delhi and then look for franchisees to build a chain. "We want to corporatise a fine food chain," says Burman.

The restaurateurs insist that feeding the public can be a lucrative game. Sukhdev Majithia, for instance, comes from a family, which has large interests in the sugar industry. But his wife's family owned The Cellar a popular restaurant in the Capital. Together Majithia and his wife have smartened it up and it is now a lounge-bar called DV8. About Rs 1 crore (Rs 10 million) was spent.

Says Majithia: "It would take me say Rs 100-150 crore (Rs 1-1.5 billion) to set up a sugar mill. A restaurant by comparison would take just 1 per cent of the sum so the risk is much smaller. However, the returns are larger." Majithia too is considering a chain. "The returns would grow with the economies of scale if one had a chain of restaurants or hotels," he says.

The fact is that a successful restaurant can rake in cash. And for industrialists in industries like sugar where the returns have been squeezed heavily, the figures can be quite mesmerising. Most industry estimates are that a thriving restaurant can turn in profits of anywhere between 15 per cent and 30 per cent.

But is it really all that easy? The fact, as most people know, is that running a restaurant is an enormously complicated business and it needs owners who are even willing to head to the mandis in the pre-dawn hours. It isn't enough to plough in barrels of cash.

So, will it be the icing on the cake for these big businessmen who rake in their cash from other, more lucrative, industries? Or, will these scions of industry be able to turn it into their main course.


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