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Why do restaurants shut down?

June 17, 2006 03:49 IST

Last week, I heard with a sigh that yet another restaurant -- Masala Express -- in Noida's popular Sector 18 market had closed down.

Because the market is a mere 3 km from our house, it is, somewhat inevitably, the first place we think of when we're deciding where to eat. Masala Express is slated to open its doors again in another avatar.

In the 10 years that we've lived next to Sector 18, restaurants have opened and closed with dizzying frequency. I've come to think of it as a microcosm of the larger picture.

Says Sonia Mohindra of Under One Roof, restaurant consultants: "The most common problem leading to high mortality rate for restaurants is insufficient homework at the planning stage."

Mohindra has lost count of the number of times that prospective customers have approached her and husband, chef Manu Mohindra, with the dreaded words, "Italian restaurants (or lounge bars, or Mediterranean restaurants) are the flavour of the season. Let's do one together." It's usually a recipe for disaster.

Under One Roof has a word of advice for would-be restaurateurs. "Don't sink all your capital into building the restaurant. Reserve 20 per cent of your capital cost for running it over a period of six months or more, assuming that you may not be taking home any earnings at first."

This is invariably the crucial period for first-time restaurateurs who assume that their restaurant will be as packed as the competition that has been around for five years or more.

Nervous first-timers have been known to switch off air-conditioners when the restaurant is empty, or store perishable food instead of throwing it out every three days. Panic by the owner always communicates itself to the customer.

"Failure to pay your staff salaries on time during the first few lean months will certainly result in them deserting you," warn the Mohindras.

That way, by the time your restaurant gains in popularity, you won't be left with any of your original team: a recipe for disaster.

Other factors that seem to be at play in Sector 18 are poorly thought out concepts and high rentals. The owner of Masala Express has a personal fondness for Goan food, so he turned that into the USP of his restaurant, and ended up burning his hands.

"It sounds almost too obvious to actually say it, but never decide on a cuisine just because you like it," warns Sonia Mohindra, who is constantly amazed at just how many otherwise well-seasoned businessmen dream up restaurant concepts with their hearts rather than their heads.

Escalating rents -- coupled with low returns -- have sounded the death-knell for a slew of eateries around the market. Bhagatji, a low-priced thali eatery, had to down its shutters because its Rs 35 per thali concept could not battle against the new rentals. Much higher profile Mocha too went the same way.

In Noida's Sector 18, the only ones laughing all the way to the bank are the north Indian restaurants.
Marryam H Reshii in New Delhi