It must take courage to open a Chinese restaurant in China. But restaurateur Anjan Chatterjee is confident that Shanghai will love the food at Mainland China, which, of course, will be tweaked to cater for the local palate. Chatterjee, who once sold space for magazines of the Ananda Bazaar Patrika group, is also headed for Manhattan and Wimbledon, where he's planning to open "Sigree", a brand that offers frontier food. Back home, there are plans to cater for those who like Italian food. The owner of India's largest private sector restaurant chain is a busy man these days. But the sale of a 26 per cent stake in his company Speciality Restaurants to private equity players SAIF, at a valuation of about Rs 450 crore, calls for a celebration. And the foodie that he is, he finally gives in to Lunch with BS to discuss the economics of restaurants, at where else, but Mainland China, writes Shobhana Subramanian.
I'm relieved I don't need to look at a menu. The major domo has been asked to serve me a clear fish soup and the boss a clear chicken soup with noodles. The 48-year-old Chatterjee, who hits the gym thrice a week without fail, despite some serious travelling, is obviously enjoying his success. I congratulate him on the valuation his firm has fetched — at just under four times sales, it's not a bad deal at all. The turnover of Specialty Restaurants, which is now about 15 years old, should be about Rs 120 crore by March 2008, he tells me. With cash in the bank, the plan is to roll out 100 restaurants, in cities such as Bhopal, Indore and Chandigarh. And the topline target is to try and treble sales in about five years. A difficult business to consolidate in terms of volumes, because a restaurant can only fetch a certain turnover, Chatterjee's exploring options for mergers and acquisitions. "We need some large formats that we are not a part of. There are regional brands that are small but have potential so we would like to give them money, expertise and an all-India platform. We may not take over all of them, with some we could simply be partners," he explains. With this new model
Speciality hopes to go beyond Chinese, Indian and Bengali cuisines and perhaps look at Italian and also Mediterranean restaurants.
Meanwhile, the starters have arrived — chicken and leek dim sums and prawn dumplings. If you cannot scale up in a single location because there's only that much of capacity and limited time, how do you improve or sustain profitability, I ask? Over a period of time, you work out strategies by which you keep introducing new dishes and change the menu mix, explains Chatterjee, who graduated with a degree in physiology, but seems to be putting to better use what he learnt from the catering college in Kolkata and marketing course at Jamnalal Bajaj.
He's reluctant to talk net margins but volunteers that gross profits are fairly high at 48-50 per cent, so it's not that difficult. In fact, I'm surprised to learn that though real estate costs are going up each year — the space for Mainland China in Andheri (west) costs Rs 175 per sq ft per month — at no point does the business become really unviable. Chatterjee explains that with more people eating out more often and corporate lunches quite the in thing, he's not discouraged by rising real estate prices. "When you build a brand, people come in. And when the rents go up, menu mixes can be interestingly done so that the profitability remains. Of course, there is also a price escalation because we have to cover our costs." A novel way to cook up profits, I joke. Indeed, Chatterjee contends that Mainland China is offering the brand at a much lower price than the bracket it should be in. "Our average ticket size is around Rs 350 a person but for a fine dining experience like this, it should be at least Rs 500," he asserts, adding that the reason for underpricing the product is to sustain the volumes and establish the brand.
The main course arrives — chilli mango mustard fish and Chendgu pickled chicken served with some olive fried rice. And some pan fried vegetables, to balance the yin and yang, as Chatterjee puts it. "Most Chinese food is balanced, which is why I'm so inspired by it," he says. I compliment the chef on the chicken — the main ingredients for which have been flown in from overseas just as the bhekti fish is flown in from Kolkata every morning. Chatterjee's favourite eating place is Somboon in Bangkok, a sea food eatery he loves because "it has live fish and I don't think you can get better quality fish anywhere else other than some places in China. I'm a Bong you know."
It could be a while before Mainland China and Sigree open in China, because permissions are taking their time coming, but "Sigree" in Manhattan and Wimbledon will happen soon. For both the US and UK forays, Speciality is roping in local players who will help out with the real estate and local know-how. However, Chatterjee has decided to go slow with the international expansion and will postpone a launch in Dubai. "India today is more happening and we are leaders in this market, so we've been advised to consolidate our position here, become a 100-restaurant company from 40 currently, before moving on abroad."
Chatterjee's a great believer in the need to institutionalise a business and says one of the reasons why several good restaurants in cities like Kolkata are in a shambles is because the owners neither have the passion nor do they want to hand over the job to a professional. For his part, he claims he's a hands off promoter, letting the CEO run the show, but with a say in key decisions. Of course, he's never too far away from the kitchen, constantly coming up with new recipes with his chefs, comparing the creation of a new recipe to creating a new campaign, recalling his advertising days when he ran his own agency. "That's the fun part and I believe the secret to success lies in constantly surprising people with new food, innovating." People, he feels, want some change in the food, and the ambience and they also want style. Although partial to Bengali cuisine, Chatterjee has always been a fan of Dum Pukht because of its authenticity and he believes restaurants like Indigo, in south Mumbai, compare with among the best in the world. He's proud that so many foreigners visit Mainland China — about a tenth of its revenues is in foreign currency — because they can be "really fastidious".
We decide to skip ice cream with lichis and Chatterjee asks me whether the stock market is down again. Not because he plays in the market, he says, but because it's important to understand the sentiment. "We're directly affected because we have a very large corporate clientele all over India and those two days (when the markets crashed) were very bad." With new brands like "Haka" and "Machan", the restaurateur has enough on his plate, but the businessman in him should be able to handle it.