Mumbai: In the last two-three years, many dining concepts have emerged from chefs-turned-restaurateurs and established restaurateurs launching new brands. So there is Floyd Cardoz’s The Bombay Canteen and Vicky Ratnani with The Korner House, which are less than two years old. Meanwhile a company like Massive Restaurants Pvt. Ltd has launched concepts like Farzi Café, a modern Indian bistro, and Pa Pa Ya, a pan-Asian bistro. Likewise Olive Bar and Kitchen Pvt. Ltd, which operates Olive, has in the last three-four years diversified to open SodaBottleOpenerWala and Monkey Bar. deGustibus Hospitality Pvt. Ltd of Indigo fame, which has been opening, on average, one restaurant every two years, has launched a new concept D:Oh two months ago. The coming year will see the company stepping on the accelerator and doing things differently, says Anurag Katriar, executive director and chief executive officer of deGustibus Hospitality. Edited excerpts from an interview:
You have moved from fine dining to casual dining to what now looks like a mix between quick service restaurants (QSR) and casual dining. What was the rationale behind this journey?
Our journey started with fine dining—Indigo. At some point in time I realized that Indigo, despite all the lovely numbers it was doing, had its own limitations. So in 2003 we decided to do something for the larger mass and that is how the first Indigo Deli was launched in 2005, which is in the casual dining space. We now have seven Indigo Delis in Mumbai, one in Gurgaon and one in Pune. I felt Mumbai could take maybe a couple more Delis. So a year ago I came back to the same question: now what? My initial thoughts were QSR and I spent a lot of time at food courts across the country observing.
Are you saying that you needed a cheaper per-head average cost offering to expand?
Today 65% of our population is millennials. They are young and go to QSRs and bars selling at economical prices. We wanted to have a place for them that is fun and economical.
But D:Oh is not really a QSR...
QSR is not essentially good food served quick. It has become convenient food served cheap. I was unnerved by this realization. So, I did a rethink and picked up the niceties of a QSR—quick service, easy-to-understand menu—and merged it with the goodness of casual dining—ambience and limited service. This is the area we will be expanding into now.
Why not take Indigo Deli to newer geographies? There is Delhi for instance which can take a few more...
In Delhi we had a very poor experience honestly. Also every city is different. I prefer to expand in my core area and that is where D:Oh fits in.
Your peers have been on an expansion spree, launching new formats and opening branches. What’s holding you back?
Yes, we have been a little slow. We were not innovating as quickly as we could have. We were in our comfort zone. On average we have been opening one restaurant every two years. Having said that, we were also trying to restructure our company as investors came in. We consolidated and also gave every brand a leadership team to grow their business. But that was our principle earlier, we didn’t believe in doing too many things. Today I think differently. I believe that gone are the days when you could multiply one brand into 500 locations. You have to think differently. The socio-economic changes are driving a very different kind of a market. The boredom creeps in a lot faster. Consumers are not as loyal. The shelf life is a lot shorter and therefore brands have to be innovative.
So does that mean you are ready to launch more new brands for faster growth?
In the last financial year we opened five new restaurants. In the coming year we will be opening nine restaurants, which will be our fastest expansion. We are also open to inorganic growth and are in talks with a couple of brands, which I can’t disclose right now. In the next one-two years, we will also expand outside India.
You have made some changes at Neel. Can you share what prompted them?
Neel, which is at Turf Club, is fine dining. We are not expanding that format. The one in Powai is casual dining. We have realized that in casual dining, vegetarian and seafood works better than red meat. So we have reduced the red meat and increased vegetarian to get more balance in the menu. We have also introduced evening snacks like kathi rolls.The conversion on vegetarian snacks is 46%, which is a lot.
Your expansion is in the casual dining space with Indigo Deli and Neel-All-day Diner, and now in the new concept, which is even more casual. What about fine dining where you have the Indigo restaurant and Tote on the Turf brand?
Fine dining is a dying format. No one wants such an elaborate meal. It’s become a place only for celebrations. For me the biggest benchmark of fine dining was Zodiac Grill. If that shut down, how long will the bachas (kids) survive? For me the Indigo restaurant business is good but it’s 40% down from its peak. We have one Indigo restaurant and one Tote on the Turf restaurant. We are not expanding these fine dining formats any more.
You have been in the restaurant space for the last 15-20 years. Can you tell us what has changed over the years?
Today, drinking is out of the closet. Earlier you would be very shy to say you were going for a drink. Now you would be looked down upon if you say you are not going out for a drink. Secondly, value-for- money expectations have gone up. Today people want good experiences at QSR prices. Also shelf life of a brand has reduced. Let’s look at the last 10 years and restaurant chains that have started and are still thriving. There are hardly any. Today a lot of new restaurants are focused on gimmickry and that is why the novelty factor wears off and they fade away.
At D:Oh, you have cold sandwiches on offer. Do cold sandwiches work in India?
Indians are not used to cold food. We like our food hot. Customers feel cold food means purana (stale) even though we are not selling anything more than 24 hours old. So we are doing away with the grab-a-tray concept and cold sandwiches.
Overall the restaurant and out-of-home eating sector has had muted growth for the last couple of years. Also there was the impact of demonetization. Are we seeing a revival now?
I don’t see any major difference. There was no major downturn or revival. There was some stress on operating margins as costs of doing business were going up. Demonetization impact was for two weeks. The change in business was a 3% drop year-on-year this November. Yes, one can argue that there could have been growth but that’s fine; it’s not as bad as it was made out to be.
We are seeing so many new launches. Chefs turning restaurateurs and restaurant chains like yours now looking at rapid expansion. What’s happening?
The entry barrier for this profession is very low. A lot of start-ups with no background in hospitality want to start a restaurant as they feel it’s attractive. I was once approached by a traditional metal business family who said they want to start a restaurant for their son as it would help them get a good marriage proposal for him. For chefs turning entrepreneurs it’s a good time to start up. Having said that, today the risk of failure is also very high and they have a reputation at stake. It’s interesting times.
Has the recent Supreme Court ruling on not serving alcohol within 500 metres of highways impacted you?
Two of our restaurants have been impacted. One is in Cyber Hub in Gurgaon and the second is in Phoenix Market City in Pune. From 1 April we have not served any alcohol at these two places and business has dropped by 50% already. Overall this rule will be catastrophic for the industry.
What are your thoughts on the proposed initiative to regulate food portions?
Following this announcement we did a two-day survey in our restaurants. There is very little wastage of food at restaurants. People don’t order to waste. If there is extra food, customers usually pack it and take it back. What is returned on the plates is something they don’t like. We hope they don’t regulate food portions.