Sector Outlook 2022: Speciality Restaurants is expanding through cloud kitchens: Anjan Chatterjee, CMD

Anjan Chatterjee, Chairman and Managing Director (CMD), Speciality Restaurants Limited, talks about his outlook for 2022, demand and cancellations amid a surge in restrictions due to the Omicron variant of COVID, international market, takeaway model and cloud kitchens among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: If we put Omicron's concern aside, do you think 2022 will emerge as a strong year for you?  

A: Of course, the issues like capital expenditure, raw material cost which is expected to be stabilised. If we keep Omicron aside - because how it will behave is not in our control - then a word like revenge eating, revenge shopping, and revenge tourism has been used a lot but we have definitely seen this in our sector as if people had not eaten food in the life, such queues were made and such queues were still there. This is the month of December, as you know, November, December, Diwali, New Year and Christmas are a time when people get out and celebrate it as children have holidays. So, it has been a prime month for us. At this point in time, we are seeing that suddenly after December 20-21, 2021, or so, there has been slight layers of people becoming more conscious about the whole thing like getting out. Although, we maintain world-class hygiene at each of our restaurants like Mainland China, Oh! Calcutta, Sigree, Episode One. Our restaurant company has been running for the last 27 years. I want to say that if we move ahead with a feel that Omicron stays in its place and behaves well because the number of deaths as we expect from the signs which are being spoken about will be limited then I feel that in the coming year also such type of growth that we saw till October and November, there were some fluctuations in December, which was expected, the quarter will remain good. So, I think, we have done with whatever learning and mistakes were there and COVID Has also taught us a lot in terms of cost control, a number of restaurants have been balanced, right-sizing, so all the questions were out of the syllabus and we have learnt. So, I think, the bullish nature of the whole industry will be visible everywhere especially at Speciality Restaurants.

Q: Amid the restrictions that have applied recently, have you seen cancellations in bookings and do you think that it will have any material impact on your financials?

A: It is hard to guess because things have happened after December 20, 2021, and we are seeing the figures at present. For instance, curfew has been imposed in Mumbai from 9 pm, then people are saying that will we be able to get outpost 9 o'clock, restaurants will be closed, there is a huge confusion, but we have been saying that curfew comes into force at 9 o'clock but it does not mean that you can't eat, you can stay here till 10:30-11 pm at the restaurant and we will maintain the 50% protocol. But once you have such kind of condition which do not have such kind of clarity with people - except Bengal where a slight benefit of the doubt has been granted during this festive season and the timings have been kept till 11:00 to 11:30 pm and curfew has also been imposed slightly late. Except for Bengal, I think, rest of India including Maharashtra has been bad. So, as a company, we are seeing that the needle that goes high at this point of time and it turns into a historical month is not going in that direction. Few bookings, directly, indirectly, group bookings, especially group bookings in form of corporate booking in which corporate celebrations in form of New year happens are being cancelled. Similarly, the group bookings of a lot of IT companies among others have reduced a bit.

Q: You have talked about the timings. Are there talks with the government to give some relaxation especially on the eve of the New year because 12:00 am is an important time, so, it may allow things up to 1:00 to 1:30 am or so?

A: We have sent a request for it. But, we also understand that compulsion from the government's end although the number of cases has not increased a lot. But in view of the world trend, it does not want huge gatherings as many people come on 31 December. But the time of curfew can be delayed by some hours, i.e., can be increased to 1:00 am or 1:30 am and we have also requested to have a look at other protocols as well. NRAI has also sent a letter and is talking with the Maharashtra government and I think it should be responsive enough to give us that particular day, so, the celebrity mood of people does not go away. So, I feel, it is a fine balance because you have to maintain safety and also have to celebrate. It feels wrong to request beyond a point but I feel that Omicron - an Avataar of COVID - will be a little pity and if the peak passes off in January and February and having an eye on the world trend it will come down and it should not be as bad. So, yet another positive, which will come back to all our industry friends.

Q: What kind of trends are visible in the international market because the number of cases is increasing in Europe. What kind of response you are getting in Chourangi that has been opened in London, recently and going forward what are your expectations from it?

A: We have two restaurants in Doha and the third is about to open in Dubai and we already have two restaurants there. And, there is no such effect there as they have controlled it well there, however, some cases are emerging but there is not such an environment. What happened in London is that the spike was very high there, which increased pressure on LHSC due to which they imposed certain restrictions. But the restrictions did not have any major impact during the festive days, however, a slight impact was seen in celebrations, get-togethers and gatherings when there was a peak in London. I feel it will be felt till the beginning of January. When there is a panic, there is a fear, and so many announcements are made then people contemplate it. But, I would like to tell you something, it is a small thing, that our deliveries have surged. People will celebrate and everyone will feast, rejoice, maybe he/she cannot get out of the home, then they have got them delivered at their homes. This trend has been created in the last few years and we are seeing that as there is a decline in dining, there is a surge in deliveries. So, this has been a saving path for us.

Q: What is the takeaway model of your total business and do you have any plans to grow it? Also, what would be your focus for next year, i.e., will you focus more on the takeaway model or the current numbers are enough?

A: The biggest learning in COVID - because we are a restaurant company and fine-dining and less of delivery - is that we have strengthened deliveries in the last one and a half years. In the process, we have created a kitchen within the kitchen, where we increased the capacity of the kitchen by optimizing and by putting cloud kitchen because Mainland China, Oh! Calcutta and other brands are formidable brands and people want to order food from there and go there. So, we knew that this trend will be a very big part of the business, in fact, it has gone up to almost 60%, during the lockdown it was 68%, that was the only percentage that we have. Even post-lockdown it has not come back less than 35-38%. So, it is a very big chunk and a separate vertical has been created for it. A lot of cloud kitchens are being added in which the places where we do not have restaurants or we have shut those, we are expanding through the cloud kitchen. I think this has been the biggest learning because we knew that any variant of COVID can hit at any point in time.