High-end restaurants hesitate on betting on delivery business

Short Description
Restaurant economics work differently from deliveries. For a well-run, 1,000 sq ft, 50 cover restaurant, revenue can be estimated as INR 35 to INR 40 lakh per month.
  • Sakshi Singh
Fine Dining

Fine-dining restaurants, especially the kinds that are part of luxury hotel chains, place as much importance on the venue, ambience, service, presentation, etc., as on the food itself. It also isn’t unusual for fine-dining restaurants to refuse requests to pack leftovers to preserve the sanctity of the dish. So, the very idea of running a fine-dining business on the same model as a roadside delivery restaurant was unthinkable. Then again, so was the idea of the entire world grinding to a halt.

Taj went on to launch Qmin, an app that would home deliver food from its restaurants. Other hotel chains such as ITC and Marriot also launched their food-delivery services, albeit through phone calls and WhatsApp messages. For anyone remotely connected to the food and beverage industry, it was evident that to survive, they’d have to home deliver their food, fine dining or not.

High-end restaurants exploring delivery

This highly challenging operating environment has led to a rapid expansion in the number of high-end restaurants or experiential restaurants offering take away food, or home delivery meal kits, simply in order to survive. While the market for the home delivery of food was already expanding rapidly prior to the emergence of the Covid pandemic, the explosive recent growth seen in this sector has thrown up some intriguing issues and challenges. 

For instance, concerns have been raised over where many of the meals that are being delivered are being prepared, given the rise of so called “dark kitchens.” Furthermore, figuring out which elements of the high end, fine dining experience, and of the increasingly popular multisensory experiential dining, can be captured by those diners who may be eating and drinking in the comfort of their own homes represents an intriguing challenge for the emerging field of market research. The chefs, restaurateurs, restaurant groups, and even the food delivery companies concerned are only just beginning to get to grips with.

In India, food delivery is seeing a move away from an emphasis on price to quality and brand. Before Covid, an average order value (AOV) may have been INR 300. However now, with the entry of top restaurants into the delivery business, the attention is on premium.

Quality over quantity

“Consumer preference has changed from deep discounting and anonymous cloud kitchens to quality. Brands that were extremely low AOV are now finding it difficult to stay relevant, and even aggregators like Zomato and Swiggy have shifted their focus from deals and discounts to hygiene, family combos and health foods,” says Ishita Sudha Yashvi, co-founder of Cross Border Kitchens, which runs seven delivery brands across the NCR.

The game is being upped further by five-star hotels that want to bring in experience. Hotels that were initially testing the waters by offering coffee shops or limited menus are now looking at deliveries as a long term business and thinking up ways to augment the dining in experience to be at par with what restaurant dining used to be.

One size does not fit all

However, that’s only one side of the picture. The big question is how feasible is it for these restaurants to get into the delivery business? Can they ever look at making the kind of revenues they once did from dine in, pressing their staff and kitchens to a newer dynamic? “I am treating these two as completely separate businesses,” says Delhi-based chef and restaurateur who has no plans to open her restaurants till air conditioning, alcohol and extended hours of operating are permitted. But she has launched DIY kits with a limited menu for which the cooking and delivery is being done from her base kitchen in Delhi.

This has been seen throughout the f&b industry. Brands that are into high-end dining, came up with alternative delivery brands catering to the masses at a reasonable price. Chef Gauri Varma, Owner and Founder of Confect and G's Patisserie believes that Covid has changed the game and there is a role reversal that's happening, a consumer today looks forward to an experience from the comfort of their home. “This is a result of the mental shift due to the numerous restrictions and lockdowns in place. In order to survive, businesses need to rapidly adapt to changing nature of consumer demands," she added.

Experience can’t travel home

But many experiential restaurants do not want to be fit in all sizes rather be exclusive to what they offer. Taking a tour of Ambawatta One Complex situated in Mehrauli New Delhi, almost all the restaurants and bars remain shut throughout the peak time while they refuse to offer delivery.

“The Third Wave has impacted the business in a very negative way. As our food is experimental, the delivery has never been a great option for our business. We do offer takeout and delivery but it has never been a large chunk of our revenue and we do not want to position ourselves as a delivery focused brand. We have done very well over the last couple of months and are more than capable of sustaining through this Wave, which I personally feel should die down by Mid-February. We are paying full salary to our staff who are the backbone of the restaurant and are sure demand will start peaking again post the wave. As we are shut as per the government regulations and delivery is not a major part of our business, revenues have taken a hit of about 80 percent during this period,” Udita Khaita, founder of Ditas commented. Ditas is one of the pioneers in launching experiential restaurants in the vicinity.

Restaurant economics work differently from deliveries. For a well-run, 1,000 sq ft, 50 cover restaurant, revenue can be estimated as INR 35 to INR 40 lakh per month. A good delivery brand in just one location, on the other hand, can expect to do only about INR 8 to INR 10 lakh which can perhaps be pushed by another INR 2 to INR 3 lakh, even though the market is already getting cluttered and competitive.

Dining in can’t be replaced

“Although the delivery model has caught pace in recent times, however, if there is one thing that has and will remain constant is people's desire to venture out and explore. Delivery is an additional source of income for businesses and probably the latest buzz but the dining model has always reigned in the sector. The demand for dining will always be as is and rather, it is only anticipated to increase by the day. We aren't facing excessive challenges based on delivery as of now and nonetheless, we do deliver our products but it is limited to retail, including chocolate bars, spreads and desserts that can be enjoyed at home. The delectable hot bites are meant for the table and thus going just fine with our current model and business approach,” Nishant Sinha, founder of Roastery Coffee House and co-founder of Colocal stated.

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