Punit Chanda was a fresh graduate of Mumbai University when he opened a café in the upmarket Lower Parel with initial funding from his parents. The quirky café ran for two years before Chanda finally called it quits. High rentals, high staff attrition, accelerating overhead costs were becoming unmanageable. But despite its closure, the café gave Chanda a brief opportunity as an entrepreneur.
Many millennials with little or no backgrounds in food and beverages (F&B) have entered the domain, becoming ‘restaupreneurs’. After app-making, F&B seems to be the easiest route towards entrepreneurship. And why not, when the total food services market in the country is presently valued at Rs 3, 09, 110 crores.
Says Vijay Abhimanyu, MD of Billion Smiles Hospitality, which runs brands like BonSouth and Southindies, “this industry is disorganised, providing an opportunity for entrepreneurs.”
Experts state the potential for F&B outlets is tremendous considering India has a mere 10 chained outlets per million population, compared to the USA, which has 730 chained outlets per million population.
But alongside market potential is the high mortality rate that F&B outlets confront. For every successful restaurant, there exist 10 unsuccessful ones that have been closed down in less than a few years of operations. “Many people get into this business for the wrong reasons, like social recognition and glamour. ‘Restaurants’ is a serious business and not something that can be run part-time,” says Riyaaz Amlani, CEO and MD of Impresario Entertainment & Hospitality that runs Social, Smoke House Deli, etc.
Experts say restaurants witness multiple challenges. It is highly capital intensive, requiring upwards of Rs 80 lakhs to a few crores as initial costs. “Rentals and sourcing talent are major hurdles, as well as dealing with agencies to procure liquor licences,” says restaurateur Rahul Khanna of Azure Hospitality, who runs brands like Mamagoto, Sly Granny. And lastly, F&B is highly competitive. A 2 km radius in a business district in any metro could have innumerable F&B outlets offering wide-ranging cuisines and experiences. Beating competition and overcoming the other challenges often proves a daunting task for any entrepreneur. Thus, although restaurateurs dream of margins that are upwards of 15%, many are able to actually garner only as much as 5-6%.
Further, debunking the myth that F&B is an easy route to entrepreneurship, restaurateurs say that beyond starting an outlet, attaining scale is of prime importance. According to Abhimanyu, building a scalable chain across cities has a different dynamic from say running one or two restaurants. “There are a lot of F&B entrepreneurs, but very few scalable chains are being built. And once you hit a critical scale in this business, I believe you can grow at an attractive rate with just internal accruals.”
So what’s needed for entrepreneurs to sustain and attain scale? “Besides funding and deep pockets, what is required is regular innovation, novel concepts and ideas, consistent quality of food and service and the passion to tell a good story,” says Amlani.
…& ANALYSIS
Many millennials with no backgrounds in F&B have entered the domain
After app-making, F&B seems to be the easiest route towards starting-up
Besides attaining a scale, an outlet needs funding, innovation and good quality of food, service
Innumerable F&B outlets offer wide-ranging cuisines in 2 km radius of metros
