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Nirula’s: The charge of the old brigade

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For many an adult Delhiite, Nirula’s is a part of the growing-up years – indeed, so much a part that the memories all merge and fade into one another. Perhaps just one of those things that one loves and, hence, takes for granted as something that always will be there!

Well, as they all say, time never stays that way. New generations come and stake claim to the ownership of the world – new idioms and rules of living find their way into the old order. The old ways either have to mould themselves accordingly, or they choose to exist for the sake of their old believers. Or, they simply perish.

Established in 1934, Nirula’s was to become the first quick service restaurant (QSR) chain in Delhi. At least a couple of generations of the capital’s populace must have had their first taste of the hamburger at the corner joint at L Block in Connaught Place. Another first owned by this landmark is the Chinese Room, Delhi ‘s oldest Chinese restaurant.

In 2005, Nirula’s was presented in the market for a sell-off of operations (the reason, from all accounts, is mainly a personal one). The company was said to be in talks with Philippines-based Jollibee, among others. There was also speculation about an IPO. After about a year, Nirula’s formally came to an arrangement with a $500-million Malaysian company in a deal said to be in the range of Rs 85-90 crore.

With effect from July 1, 2006, Nirula’s passed into the ownership of Malaysia-based private equity fund Navis Capital Partners, the majority stakeholder, and Samir Kuckreja, with a minority stake. Kuckreja, a relative of outgoing owners Lalit and Deepak Nirula as well as a former executive director with Nirula’s, assumed the post of managing director. And the call for change was imminent.

The new management made their intentions clear – that, save the name, everything else was due for a makeover, be it design, look and feel, ambience, staff and service decorum, market expansion strategy, or communication parameters. It was time to seek out the new generation, before they were lost for good to other branded spaces that boasted of coffee, conversations and glamorous chutzpah!

Here, Managing Director Samir Kuckreja deals with some pertinent questions from coordinating editor Padma Pegu and senior correspondent Karan Mude.

What formats of retailing does Nirula’s have besides family-style restaurants, express outlets, fine-dine restaurants, fuel pump outlets, and highway outlets?

In addition to the above-mentioned formats, we also have Food Court Units and ice-cream kiosks. Both of these formats help us in increasing our reach to consumers. The Food Court Units offer a variety of food to the moviegoers. As famous and cherished as Nirula’s ice creams are, it makes for good reason to take our ice creams to maximum number of consumers.
In the hospitality segment, Nirula’s has two hotels – one in Noida and another in Panipat.
We also have bars under the name Pegasus.

Which format is the company focusing on, and why?

Currently, our strongest emphasis is on the Quick Service Restaurant (QSR) business. The QSR category comprises Family Service Restaurants, express outlets, Food Court Units, and ice-cream kiosks. These formats will form a substantial part of the pan-India presence that we have on our expansion map. The reason for laying emphasis on the QSR category is that this format serves the maximum number of customers. Investing more in this format is beneficial for our customers and us as well.

Has the company formalised any deals for the proposed air catering business?

There has not been any formalisation of deals in this business domain so far.

How many states/cities/towns is Nirula’s present in? What is the current number of outlets, and what is the dominant format?

Right now, we are present in Delhi, Haryana, Uttar Pradesh, Uttaranchal and Punjab. The number of outlets stands at 45. Out of these, 35 are QSRs, which also host 8 Nirula’s pastry shops. Soon, Nirula’s will also be entering Rajasthan and Madhya Pradesh, which will be followed by a nationwide expansion.

What are the expansion plans within the country? How much investment that will entail?

By 2009, we plan to open another 150 outlets. In the next three years, we plan to establish Nirula’s presence all over India. And it must be mentioned that it is not only the metros, but also the tier II and III cities that you will find Nirula’s in. These cities offer tremendous opportunities that have not been tapped so far.
In terms of investment, we will invest Rs 100 crore over the next three years to fuel this expansion.

How many outlets have been opened so far under the agreement with Indian Oil Corporation (IOC)? How many more are lined up? Is this format profitable?

Presently, we have six outlets that are operational at IOC gas stations. We intend to raise this number substantially with time. In fact, we are also in talks with other major petroleum companies for similar tie-ups.
This format is highly profitable as there is little or no rent that needs to be paid for these outlets. As rent can constitute a significant part of cost, its absence brings down the cost tremendously – this helps in improving the profit margins. The model works on a revenue-sharing basis and generates good margins. With an increase in highway traffic, outlets at highway gas stations have a great potential for business. We are keen on opening a large number of these outlets at locations that are feasible enough.

What is the status on tying up with possible partners overseas, particularly the Gulf region and the United Kingdom ?

Presently, there are no plans on international expansion.

What is the scale and size of operations the company is looking at for its overseas expansion?

As mentioned in the previous answer, presently we do not have any immediate plans to go to international markets.

In India, how has been the response in the southern region? Were there any initial problems the company faced in terms of logistics, format experimentation, acceptance, competition, etc.?

We have not entered markets in South India so far. However, we should be present there within the next three years.

How has the change in top management reflected in brand Nirula’s makeover/growth strategy/positioning?

Nirula’s has been a pioneer in the organised F&B industry in India. The first food licence, FPO1, was awarded to Nirula’s. We were also the first to introduce pizzas and burgers to the Indian consumer.

The fresh top management in the company reflects in the changes being brought about to make the Nirula’s brand relate best with the needs of the modern consumer. The new team comes with fresh ideas and strong enthusiasm to take the brand to new heights. Owing to the remarkable equity that Nirula’s brand name holds, it has been essentially retained, with a slight change of font.
However, other logos like those of ice creams, potpourri, and pastry shop have been given a new look.

On the service front, we now have partial service instead of self-service at our restaurants. One just has to take a table number subsequent to the payment, and the food gets served at the table. We have introduced female Guest Response Executives (GREs) at our restaurants. We have also given a new look to Nirula’s restaurants and the colour red is an essential element of it. The staff is now seen in new lively uniform, designed by renowned fashion designer Manoviraj Khosla. Signage and graphics have also been given a new look by Gopika Chowfla. We have all-new exciting interiors done by Lotus Design. Our most recent FSR at K-Block, Connaught Place, already has all these new elements and soon these will be carried over to all other Nirula’s restaurants.

(The old location of Nirula’s was disbanded, the main reason reportedly being the expiry of lease. The new management also insists the new address better suits their plans for a brand new Nirula’s.)

At the same time, we are also incorporating new technologies at our central kitchen and the ice cream factory. Capacity upgrade of both the facilities is being carried out as well.

Though an incredible number of changes have been brought about, the food that our customers have always loved and cherished still remains there in all its originality. Moreover, the value-for-money prices you get at Nirula’s also remain.

While implementing the changes, we had ensured that our customers got the best value out of this process.

How would Nirula’s do a competitive analysis in the present situation? This can seem all the more complicated now, if one considers not just the fast-food joints, but also the mushrooming coffee cafés as potential competition?

Just as Nirula’s tagline reads, it really is ‘WOW Kya Choice Hai’ – we offer a very wide variety of food to our customers. With such a product portfolio, our competitors are of different kinds as well. Pizza chains, burger chains, coffee chains, ice cream chains, cakes and pastry chains, and, of course, the chains serving Indian food constitute our competition. As one can observe, the competition is very diverse and large in number.

However, what differentiates Nirula’s from all competitors is that almost all of them have a very specific product focus, be it burgers, pizzas, or anything else you may. On the other hand, when one visits Nirula’s, one can choose from pizzas, to burgers, to ice creams, to Indian food… and the list runs long. This is where we score over our competitors. At Nirula’s, there is something for everyone.

With our variety being our big strength, we are confident of becoming the leading F&B chain of India in a realistic span of time.

Does Nirula’s have a standard pricing model across different markets?

There is a high degree of standardisation of pricing across different markets, and within Delhi all prices are the same. Almost all the products carry similar pricing in different markets.

How is the company looking at ‘sustainability’ issues, which are increasingly important in determining a retailer’s credibility among consumers and stakeholders? Obviously, this is also linked to corporate social responsibility (CSR).

We clearly understand the importance of establishing sustainability for the business and creating a relationship with our customers. Relating to that, we run programmes for kids, families, etc., with the aim of creating a long-term relationship with them. We also continuously innovate new ways to improve our products and services, so our customers get the best.

We also acknowledge our responsibility towards society. Nirula’s has been for long running reward programmes for scholarly kids, called the Scholar’s Award Program, to motivate them to perform well in studies. Also, regardless of their social standing, children flock to join our Birthday Club and avail of freebies on their birthdays. There are other CSR activities in the pipeline which we shall start implementing very soon.

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