New Delhi: Atul Kakkar calls himself a foodie, and he isn’t understating his case. When he talks about a meal in a Chennai restaurant where he dined—only once, way back in 1977—he can recall not only everything he ate, but also how much each dish cost. It may have been superlative food, but that is still an impressive feat.
Even for a diehard foodie, to go from textile exporter to restaurateur is something of a leap, and a courageous one to attempt in the face of an economic slowdown. But in the next couple of months, Kakkar will become co-owner of a 10,000 sq. ft, Polynesian-themed restobar in Gurgaon. It will be the start, he says, of a full-fledged food and beverage company, with a possible franchisee model in the future.
Being unique: Atul Kakkar looks at menu designs at a location in Gurgaon. Kakkar will become co-owner of a Polynesian-themed restobar which, he says, will be the start of a full-fledged food and beverage company. Ramesh Pathania / Mint
For the last two decades, first in West Africa and then with his own company in India, Kakkar has been contract-manufacturing textiles for export. It was in Africa, he says, that he grew enamoured of the tropical style of dining: “Open atmosphere, lots of fruits, lots of greenery,” as he describes it. “I did the groundwork, and I know there aren’t any Polynesian restaurants in India. This would be the first.”
On his desk in his office, next to large bolts of block-printed cloth, is a copy of Asian Dining Rules as well as a stack of cards bearing design and name options for his restobar: Fume, Totem, Smoke, Pineapple Grove.
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Technically, he says, this will be a tiki bar, which his project dossier defines as “an exotic–themed drinking establishment that serves fancy cocktails, especially rum-based mixed drinks such as the Mai Tai or the Zombie cocktail”.
Until last August, when the Indian cricket team toured Sri Lanka, Kakkar was considering simply opening a franchise of Sourav Ganguly’s restaurant, the Food Pavilion, in Delhi. “But then Ganguly didn’t do well on that tour, and the value of the brand really depends upon his cricketing performance,” Kakkar says. “So, I decided it would be better to just start my own.”
The most involved part of the process proved to be finalizing the space, and this is where, according to Monu Mahindra, managing director of Under One Roof hotel consultants, the downturn is actually helping the hospitality industry.
“Real estate prices are going down, and rentals are cheaper,” says Mahindra, who is consulting on Kakkar’s project. “Construction project costs have come down by around 35%, and somewhere like Connaught Place, where I was negotiating at rental rates of Rs600 per sq. ft earlier, now it is around Rs175-250 per sq. ft.”
That trend may be broadly valid, but Kakkar says that in his months of negotiation, he was only able to reduce the demanded rental rate by Rs10, to Rs80 per sq. ft.
The real estate will thus form a large part of the investment in the tiki bar. “The total investment, I think, will come to Rs3-3.5 crore,” Kakkar says. “We’ll be financing roughly half of that ourselves, and the other half with a bank loan.”
Kakkar may declare that the economic slowdown, in India, is more media-driven than real, but he admits that it has had an effect on the banking system.
Loan rates are lower, but the scrutiny of projects is far greater; a loan that would once have taken five working days to clear, Mahindra observes, can now take two or three weeks.
“Earlier, if you just knew a guy personally, he would approve your loan, and the documents you submitted would be used to line the shelves,” says Kakkar. “Now there’s a full-fledged approval panel, they ask for monthly asset statements, and banks have become more prudent—and really, that’s a good thing.”
He also cites as an advantage the glut of talent now available, and how much easier management becomes as competing jobs dry up. “The mobility of your staff is much lower,” Kakkar says. “Earlier, you’d always hear statements like: ‘I’m going to this place, I’m getting this much money here.’ That language has already stopped.”
Kakkar does not seem unduly worried about attracting clientele. His restobar, situated on the ground floor of an office building, is in the middle of a clutch of other similar office buildings, a prime area that he calls his “catchment area”. He operates under the same advice that is given to Kevin Costner’s character in Field of Dreams: “If you build it, they will come.” “People still have to eat, and if your quality and service is good, you’ll be the last to be hit by something like a slowdown,” Kakkar says.
Independently, both he and Mahindra insist that the food-and-beverage industry was stronger by the end of the Great Depression than it was at its beginning, and that the industry is helped, rather than hurt, by economic slowdowns.
This seems to be arguable. On the one hand, the historian Michael Bernstein, in his book The Great Depression, did show that the share of food as a percentage of a family’s expenditure increased between 1929 and 1939, and that the consumption, in pounds per capita, of even expensive foods such as beef and poultry increased in that decade.
On the other hand, however, The New York Times recently quoted a projection by Technomic, a research and consulting firm, that fine-dining revenues in the US would fall by 12-15% in 2009.
A slowdown may pull down big-ticket restaurants, Mahindra says, but the mid-market restaurants such as Kakkar’s, where a main course will cost roughly Rs300, will thrive rather than simply survive.
“I do know there are some Delhi restaurants that are on the block for sale now, but there must also be some people who are trying to upgrade their services,” Kakkar says. “I see the slowdown as an opportunity. I see a lot of thinking going into the system now, and I think better products will emerge.”
This is the fourth in a series about entrepreneurs starting businesses during the economic slowdown. Next: The bicycle chief.