“Club of Knowledge Hunters”

‘The question is whether I can create an Indian McDonald’s’

Posted by superstar23 on October 4, 2008

Amit Burman, vice-chairman of Dabur India Ltd, has just got into organised food retail with Lite Bites, a new restaurant chain company that has recently launched a number of formats in the mid-market space. He talks to Anoothi Vishal about his restaurateur aspirations and explains how he proposes to go about building one of India’s biggest food chain companies.

A lot of people are getting into food retail, but your concept of food retail is a bit different. Why restaurants?

Everyone wants to tap into the new big boom in retail. All the big, (smiles) well, bigger boys like Reliance and Bharti are looking at that space and food plays a major role with them too. But instead of supermarts and hypermarts, I thought we should set up a restaurant chain company that will have some of our own brands and others that we bring in from abroad. My other business (Dabur Food’s Real and Homemade brands) was also food-related. Personally, I love food and when I am trying out something abroad, I always think if it can work in India. Why has no one in India been able to create a McDonald’s? There are so many western brands in India. In London, you have hundreds of chains but in India, we don’t really have such big chain companies. One, of course, there’s a lack of retail space. And then, you need to spend a lot of money for that. I think, can I create an Indian McDonald’s?

How do you plan to spread out your investment?

We will invest Rs 150 crore in four years to set up about 200 outlets. Of these, some will be quick-service restaurants (QSRs) and others will be in the casual segment like this one (Asia7, an oriental restaurant in Gurgaon’s Ambi Mall, where we are sitting), where we will give diners the best international-quality food and experience but at prices that are affordable by families. We are also managing food courts within malls (we’ve got a strategic tie-up with PVR to manage food courts) and on other locations like in high streets the way you have in Singapore and Hong Kong. And we will look at the highways next. Here, we will give you a couple of concepts within the same complex. Right now, you just have the dhabas or the government-run facilities that are very basic.

You are focusing on malls, but do restaurants in malls really work?

Indian consumers have taken to the malls. The pricing should be such that you don’t mind stepping inside and spending that amount with your kids and family. I see food courts and cinemas as the anchors for malls. Right now, we have set up several of our restaurants here (at the Ambi Mall) and we have done all the back-end work after getting the space. But in future, we want to have preferred partners among developers, in fact, even coming in at a stage when the mall is being planned. The developer will get traffic. Obviously, there will also be a need to see that other businesses don’t get driven out .

You had earlier opened a restaurant (Forum in GK-II) in your personal capacity but that didn’t work out. Why? And what lessons have been learnt from that experience?

We were too many (eight) partners in that and didn’t really know the business. It was a fine dining space and we spent too much money on it. In Delhi, I feel, a fine-dining space on a high street does not work. You can have a Sagar but not really a fine-dining restaurant. For that you have the five stars. On a high street location there are problems — for instance, your wife or your girlfriend cannot walk to the place wearing a skirt!

It’s interesting that this time around, you have tied up with well-known names in the F&B business for your restaurants, people like Jiggs Kalra and Nikhil Chibb…

We have launched three restaurants in the casual format—Indian with Zorawar (Jigg’s son), a Mediterranean/Italian one with the Spanish group (Alfresco, which has several restaurants worldwide) and Oriental with Nikhil Chibb (the Busaba chef-restaurateur from Mumbai). These are the three most popular categories of cuisine in India and we will see how the concepts work. The advantage of associating with these people is that they already know the hospitality business and so are able to work out all the details like the supply-side, consistency of the product and so forth. The problem with a chef-driven restaurant is that if the chef leaves, you are left at sea. But here, because these people are working in partnership with us (mostly with equity, Chibb takes royalty only at the moment), there is no danger of that.

One of the big issues of the chain business is consistency. How do you ensure that?

For the fast food stores (QSR) segment, the guy who is putting together your order does not really need to know how to cook. He must simply know the formula. It is like a chemistry lesson. We already have everything pre-cooked, the sauces, the spices, the breads. All the food stuffs are transported from the factory to the restaurants nicely packed in an AC van. The person at the restaurant simply needs to put together the required quantities, heat it up and give it to you.

How are you planning the expansion?

Punjab and the north would be obviously easier, then Mumbai and the western areas and then down south. It is easy to take the restaurants anywhere once we have located suitable sites. If I want to plan the fast food stores though, we will need to move in clusters. I will need to set up the commissary, the factory first, that will cater to about 35 outlets.

Professionals in the business of restaurants feel that you are spending too much and in things such as publicity, so how will the business be viable? Have you figured out the economics?

We are hardly doing any publicity. I see (other chains) coming out with big ads daily (smiles). We have worked out our food costs and at the store level, the margins are 15-20 per cent. Obviously, I can better this… the more the volumes, the more I am able to do this.



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