Are You Being Served?
Dining out… or even sipping coffee has undergone a sea change. Stylised ambience. Themed interiors. Exotic menus. Read about how it’s done…
On a chilly December evening, while he chatted and sipped good coffee with a couple of friends at home, it struck Riyaaz Amlani that Mumbai had no café where he could do the same. “Mumbai had fine dining restaurants, it had little wayside cafés, but no coffee houses,” says the founder of India’s Mocha chain of coffee houses.
“I developed a taste for coffee in New York. Cafés in the US aren't just eateries; they are social spaces where people hang out with friends or even work, armed with laptops. They attest to the fact that there are social connotations attached to coffee.”
To set up the chain Riyaaz Amlani’s first step was to research the Mumbai market. “I called friends and acquaintances to check whether they knew of a coffee house that functioned like a hang-out. I ate out almost every day in cafés around Mumbai, and found they were informal, small restaurants that served bad coffee.” His research indicated that there was room on the market for his idea. And as something like it was known to work very well in other countries he had enough of a pitch to rope in two partners, Varun Sahni and Kiran Salaskar to finance a project.
All this in the face of the fact that coffee cafés were as antithetical to the tea-drinking Indian culture as, say, burger joints. “It was a risk,” he admits. “Would Indians be ready to replace their cuppa with coffee? We couldn’t be sure. So to play it safer, we value-added. Besides coffee we decided to offer selection of teas and wines. But the emphasis was on creating a space that allowed customers to relax with a couple of friends and catch up with the gossip.”
The three partners resolved not to ape the American Starbucks model. “Our borrowings were more from the kawakhanas of Turkey, where they serve coffee and hookahs,” he explains. “Kawakhanas or coffee cafés are integral to the social fabric, places they meet and exchange ideas. That’s what we wanted.”
According to Amlani, “there are many people who think they can start restaurants. Only a strong idea will help you navigate through the mob. There’s almost no need to observe that it’s best to start a restaurant in a niche that is still empty, or where there aren’t too many strong players.”
The Amlani’s first Mocha café opened in Bandra, Mumbai, in 2001. Today, there are 15 Mocha cafés spread across Mumbai, Ahmedabad and Delhi. Amlani now plans to expand to Dubai and London.
Big business sector
Restaurants and cafés are big businesses, with many players vying for a place in a crowded field. According to America’s National Restaurant Association, the sales of stand-alone restaurants across the country will reach $537 billion in 2007. The industry employs 12.8 million people and serves more than 70 billion meals. The Dubai Department of Tourism and Commerce Marketing (DTCM) data reveals that Dubai itself has about 600 restaurants, with at least two new ones opening every month.
As for India, it has over 500,000 big and small restaurants, according to the Federation of Hotel and Restaurant Association’s 2007 figures. The turnover could reach about $125 billion in 2007. The FHRA calls the industry an economic powerhouse, one that will play an important part in transforming India’s economy and its job market. Dr Ashit Sen, Professor (Retail and Services Business) at the Pune-based Symbiosis College of Management reports, “Retail and services are the front runners in the new economy, worldwide. The big growth is expected to be in the services industry, like the restaurant business. I expect an 18% to 20% growth in the Indian restaurant business in the next two years or so.”
There is certainly no dearth in hopeful entrants. Setting up a restaurant is easy, provided you have a sound idea and the finance to make it happen. Marketing it is another story (see box). How do you position your restaurant to make it stand out from the rest? How do you ensure that your idea will prevail on the crowded marketplace?
Here’s how to go about it.
First step: the concept
The idea is a vital part of any start-up plan, most definitely so in the restaurant business. Setting up a restaurant is fairly easy, but surviving competition isn’t. “The quality of your idea is what will ultimately decide your fate,” counsels Riyaaz Amlani
It is crucial to find the niche for your putative restaurant. Do you want to be a café or a pizza place? Is a deli or bistro your idea of a good hangout place, or is it a fine dining restaurant, which will cater to a select clientele. Rahul Akerkar, the man behind Indigo and Indigo Deli, knew that he wanted to set up one of Mumbai’s finest restaurants for French and Italian cuisine. Indigo opened its doors in February 2002, while Indigo Deli, the casual eatery next door, was set up in 2006. Moshe Shek, who opened Moshe in 2004, wanted to create a cool, informal eatery where you walk in wearing shorts and feel at home. Moshe is already on an expansion spree with three new outlets on the anvil, two in Mumbai.
“Don’t try to do everything in one restaurant – it isn’t a good idea to serve three different cuisines, like European, Chinese and Indian, in one restaurant,” cautions Akerkar, of the fancy Indigo restaurant. “That will dilute your positioning. Ensure your idea is clear and your basics are correct. Decide on the kind of restaurant you want to operate, the food you will serve, and only then turn your attention to supplying the detail to make it happen.”
It is important for any retail or hospitality brand to grow and get noticed. “There are too many restaurants and cafés around. How do you intend to make yours different?” asks Amlani. “You need to value-add. From the food served to the experience created, everything has to stand out.” Research will help you figure out which kind of a restaurant is in demand, and to verify if that demand exists in the area where you plan to open.
Second step: the business plan
Raising cash for your venture will be easier if there’s an orderly and cogent business plan. “The food business is the biggest, internationally,” says Akerkar. “It’s growing by about 20% per annum in India. People with the big bucks will want to tap this growth. But a strong business plan is essential.” Many chef-entrepreneurs seek associations with business managers to insure proper planning and administration (see box).
An ideal business plan would include:
*The idea: Study the category in which you plan to start the restaurant – a café, a casual bistro, a fine dining restaurant, or a deli? Check out the other restaurants existing in the same category: who are its key players and how different from their business plan is yours?
*The positioning: How is your project to be positioned and how is it to be promoted? What are the strategies that you intend to employ to live up the two challenges? ?
*Finance: How much money will be required for set-up and operation in the first six months?
*Turnover: What will be the turnover you expect in the first year of operation? How do you explain this expectation?
Third step: the location
The wrong neighbourhood will kill any restaurant in its infancy. According to a 2006 AC Nielsen report, about 20% of restaurants in the USA close within a year of set-up because of the wrong choice of location. “Your café or restaurant should be located in a place where it attracts its target customers,” the report counsels. “A diner should be on a highway, where people can stop for fast meals. But a fine dining restaurant has to be located in an upmarket area.”
Shek chose Colaba, in South Mumbai, for opening Moshe’s. He explains that he chose it because “the area is a hot spot for tourists visiting Mumbai. Also, many expatriates live here and are familiar with Mediterranean cuisine that they find on my menu”. For Amlani the choice was Bandra, one of Mumbai’s fastest growing suburbs, with its large, affluent, population of movie stars, corporate heads and advertising professionals. Akerkar, whose fine dining restaurant, Indigo, serves Italian and French cuisine, chose Colaba because of its proximity to Mumbai’s tony residential areas.
It’s critical to conduct a quick survey of the area you where you plan to set up shop. “I checked out most of South Mumbai to understand to get to know it from a restaurateur’s point of view,” says Shek. “There were outdoor cafés for evening drinks, and fine dining restaurants, either independent or attached to multiple-star hotels. I found that what Mumbai lacked was a casual eatery that served Mediterranean cuisine. I knew about its demand, since I've been serving Mediterranean cuisine through my catering business.”
Fourth step: financing
The obvious next step is to figure out financing, at least for the first year. Amlani, who raised Rs 12 lakh (ca. $30,000) for his first café, says, “About 15% of the cash I raised went toward the rental. I also spent freely on design and décor. I wanted a Moroccan look: warm walls, dim lighting and a mix in furniture. About 20% of my budget went into this. We imported sophisticated coffee machines from the United States as the coffee machines and dispensers we needed were not available in India. Coffee beans were imported for some of our exotic coffee concoctions. Another 40% went into this.”
Akerkar reports that about 8% of his capital of Rs 60 lakh (ca. $150,000) was spent on training his staff, especially his chefs and waiters. “They needed to get to know what they would cook and serve. So, I flew in experts from the US who trained and informed them about the food at Indigo, and our extensive wine list. They even got to learn the kind of wine that would harmonize with the flavours of a particular dish.”
About 15% of the finance raised was spent on the décor. “We hired a reputed interior designer to create a global look for the restaurant, but with an Indian soul. The moment a guest enters, he was to know that there is something Indian about Indigo. But we don’t push the image with kitsch.” The biggest amount, about 60 % of the cash spent, went on renting the space Indigo as well as setting up setting up the kitchen and bar. “Rental rates in South Mumbai, where we are located, are steep. We imported equipment for the kitchen, as well as the wines. The import duties ate up a lot of our capital.”
Fifth step: restaurant positioning
Survival in the long run depends on how well your restaurant is positioned. “It’s important to figure out the niche in which your restaurant falls, and position it accordingly,” says Akerkar. “Are you a fine dining place? A coffee café? An eatery? Do you serve food that’s considered exotic in your country, like Japanese food is in India? Your pricing, branding and menu depends on the positioning of your restaurant. It informs every communication, from menu to your press releases.”
Stand-alone restaurants need to have menus, prices and décor exactly corresponding to the image they wish to project. Mocha positioned itself as a space where people come to meet and greet friends or contacts in air-conditioned comfort “Design and décor played a big part in our positioning strategy,” says Amlani. “Our inspiration came from the kawakhanas of Turkey. The coloured walls, furniture, the hookahs, flea market lights, are calculated elements of the ambience.”
Akerkar paid equal attention to menu, pricing and the décor. “I wanted my restaurant to be positioned as a fine dining space. So, the location had to be upmarket, like Colaba. Since Indigo is located in a high-rent area, I am saddled with rental expense, which shows in my pricing. In turn, high pricing brings in the choicest of customers, the crème-de-la-crème of society, who widely travel and understand European-style cuisine. There’s no sense opening an Indigo in a middle class area.”
“We positioned Moshe as a gourmet but casual place, and priced it accordingly. We wanted Moshe’s to become known as a place that serves a distinguished meal for roughly $12 or $14.” says Moshe Shek, the founder of the Moshe restaurant. Portions are generous, and the menu is more exotic and of higher quality than is the rule.
Amlani believes the location must be part your positioning strategy. “To appeal to younger people, we have located all our cafés in high-activity areas like markets or residential areas, where people hang out. The idea was to create a cult, so that people say, I am a Mocha kind of person.”
Shek believes that a restaurant’s niche audience should be able to identify with it. “Moshe offers its customers an ambience which invites them to relax, or to attend to business in a relaxed way. We wanted people to feel they were coming to us to socialize, and not primarily to eat and drink.” By contrast, Indigo is positioned as a restaurant you go to for great food, equally good ambience, and for the events it hosts, from art shows to talks by filmmakers—and never mind the price.
The menu, too, corresponds with the niche in which a restaurant is positioned. Indigo constantly experiments with its cuisine, but also maintains a permanent core of its menu. The food and wine, the talking points of Indigo, borrow a lot from France and Italy. “But we have adapted French and Italian cuisine to suit Indian tastes,” says the owner. “I use ingredients that convey the Indian taste, but are western in form and texture.” Moshe's food, again by contrast, tends to the Mediterranean side, with detours to Turkish, Moroccan and Greek cuisines.
But all of our interlocutors agreed that the main emphasis of management must be on the quality of the food. “Fancy places run by businessmen tend to fail because of food is not given sufficient attention,” says Akerkar. “I never cut corners on food. I pay continuous attention to the kitchen. Since I am a chef myself, my cooks can’t flummox me. If the bread isn't the proper shade of brown, I know what’s gone wrong and am not shy about telling them how to fix it.”
Published in October 2007.
