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TGI Fridays’ Indian partner to raise funds for expansion



NEW DELHI: American casual dining chain TGI Fridays’ India joint venture partner Bistro Hospitality will dilute stake and raise private equity funding to finance expansion for the first time since it set up the brand in India more than two decades ago, joining the league of restaurant chains that have been attracting external funding on the back of a revival of India’s consumption story.

Bistro Hospitality, which operates an existing network of 11 TGI Fridays outlets in the country, has appointed Centrum CapitalNSE 0.14 % as its investment banker.

TGI Fridays’ India chief executive Rohan Jetley said the funds would be used for expanding operations of the flagship brand, besides setting up its first Fridays American Bars in the country. “India will be the launch market for The Fridays American Bar. The plan is to roll out five outlets a year starting with three bars and two Fridays bars next year.”

The smaller format bars, TGI Fridays’ second brand in India, are being set up in response to rapidly changing consumer demographics, growing number of millennials and urbanisation, he said. “The bars concept will help Fridays penetrate into the tiertwo markets faster, keep expenses low and leverage the Fridays’ brand name.”

US firm Fridays International will retain its 25% stake in the Indian JV, their only JV across the world. In all other markets, TGI Fridays operates through franchisees.

TGI Fridays India is a 75:25 joint venture between Indian firm Bistro Hospitality and American TGI Fridays. In April-May this year, TGI Fridays shut down three stores on the back of a tough 12-24 months that saw the rollback of input tax credit, which industry officials said, led to 10-15% impact on profit margins, a ban on selling and serving liquor near highways and a slowdown in people’s eating out habit.

However, sentiment has since been improving with the consumption story looking positive for the sector. Late last year, venture capital firm Gaja Capital invested Rs 160 crore in Massive Restaurants owned by Jiggs Kalra and his son Zorawar Kalra. Around the same time, French luxury conglomerate LVMH’s investment arm L Catterton Asia acquired majority stake in restaurateur Riyaaz Amlani’s Impresario Entertainment & Hospitality, promoter of fine dining restaurant brands such as Smoke House Deli and Social.

A report on Indian food servicesNSE -0.89 % by National Restaurant Association of India (NRAI) estimates the country’s food services market to touch Rs 5 lakh crore by 2021 and lists challenges such as real estate costs, taxation and high levels of employee attrition.

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