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“New tech players’ discounts is not sustainable model”
Monday, 22 April, 2019, 08 : 00 AM [IST]
The Chocolate Spoon Company is a 4-year-old hospitality company founded by Rachel Goenka, which operates The Sassy Spoon, Sassy Teaspoon, House of Mandarin, Bandra, Baraza Bars & Bites, Pune, Mandarin & Mircchi, Pune, and Wicked China, Pune. The operations began in 2013 and have expanded exponentially in the last one year having launched in Pune and opening new outlets in Mumbai as well. Rachel Goenka, founder & CEO, The Chocolate Spoon Company, in an email interaction with Anurag More spoke about the restaurant business in India. Excerpts:

What is the current scenario of the restaurant business in India?
Food has always been taken very seriously in India. Over the past decade, we have seen rapid expansion in the number of stand-alone restaurants and it is going from strength to strength. There has been an explosion on the number of cuisines and concepts on offer, and the expansion is happening in tier 2 cities and non-metros as well. Rising disposable incomes, increasing numbers or nuclear families and evolving tastes have all led to the restaurant industry becoming increasingly vibrant.

How will your business benefit from the Government of Maharashtra ’s decision to permit eateries to stay open 24x7?
This is a welcome move for the F&B industry as a whole as there is a culture of late night dining. However, for our restaurants, we typically don't wind up very late so this change is expected to have a minimal impact. It is also difficult for staff who travel by train to work beyond regular operating hours.

What are your expectations from the government for the restaurant business?
The restaurant sector is the third-largest employer in the country. However, the sector does not fall under one ministry thereby making it extremely difficult to advocate for change. While there has also been progress in terms of regulations, we still have a long way to go towards streamlining the operating environment for restaurants. Though the "ease of doing business" is being discussed, the reality is there are still many hoops to jump through to get any new establishment off the ground.

Do you have suggestions for the government for the restaurant sector?
There are a plethora of issues that need to be addressed such as licensing, exclusion of alcohol from GST, variances in excise policies across states. However, the most crucial impact of GST 2.0 was the exclusion of Input Tax Credit for the restaurant industry. This, coupled with escalating rents, has made break-evens sky rocketing. Offering relief to restaurants is an absolute necessity.

What are the challenges faced by you in the running of your restaurants?
Running multiple restaurants isn't an easy task. It goes beyond the task of just maintaining the same quality and standard of service but also making sure operations run just as smoothly. Managing over 300+ staff is another challenge hence its important to have your key people in place.

What steps are you taking to overcome the same?
Constant communication with both our front of house and heart of house (kitchen) is very important. You have to take personal interest in each of the restaurants. Standardising procedures is key to making sure things run smoothly and effectively. Systems therefore are very important.

How is your restaurant different from other players?
We're in this business for the long haul which is why we have also been very strategic in the kind of concepts we have. We don't want to be a one-hit wonder where we're around for two years and then shut shop to start something else. We've studied our markets very carefully and develop our concepts accordingly. Food and service is a given in any restaurant worth its salt but I think the kind of concept you have also makes a difference. I had like to stay away from fads and trends for this reason. Its fine to do something that’s 'in' as part of a special menu but to develop an entire restaurant concept around it is a big risk and very few players can pull it off.

Tell us about your expansion plans.
We operate five brands and have national ambitions for each of them. The last 18 months have seen us grow from three outlets to 15 outlets across two - Mumbai and Pune. We aim to hit 100 outlets in the next five years and tier 1 and tier 2 cities like Delhi, Hyderabad, Chandigarh, Kolkata, Chennai, Jaipur to name a few.

How much will you be investing in it?
To date we have been self-funded. However, to help us achieve our growth targets, we are already exploring both the institutional equity route as well as the franchising route.

What is the outlook for the restaurant market?
On the dining front, it is fascinating to see the increasing focus on regional cuisines. We have such a rich cultural heritage and it’s brilliant to see it celebrated in major cities. On the tech front, the advent of third-party delivery providers has given rise to delivery only businesses which have opened up ancillary revenue streams for restaurants. That being said, a lot of the new tech players are over reliant on discounts as a means of customer acquisition, which is not a sustainable business model.
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