It was tough being a student with dyslexia and no interest in studies in the India of the 1980s and 90s, particularly if you fancied making your mark through entrepreneurship. Delhi boy Priyank Sukhija did it the old-fashioned way, taking money from his parents and tinkering with various businesses as a teenager. He almost opened a bowling alley (local authorities did not allow it) before following his heart and tongue, hitting the bullseye with the restaurant Lazeez Afffaire when he was just 19.
They do not call Sukhija, now 44, the ‘Restaurant King’ or the ‘Nightlife King of Delhi’ for nothing. He runs over 30 food & beverage (F&B) outlets, ranging from fine dining restaurants to night clubs, that are doing brisk business, including popular brands like Lord of the Drinks and Diablo, and a turnover hitting Rs300 crore. He could well be the richest restaurateur in the country. Not bad for someone with no chef background and who once found it hard to clear term papers.
Sukhija, however, feels he has just started. “We are at the tip of the iceberg, with people just about starting to eat out more,” he said. “Even if, say, 1 per cent of Delhi dines out more often, we will not have enough restaurants!”
BREAD & BUTTER
Man does not live by bread alone; a crostini or a bruschetta once in a while sure is nice. As the whole concept of restaurant outings as a special occasion makes way to eating out (or ordering in) as a matter of habit, restaurateurs are enticing customers with innovative cuisines and immersive experiences.
The urban legend of a famous restaurateur quipping that the biggest entertainment sector in India is neither Bollywood nor cricket, but the business of restaurants is a clincher, because it is no hyperbole. A Bain & Company estimate this year puts India’s restaurant business (including dining as well as delivery) at 5.5 lakh crore rupees―and set to reach Rs9 lakh crore by the end of this decade. It employs around 80 lakh people, which would make it one of the biggest formal employment sectors.
Quick service restaurant (QSR) format also is attracting big names. Jubilant FoodWorks, the master operator of Domino’s Pizza in India, is valued above Rs45,000 crore. Tatas with Starbucks and the Ambanis with Reliance Retail Ventures (Pret A Manger and Muji Cafe) are also investing big in this segment.
“We have just entered the golden age of restaurants in India,” said Riyaaz Amlani, CEO of Impresario, which owns iconic brands like Social, Smoke House Deli and Mocha. “It is really a good time to start scaling up a restaurant business.”
It is these prospects, and that spirit of adventure and glamour the sector entails, that entice entrepreneurs like Karan Nohria. Antiquated excise laws in many states mean he is not allowed to have a spot of alcohol, but that hasn’t stopped this young entrepreneur from opening up Silly, an expansive resto-bar in Mumbai and Delhi. “When I was 17, I decided I can’t do a corporate job,” he said. “I wanted to open a night club.”
But his mother put her foot down. And Karan tried his hand at cloud kitchens, opening a Lebanese and South Indian brand, which worked out pretty well. Then he veered back to his original idea, working at bars, talking to owners and generally getting a feel of what the business involved. He took the plunge after the pandemic.
Silly, started in Mumbai’s Bandra-Kurla Complex, soon acquired a big following, prompting Karan to branch out to Delhi, at an expansive space a stone’s throw from the Qutub Minar, which may not have clicked as he expected. “Today, anyone from an angel investor to a landlord are much more open to a restaurateur,” he said. “Institutional investors want to know how much you can scale.”
APPETISER
For long, India had a staid F&B scene between fine dining restaurants, like the Gaylord’s of yore, and quick service restaurants exemplified by those Udupi south Indian places or the Shivsagars of Mumbai. While the 1970s saw a proliferation of Chinese restaurants across the country, the post-liberalisation 1990s saw two major trends―bigger cities experimenting with a spate of international cuisines and the arrival of American fast food joints turning burgers and pizzas into household names.
Pump-primed with a booming economy enjoying the fruits of reforms, a fresh wave of F&B sexed up the scene at the turn of the century―casual dining spaces serving inventive cocktails and unique foods, all with a fun, often quirky, ambience. When Rahul Akerkar opened Indigo in a colonial bungalow in Mumbai and A.D. Singh opened Olive at an abandoned haveli in Delhi’s ancient village of Mehrauli, they blew that much-needed siren of change for the nation’s restaurant scene.
Since then it has been a rollercoaster―phases of robust growth peppered by setbacks like the global economic meltdown of 2009 bringing curtains down on the spending spree and a 2016 court judgment shutting down liquor service near national highways.
HUMBLE PIE
While the pandemic turned the clock back on growth across the board, the worst affected was the tourism and hospitality industry, especially restaurants. Even the most sought-after celebrity chefs found themselves twiddling their thumbs at home for months and topnotch restaurateurs were forced to cut salaries of their staff.
“At first, it was tough for restaurants, but they found new ways to adapt,” said Vikram Batra, co-founder of Cafe Delhi Heights, a popular casual diner present in 40 locations across the country. “They started using more technology for things like online ordering and delivery, which also helped the business grow.”
Home delivery was the lesson of the pandemic for F&B, as even fancy places swallowed the humble pie and joined the brigade. “Some topnotch places that used to look down upon delivery had to accept it,” said Pranav Rungta, vice-president of the National Restaurants Association of India, who runs the fine diner Niksha in south Mumbai. “In a way Covid taught a lot of lessons which has helped the industry to expand. The whole home delivery ecosystem went from strength to strength, while restaurants also adopted a lot of technology during this period.”
Concurred Aji Nair, chief operating officer of Mirah Hospitality, which runs the Rajdhani restaurants famous for their thali: “Home delivery was 10 per cent of total sales earlier; now it is more like 30:70.” The crisis also helped concepts like cloud kitchens and dark kitchens to become mainstream, thereby fuelling the next growth phase of restaurants.
CUP RUNNETH OVER
Then something extraordinary happened. As things got back to normal, the business exploded across the country. “People really came out to restaurants with a vengeance,” said Singh of Olive. “The pandemic led people to realise there’s no surety for tomorrow. Indians are very prudent, we save up for tomorrow. Suddenly we didn’t know about tomorrow. So the ratios of consumption went up.”
Urban Indians are eating out more and more, from an average of five meals a month in 2009 to 14 now. Yet, it pales in comparison with places like Singapore, where the average is 65 meals out of a possible 90.
PROOF OF THE PUDDING
The restaurant business is roughly segmented into fine dining (which is minuscule), casual dining, quick service/fast food and informal eateries. A quick survey of the numbers shows that fast food and QSRs have bigger numbers because of their scale, even though the average price of a meal would be much lower than casual and fine dining places. Devyani International (operates KFC, Costa Coffee and Vaango) and Sapphire Foods (operates KFC and Pizza Hut) are even listed companies, and the big daddy of them all, Jubilant FoodWorks has some 2,000 outlets of its Domino’s Pizza operations.
The biggest scene of action in the past few years, however, has been the premium casual dining space. “The buzz is around upscale restaurants with casual but upscale dining plus bars, with higher quality ‘cheffy’ food,” said Anoothi Vishal, F&B historian, analyst and author of Business on a Platter. “This has become a more sought-after format given the fact that Indians are spending more on higher quality F&B experiences and seeking internationalism and distinctiveness.”
The prospects are evident from two factors: one, cost no longer matters, as elite clientele are lapping it all up. And two, there is no dearth of funding. From the days of depending on rich parents, funds today come anywhere from a private equity investor to real estate players looking for the next big story. “Money is coming from rich investors in hyper local markets,” said Vishal. “There is no dearth of funds from builders, actors, sportsmen, property dealers and so on.”
Agreed Vikram Gupta, founder and managing partner of IvyCap Ventures, a Mumbai-based financing firm: “The food service market in India is projected to be $125 billion in the next five years. We believe in the massive scalability of this sector, presenting a significant investment opportunity for venture capitalists to nurture early-stage companies into billion-dollar enterprises.”
CLOUDY WITH A CHANCE OF MEATBALLS
Of course, there are challenges, starting with the fact that hospitality, be it restaurants, hotels or even tourism, is not formally recognised as an industry by the government. “The glamour part of the industry is what everyone is seeing, not the regulatory maze,” said Rungta. Walking the regulatory tightrope is what nightmares of restaurateurs are made of, and it doesn’t help that they vary from place to place and are changed frequently.
Singh of Olive says it is troublesome for entrepreneurs. “Rules cannot change overnight,” he said. “We opened according to existing laws there at that time. How can that be changed somewhere along the way? Whatever we invested, all our efforts, all our money, the reputation we built, all of that gets wiped out.”
ALL-YOU-CAN-EAT
But many believe it is an opportunity. Amlani says that compared to shopping for groceries, buying, processing, cooking, serving and washing dishes, eating out could just win out the battle for economics. “It is imperative because with the rise of nuclear families, double income households, your labour will become more at a premium. Time will become more at a premium. Ordering food from outside, going out and eating will become more and more prevalent,” he said.
Spurring the next wave of F&B growth is also the rise in eating out culture from cities other than metros. “What has been very encouraging is the rapid emergence of tier 2 and tier 3 markets,” said Singh of Olive.
Better exposure has made those in smaller towns perk up to go beyond Chinese or butter chicken when they go out. “What people outside metro cities are looking for, their desires, the standard and the quality, have really gone up. That is encouraging across India now,” said Singh.
Dosa and Biryani among Indian foods and burger and pizza among western fast food are the most ordered food items in the country. But that is just the surface of a very complex market. From eight types of vegetarians, to gluten-free, vegan, those who don’t eat beef and those who don’t eat pork, India is a profoundly varied eat-out market. It sets the bar for cracking the market way high.
Serving to the world’s biggest vegetarian customer base, Indian restaurateurs are increasingly going beyond the staple idli-vada-dosa combine or the North Indian dal-sabji. Burma Burma serves only vegetarian food from Myanmar. “The decision to maintain a vegetarian menu is deliberate, rooted in the belief that the essence of Burmese cuisine can be authentically captured in its original vegetarian form,” said Ankit Gupta, co-founder. “Given India’s strong vegetarian food culture, we wanted Burma Burma to be a welcoming and inclusive place for all.”
The result? Eleven outlets across the country plus a shop where you can buy authentic Burmese ready-to-cook sauces and spices.
“This is an incredibly exciting time for Indian food with the popularity of Indian cuisine rising, especially in the international markets,” said Sameer Seth, founder & CEO of the parent company of the popular The Bombay Canteen. While many Indian restaurant brands are looking at setting up a brand abroad, there is also a belief that with the local scene at a tipping point, all the action will be back home.
“We are exploring our international options, but we remain focused on the India story because this is where the whole world is coming to!” said Amlani. He should know, with his restaurants set to steam towards the magical Rs1,000 crore mark.
BON APPETIT
“You are looking at 100 million affluent Indians by 2030,” said Pranav of NRAI. “This means Indians are going to earn more, and once they earn more, they are going to spend it on experiential items. That aspirational value will always be there. From a vada pav you move on to a burger, and from a burger you move on to a pizza, and from that you move on to sushi. It’s only going to grow.”
As restaurant kings across the country mark their territory and lick their lips in anticipation, Singh of Olive gets it right why, beyond all the regulations and profits and future glory, there is a simple reason the business of eating out matters. “Dining out gives people happiness,” he said. “It takes away the difficulties and stress of daily lives. The restaurant business goes a long way in helping Indians be as happy as possible, and to have a work-life balance.”