Growth is very individual to every single brand, city and every new location that one expands to. Food service market which accounts at 48 Bn is 8x of hotels and 2x of the pharma industry has seen a continuous growth in the business in last five years. Food service is emerging as a key segment in the Indian economy with change in consumer dynamics and increased awareness about varied cuisine and experience.
There is uninterrupted growth in the industry where organised standalone has grown to 23% in 2016 from 22% in 2013 and is projected to reach at 28% by 2021, the chain market size has grown to 7% in 2016 to reach 10% in 2021 showing a positive side of the growth to industry where the contribution of Unorganised and scattered market is going down to 67% in 2016 from 70% in 2013 which is suppose to lower down in next few years to reach 59% by 2021, says NRAI food service report.
Managing growth
With such a positive turnaround happening in the industry the Indian food brands are growing at a steady rate. Not only in the local market, Indian brands, are eyeing global presence as well as they are at par with the global trends and consumption habits. Brands like Saravana Bhavan, Farzi Cafe, Punjab Grill, Yellow Chilli, Silver Beach Cafe are already doing good in the global markets where they are present in giving an opportunity for the brands who have still not thought of crossing that multi lingual boundary. “The formula is the goals. How do we make the business capable and to make the business capable you need make your resources capable and resources comes from the people, the business and the system. And then what we need is the processes which convert these two into product and products are something that we sell,” believes Reynold Fernandes, CEO- Oriental Cuisines which has already expanded its brand portfolio to more than 170 restaurants in India.
Change is the only constant
The market is changing. These days’ restaurateurs look at the trends that are going in the market as restaurant and food business is all about the business of consumption. Where real estate moving, which markets are opening up, where is growth heading, how are people consuming food and the right mix of portfolio to grow to a city are some of the important aspects one look at before investing money into expansion of a restaurant. “It is great to be in Mumbai, Pune, Bengaluru and Delhi, but it is equality exciting to be in Coimbatore, Kolkata, Pondicherry because consumption is happening every day and everywhere,” adds Reynolds.
Customers now a day’s have an advantage of aspiration that are coming from a global brand but end of the day they need to have a sustainable product because there are varied options available in the market for customers in multiple price ranges depending on the quality of the product. “How do you regionlise the brand,” asks Karan Tanna, CEO- Yellow Tie Hospitality adding, it is not only important to localise the product according to Indian taste but to localise it to regional taste because India is a cultural rich country. You need to standardise the product according to regional flavours.
Same goes with Goodies a bakery brand started in Baroda which has to change its model to attract customers with pace of the time. “It was only when we thought of retailing our bakery products we started our cafe of multicuisne food and of course our bakery products,” adds Kaizad Modi, Senior Partner at Reise Hospitality LLP.
Overcoming challenges
Business has to be expanding unemotionally because we are so attached to a thing and that’s the downfall of the business. One needs to have a concrete business plan before going to a new market. If you are going into a market that does lots of delivery you have to build high scale rate. Two to three years payback cycle and within 24 months things could be different but the good business is to take decisions. It’s all about capital- how you are going to move capital or how you are going to rotate capital.
“The challenge we faced at being present in a small town was getting good talent, skilled labour and retains them afterwards. Also, people do not want to spend large amount of money. It’s very tricky because they expect a high quality product but they don’t want to spend the money. So, how do we maintain quality and presentation with very tight budget? Also, the infrastructure is a hard task and it is very hard to match the customer expectation in terms of challenges we have,” adds Modi who believes that it is very important to cater to a local food.
One needs to be creative as far as food business in India is concerned. One need to keep observing why he isn’t doing well because it is a consumption biz and everyone needs food. “It could be way of serving, your pricing, portion size and menu mix and hence you need to be hands on with everything. There is lots of passion that goes into it. So, your rental v/s the ticket size v/s the footfall caters to the larger part of the business,” adds Tanna.
