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Industry Leaders Analyse Expansion and Sustainability in Restaurant Business

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The National Restaurant Association of India (NRAI) conducted a power-packed CEO Session on ‘Expansion and Sustainability in Restaurant Business,’ at the PHD Chambers, New Delhi on 5th May, 2014. The panelists at the session included industry experts representing various food service segments, A.D Singh, Olive Bar & Kitchen; Ajay Kaul, Jubilant FoodWorks (Domino’s and Dunkin’ Donuts); Jay Singh, JSM Corporation (Hard Rock Cafe, Shiro’s and California Pizza Kitchen); Niren Chaudhary,Yum! Brands (KFC, Pizza Hut and Taco Bell); , The Beer Cafe; and Riyaaz Amlani, Impressario (Smoke House Deli and Mocha). The session was moderated by Samir , President NRAI.

The interactive session observed discussion and knowledge sharing on essentials of expanding the business and keeping it sustainable, which included analysis on some key points, when is a restaurant brand ready to expand; expansion through company invested restaurants versus building your chain through franchising; sustainability in terms of menu innovation, profitability and growth; and funds for expansion, when and how to go for funding, debt and equity.

The panelists observed during the session that running a restaurant business in India is a challenging task, as India is a unique market with complex licensing issues amid current slowdown in demand. But the Indian foodservice sector has tremendous opportunities for everyone to grow.
Kaul enumerated, ” People and infrastructure, which includes vendor ecosystem as well are the key challenges in the Indian market, which Domino’s also faced 8-9 years back. Though things have improved and changed now but issues are still there.”

Kaul added, “For every business to be successful, the entrepreneur should ‘think big’ and have the ‘conviction in the concept.’ Business decisions are a function of both, heart and mind.”

Chaudhary shared, ” Brand development needs to observe four stages, consumer proposition, which means their response to the concept; business model, where the model should have the ability to generate returns within specific time lines; ramp up, which implies proper asset strategy, including the study of what format will be successful in different locations, cities etc; and the final stage, building shareholder value.”

“The keys to sustainability include, creation of synergies between top line sales, investment made and operational efficiencies,” Chaudhary added.

AD Singh shared a view to remain sustainable in times of economic downturn, “Capex on restaurants should be controlled and more compact spaces need to be taken; there should be constant innovations in food, menu, and formats.”

Rahul Singh stated,”To grow from one unit to several units, it is vital to remain connected with your employees and have an open door policy.”

For franchising the panel agreed that there will always be differences between the franchiser and the franchisee therefore to make the franchising model flourish, it is necessary to find like-minded partners who can share the same value and vision as yours. Amlani emphasised, “Many times people eat out only to savour an experience in the same restaurant brand, which they must have had in the past; franchisee owned outlet may fail to re-creating the same experience and offer same consistency as offered in the company-owned outlet. So, there is risk of losing a set of customers”

The last segment of the panel discussion concentrated on funds for expansion. Jay Singh contributed, “To get funds for expansion is good but to assume that the investors will bring strategic changes and will add value to the business is a wrong premise. One should be very clear about the objectives of raising funds, while raising money.”

The speakers and industry experts also shared information about their brand, expansion plans and strategies.

Kuckreja, concluded, “Being the leading association of the restaurant industry, it is the responsibility of NRAI to create and offer platforms, where best practices by various brands could be shared. As it is during these knowledge-based conferences that stakeholders get opportunities to learn continuously from several industry experts.”

The insightful event saw participants from Delhi/NCR, Mumbai, Bangalore and Kolkata.