Rapid expansion plan of Adiga restaurants
Vasudeva Adiga, the owner of the famous Adiga’s chain of vegetarian restaurants in Bangalore has a hectic schedule almost every day of the week. He travels at least 100-150 km, criss-crossing the city in the punishing Bangalore traffic to check whether 14 of his restaurants are churning out the exact same mouth-watering dosas and perfectly-brewed filter coffees. He is, obviously, passionate, but his limits are finite. The latter is about to change.
New Silk Route Partners (NSR), the $1.2-billion private equity fund, has recently invested in the Vasudeva Adiga chain of restaurants and is working on an initiative to take this city-centric enterprise across India, by standardising recipes and creating a brand people can relate Udupi cuisine to. While the investment figure has not been disclosed. the ambition is to open 100 restaurants nationwide in four years.
“I wanted to grow the chain and expand it across India. But there are limits to what a proprietor-led organisation can do. NSR was also looking at this space and from the first meeting we clicked,” says Vasudeva Adiga, at one of his bustling restaurants in the Central Business District of Bangalore.
NSR didn’t stumble upon Adigas just by chance. Jacob Kurian, NSR’s partner and one of the people responsible for building the Tanishq brand, has been an old-time Bangalorean. Many of his weekends entailed walking down to one of the neighbourhood Adiga’s to get breakfast for his family. “It was an amazing place. People came in Mercs as well as in autos. It was always crowded. At Rs 20-30, we could have a decent breakfast with exceptional taste and quality,” he says. “I was wondering what we could do if we took this chain to more places and we eventually met through a common contact to explore this,” adds Kurian.
Even though the thought of taking Adiga’s pan-India had its germination over a few breakfasts for Kurian, it is in fact part of a larger, pre-meditated gastronomic platform that NSR is seeking to build. “What we are attempting is to have three main assets in this platform. One is a south Indian vegetarian chain, the other a north Indian chain and finally an Indian-Chinese asset. We want to invest close to $100 million in them, create a holding company, have unified operations and then maybe five years down the line, look at a listing option,” Kurian explains.
The wheels are already in motion. From a proprietor-led set-up, a professional team is being put in place. A CEO, a COO and a CFO are now on board, putting in place a structure with the help of which Vasudeva Adiga, now chairman, can sit in his office and ensure the dosa being served at the other end of the city tastes the same across all restaurants.
“Standardising recipes is the biggest challenge and we have embarked on it,” says Adiga. “At the new corporate office, there is a training centre for chefs and service staff. So when we open an outlet in a Tier-II city in Karnataka, we can be assured of the same cuisine and service,” says Adiga.
But in a country awash with Udupi restaurants, how risky is the task of going national? “There is opportunity in fragmentation. We know a thing or two about building brands and if we do not mess up in a major way, we should be coasting along nicely,” says Kurian.
Demographics, says Adiga, are solidly in his favour. “The population is growing at a rapid pace and there is good demand for quality and affordable restaurants where you can have lunch or breakfast on the go. Even if I put five more restaurants in the radius of 2-4 kms in the central business district, there will be a good crowd,” says Adiga.
Both NSR and Vasudeva Adiga are working at a feverish pace to put the expansion plan in place. On the cards is refurbishing the restaurants to have a common look, uniform standards of cuisine, identifying best-selling items in different areas and focusing on pushing them more, as also expanding to another 8-10 outlets during the current fiscal. “In addition, we are also looking at other small chain of restaurants for acquisitions to gain scale,” added Kurian.
Kurien and Adiga have their work cut out. A flourishing local business is one thing, but building a national brand is something else. Retail chains require deep pockets to bear the expenses of urban rentals. Being able to manage a high churn rate, the hallmark of the industry, is another perennial problem. Plus, they’re not the only ones with this idea — India Equity Partners picked up a minority stake worth $35 million in Sagar Ratna, a Delhi-based south Indian restaurant chain. However, those are distant worries compared to the obstacle currently facing the duo.
A legal battle has started between Vasudeva Adiga and his brother, Radhakrishna Adiga, who also runs a chain of six restaurants under the name Adiga’s, although it is suffixed with the name of the locality or the deity near the outlet. “We are fine if Radhakrishna pays us a franchisee fee for using the name Adiga’s,” says Vasudeva.
Radhakrishna Adiga on his part maintains he does not have to pay a fee for using the family name. “We belong to the same family, and I do not see any need for it,” he tells Business Standard at the legendary ‘Brahmins Coffee Bar’, a small but exceptionally successful restaurant he manages on behalf of his mother. In fact, ‘Brahmins’ is where father Narayana Adiga had started the family business.
“But it was I who built the Adiga’s name in the past two decades and we have registered the trademark,” says Vasudeva, before adding, “Let the law take its course.”
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