Speciality Restaurants will rework its cost structure to keep prices unchanged: Anjan Chatterjee, CMD

Anjan Chatterjee, Chairman and Managing Director (CMD), Speciality Restaurants Limited, talks about demand, vision and business strategy, international market, cloud kitchens, expansion plans and competition among others during a candid chat with Swati Khandelwal, Zee Business.

Edited Excerpts:

Q: Now that all the restrictions have been lifted and everything is open, so, let us know about the kind of response you are getting in terms of demand all across 

the country?

A: The footfalls have been very very good. January has been very challenging, February was better and we are seeing a steady footfall at our place in March. As you know the company has been reborn and I have said this time and again. While I am sitting here, we are doing an offsite in Lonavala named 'Start All Over Again', which is participated by many speakers. Currently, amid the relaxations announced after the pandemic, it has been a hybrid model of fine dining, which is the main focus and which has bring-in the historic growth of Mainland China, Oh! Calcutta, Sweet Bengal and other brands that we have. We have supported something that has been a sunrise for us, 'Delivery' and this combination is doing well for us. Going forward, I feel, in terms of footfalls, it is growing by the day, by the hour.

Q: What were you learning from the COVID and you are saying a rebirth of the company then what is going to be the vision and the strategy? Also, how different the new company will be compared to the company we have seen to date and have you revised your targets from a business point of view in terms of the top line, bottom line and margin?

A: It is so that over a period of time when you get to your expansion mode it is good. But at times you feel that there are many laggards, in which some of the restaurants were not profitable and were fence sitter - there are dry quarters for any entrepreneurs or a company - should be dragged, Although, we have reduced it a lot the pandemic when you are against the wall, teaches you that it's a matter of life or death. i.e., there is a question of survival then at that point somehow or the other get back on to the drawing board and try to see the ways to save the profitability and the company. In fact, earlier as well we have tried to do so, but this time, it happened expeditiously. So, we have shut all of our loss-making units and when balanced it out with the cloud kitchens, whose store matrix is much better because of the low CapEx and also in terms of manpower cost. As you were saying that we have several restaurants but there was a need to sweat those assets. The pandemic has taught us that now we are saying that the lessons of pandemics have helped our company to bounce back and we will continue with those lessons considering ourselves as a start-up and the mentality of each one has changed. Even in our conferences, all of the speakers are speaking the same and the theme has been devised around the same. So, keeping in mind the learning of the pandemic, it must not happen that we get back to the comfort zone of the pre-COVID era, we are moving. It will remain hybrid, and we have decided to make a CapEx in Mainland China, Oh! Calcutta and other brands that we have to go ahead with our plan of a New Restaurant. But at the moment, we will be balancing it and have a focus on cloud kitchen to move towards profitability. We will not go ahead just towards the turnover, we are looking at the bottom line and that is what at which we are focusing on at the point.

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Q: What is going to be the company's plan in terms of opening new hotels and you have already talked about two to three brands that will be continued. So, what is your vision for the next 2-3 years in terms of the number of restaurants that will be opened? Also, adopting an asset-light model will you look forward towards branding and franchisee model?

A: As I have said that it will be hybrid. So, earlier, we just had fine dining but now, delivery is a big part of our business. It is very difficult to tell you forward-looking numbers but four of our restaurants are already parked and we were about to launch those but have stopped it. Going forward, we intend to do these four restaurants in the next year. In future, we will also have a focus on profitability and it will be important to take our cloud kitchens - we have 50-60 cloud kitchens at present - to places where we are not present and expand our brand. The most important factor is that we are a debt-free company, so, it is not difficult for us to make a CapEx. But we are seeing wherever there can be optimization and same-store growth at the low CapEx. Now, if we can renovate and refresh our existing restaurants, where it is required and optimize the same store then it will be a new trend and growth will come from there too. So, it is a strategy of the new restaurants, say four of them and we have the cloud kitchen focus, which is 50-60 of them and 100% focus on optimizing and setting the assets and same-store growth.

Q: You have said that the footfalls are increasing. Can you please quantify it and how it is translating into revenues? If compared to the last year, then what kind of growth have you witnessed in the footfalls in terms of number in India as well as international markets?

A: Dining has reached the pre-pandemic level. The advantage is that with dining, our deliveries - which was not our reality and we were not so focused their itself, suppose even if there of 90-95% footfalls, in spite of the pandemic going away and people coming out - has become a norm today. So, it is staying as a strong base for us and our footfalls have reached the pre-pandemic levels.

Q: Is it in both Indian and international markets?

A: Ye in both. In fact, it is more international because London has a particular time and same with Dubai and Doha. So, everything is now, by and large, proper and you know the toughest country in the world is Singapore in terms of governance of the pandemic and COVID, even they have opened up. So, the whole world in this context has opened up and everywhere there is a footfall.

Q: What is the contribution of the online channel in your business and will it contribute further even after the COVID? Also, what is the competitive intensity as Zomato, recently, has announced delivery within 10 minutes of selected products and does this kind of disruptive idea bothers you?

A: I don't want to talk too much about the Zomato thing because I feel that it is a loose cannon as no one knows and anyone can do anything but at present, it seems a bit exaggerated as someone is saying uncooked paneer while an egg but they, people at Zomato, are good friends to me. So, it is a different thing because the average kitchen preparation time is 20-25 minutes because we provide fresh food, not raw food. So, it is a different thing and I am not quite bothered about it. The biggest thing in it will be that is that we are focusing on strengthening the technology to compress our kitchen preparation timings and seeing that our internal model of making deliveries, besides Zoamto and Swiggy which are the major contributors, there are ways and means, where the customers are ready to use another logistics company like Wefast and Swiggy's Genie and there are many of them which are coming up. So, people are paying for deliveries and ordering food from our place. It is just a start because platforms are platforms and almost 90% of our business goes to them. But in the coming future, it will be very interesting that the load we are supposed to take due to Zomato and Swiggy may increase a bit. Internally, we are saying that our company which was not ready in the pre-pandemic era and was completely in fine-dining has refocused its complete kitchen, logistics and operations due to which we were able to run a vertical parallelly and have appointed someone as its head, separately. So, there will be a fine-dine and a delivery.  

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Q: Commodity cost is continuously going up which is impacting almost every business. So, how are you handling this and will it lead to a price hike of foods at your place?

A: As you are well aware that in the case of oil, sunflower is the major component and a rise of almost 40% is visible in it. It may go up or decline in the coming time and it depends on the Ukraine-Russia war. Secondly, the freight prices go up as soon as there is a rise in petrol and diesel prices, which has an impact on commodities maybe not 100% but there is a 5-10% jump but we do not want to pass on it to the consumers. Our team, which is sitting now and I am talking to them and they have been very cooperative that we will not pass it off to the customers but will compress our cost structure by visiting every line item to reduce our cost of sales.