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Recipe for success in the restaurant business

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Did you know that 9 out of 10 stand alone restaurants shut down within 18 months of opening?

An expert in the restaurant business, Ajay Bansal, points this out in the India Retail Report 2009. “The flow through impact of sales beyond the break even level is far higher in this business, since only 30 per cent of sales is a variable cost”, says Bansal.

The key to make profits in this business is to focus on driving higher revenues, says Bansal. Enumerating the top three factors for developing a successful economic proposition for a restaurant business, Bansal points out the three top factors as:

1. An in-depth understanding of the core target audience.
2. Developing a comprehensive offering for the target audience, which should focus not only on food but equally on experience and value.
3. Location.

Dwelling further on location, Bansal says that high rent does not necessarily mean that the location will not make money. He feels that there is no need to go in for a mad rush for malls, as restaurants at some of the non mall locations make more money than their counterparts in malls.

Bansal, was instrumental in establishing Yum Restaurants, as one of the largest restaurant companies in India, with Pizza Hut and KFC brands. After a stint as CEO of Satyam Cineplexes, he has recently led the launch of a chain of upscale Indian cuisine restaurants under the brand name Orange Hara.

– Raja Ghoshal

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