Restaurants serve change: Fine-dining chains switch to delivery in Covid-19

Speciality Restaurants, Barbeque Nation, Indigo among companies 'adjusting to market realities'.

Covid-19 is forcing restaurant owners to reinvent their business models. Fine-dining chains, where operations revolve around providing a gourmet experience on the ground to patrons, are now following their fast-food peers to pivot to a delivery model.

To put things in perspective, dine-in sales at a restaurant constituted 93-95 per cent of their total sales in before Covid-19. Delivery and takeaways were a mere 5-7 per cent. Takeaway and delivery are inching up as dine-in remains constrained due to restrictions in cities to contain Covid-19.

Speciality Restaurants, which has brands such as Oh! Calcutta, Sigree and Mainland China, derived 34 per cent of its sales from delivery, according to its March quarter results for the fiscal ended March 31, 2021 (FY21). This came even as dine-in gained ground amid a revenge-eating trend after the first wave of Covid-19.

The "upward trend" of delivery sales is expected to stay in the June quarter of FY22, Speciality's chairman and MD, Anjan Chatterjee said, as lockdown restrictions curbed eating out during the period.

Speciality has put restaurant expansion on hold in FY22 to focus on cloud kitchens for deliveries. In the last few months, Speciality has set up 44 cloud kitchens and capped its brick-and-mortar restaurants at 96.

Barbeque-Nation Hospitality, which owns restaurants of the same name, on the other hand, plans to launch 20 new outlets on the ground in FY22. But, the company, which listed on the bourses in April, proposes to grow its delivery business by two times in FY22, after seeing a sharp spurt in revenue from delivery in the March quarter of FY21. Share of revenue from delivery and digital channels was nearly 25 per cent in the March quarter for Barbeque Nation versus 15-20 per cent a year earlier. This number is expected to grow further in the June quarter, analysts tracking the company said. 

"Delivery is a reality today. Due to Covid-19, people are not stepping out that often and there is no clarity how long this will last. There is an upward trend therefore as far as delivery goes and it will stay for now," Chatterjee says.

Though some restaurant chains claim that the delivery trend may reverse as the Covid threat abates, that is clearly some time away. Anurag Katriar, executive director and chief executive officer, deGustibus Hospitality, which runs the Indigo chain of restaurants in Mumbai, Pune and Delhi, says that fine-dining chains, in particular, will have to "retool" for the future. This will mean investing in digital platforms, apps and building a back-end that can cater to deliveries easily.

"We have to adjust to market realities and understand the requirement of the consumer. A combination of digital adoption and confinement at home will mean that eating in will be stronger than eating out. Fine-dining and even casual dining chains will have to understand this fast," Katriar, who is the president of the National Restaurant Association of India, says.

Katriar is also concentrating on setting up cloud kitchens and says that the preference for trusted names is high in the digital space. He says that fine-dining chains are bringing in a sharper focus on quality with their delivery operations as part of their effort to be seamless both online and offline. Fast-food chains, on the other hand, have traditionally focused on high volumes and therefore have a more automated process when it comes to delivery. For fast-food chains such as Domino's and McDonald's, delivery sales as a percentage of total sales is in the region of 60-70 per cent, according to analysts tracking the market. 

Despite the challenges, fine-dining chains are accelerating their delivery orders. Karan Kapur, executive director, K Hospitality Corp, which runs restaurants such as Copper Chimney and Bombay Brasserie, says that the company is setting up multiple delivery kitchens across the country.

"We have seen 100-200 per cent growth in brands such as Copper Chimney and Bombay Brasserie, due to food innovations, menu introductions, and new delivery ordering tech implementations. We have already setup multiple delivery kitchens in different geographies around the country to test, learn and grow our branded delivery business," he says.

Krishna Gupta, managing director at 1441 Pizzeria, a casual dining chain with 15 outlets in Maharashtra and Gujarat, says that his chain is pivoting to a delivery model. Around five of the 15 outlets have been transformed into delivery kitchens to cater to a growing base of deliveries. And the chain is  investing behind its app and improving last-mile delivery.