More 'value' restaurants, food courts in 2009

While slowing from recent years, fast food and restaurants business has emerged the safest business option in Kolkata with big and smaller restaurants claiming ‘marginal’ decline in business in 2008 and a stronger outlook for 2009, especially for the ‘value’ segment.

Analysts peg low-margin restaurant businesses to still grow during recession, while five-star dining or full-service restaurants may see a hit.

At least 30 restaurants came up in Kolkata in 2008 but none of them in the five-star category. Interestingly, most boast of Rs 200-Rs 400 buffet per person, portraying the ‘affordable’ image.

According to Bappaditya Basu, VP and associate director - retail, Jones Lang Laselle Meghraj, consumers have gone into savings mode and Kolkata always had less disposable income compared to other metropolitan cities. Moreover, 2009 is likely to see more special deals, more value meals, happy-hour snacks priced ‘affordably’, late-night nibbles for less, Sunday promotions, lunchtime bargains, and similar such offerings.

Reiterating this sentiment, a recent National Restaurant Association’s ‘2009 Restaurant Industry Forecast’, points out that while overall restaurant industry sales will increase in current dollars by 2.5 per cent in 2008, this is equivalent to an inflation-adjusted drop of 1.0 per cent. Sales at full-service restaurants should hit $182.9 billion in 2009 sales, a 1 per cent increase over 2008, while quick-service restaurants are projected to reach sales of $163.8 billion in 2009, a 4 per cent gain over 2008. Eating-and-drinking places will see $395 billion in sales, a 2.2 per cent increase in sales over last year.

In Kolkata, biggest hang-out places like Park Street currently commands a rental of close to Rs 200-300 per sq ft. “Although rentals have not declined significantly in Kolkata yet, food joints, especially the ones which can offer meals within Rs 300-500, will see continuous flow of revenues. So breakeven, for value-for-money restaurants, will be possible in targeted time,” Basu added.

Among restaurant chains, Speciality Group of Restaurants, the Rs 150 crore restaurant chain, plans to invest close to Rs 70 crore over the next one year to add 1 lakh sq ft to its existing chain of restaurants, up from 3 lakh sq ft right now. According to Anjan Chatterjee, CMD of the company, “Now that real estate prices are dropping and retailers are willing to negotiate rents, expansion will become more affordable.”

“All our theme restaurants are doing very well. Like ‘Machan’ is a hit with children because of the jungle book and animal theme. We intend to take ‘Shack’ to other cities as well, after its launch in Kolkata in 2008,” Chatterjee said.

Restaurants like Flurys on Park Street still see footfalls of close to 5,000 per day.

‘Street’ on Park Street, which opened in 2008, sees footfall of close to 150 on weekdays and 500 during weekends, informed a spokesperson of Park Hotels, which runs Flurys and Street restaurants.

Oriental Cuisines, which opened 'Zara' and 'Benjarong' restaurants in 2008 at the South City Mall, plans to open two more outlets in Kolkata in 2009.

According to Pankaj Poddar, director, Poddar's Thandai Pvt Ltd, which owns restaurant brands like ‘Chaat.in’ and ‘Malgudi Junction’ on Camac Street, “Sales have decreased by 15-20 per cent, on account of low unit prices. For 2009, outlook is conservative, where the value-for-money restaurants would survive the recessionary and inflationary trends. Fine dining and high-value outlets may have to go that extra mile for attracting patronage. The recent terror attacks on hospitality sector is also contributory to a downtrend in footfall for the star-category restaurants.”