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Consumption revival sparks fresh investor interest in restaurants



MUMBAI: Some of India’s largest restaurant chains such as Impresario Entertainment and Hospitality, which owns brands like Social and Smoke House Deli; Olive Bar and Kitchen, which operates restaurants like Olive and SodaBottleOpenerWala, and Massive Restaurants of Farzi Café fame have managed to change the outlook of investors to the sector.

Having raised close to Rs500 crore in December, these chains have got investors to shed their wariness; many of them are now willing to invest even in smaller chains and start-ups, betting on a revival of India’s consumption story.

Moreover, flush with money, the larger restaurateurs are also looking at inorganic growth through collaborations and acquisitions of smaller casual dining chains in the coming year.

“We will look to invest in brands that add value to our portfolio and are doing something that we don’t do,” said Zorawar Kalra, co-founder, Massive Restaurants, which raised Rs160 crore from private equity firm Gaja Capital in December.

Kalra did not name restaurant chains that he has identified as they have only just started exploring options. However, he added that the chains could be small-sized with revenues of Rs20-to-30 crore, or mid-sized with revenues of Rs80-to-90 crore.

“We are keen on creating a platform for all talented food and beverage (F&B) companies,” said Riyaaz Amlani, managing director and chief executive officer of Impresario, which raised Rs325 crore ($50 million) from L Catterton Asia (previously known as L Capital Asia), a global consumer-focused private equity firm with strategic relationships with LVMH and Groupe Arnault.

Amlani has already identified a few restaurant brands and is in talks with them. “We hope to pick up a stake in 3-4 restaurant firms,” Amlani said. He, however, did not want to divulge details as the talks are still at an early stage.

Likewise with Olive, which has brought on board a Rabobank-sponsored private equity fund in place of Aditya Birla Private Equity, which exited. “Our company is building for the future on the back of strong organic growth of its own brands. In addition, we may look at collaborations of a different nature with companies and restaurants we believe in,” said A.D. Singh, managing director, Olive.

Meanwhile, investor activity seems to be picking up as well.

“Investment activity has once again picked up after nearly two years,” said Samir Kuckreja, founder and chief executive officer, Tasanaya Hospitality Pvt. Ltd, who has got three mandates for investments of $2 million-5 million in restaurant start-ups that are 2-3 years old. Moreover the mandates are from new investors from the Middle East and family held trusts that are looking at entering the consumption space.

“I have not seen a better time in the last 10 years,” said Siddharth Bafna, partner and head of corporate finance and transaction services practice at Lodha & Co. He expects a three-fold increase in the number of mandates his firm handles in the F&B industry compared to a year ago.

The year ahead is also expected to see casual dining chain Barbeque Nation Hospitality raise an estimated Rs700 crore through an initial public offering (IPO). The company filed its draft papers with market regulator Securities and Exchange Board of India in August last year and obtained approval in January.

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