It gives me great pleasure to share with you
your Company's performance for the financial year 2019-20.
The year has been a challenging one - not just for India hut for theworld. The unprecedented fallout of the Covid
19 pandemic has had a significant impact on the hospitality industry.Despite this l remain optimistic primarily because ^ of the judicious measures we havetaken to stem the impact of the pandemic.
Your Company continues to place its mission at the heart of thebusiness based on the strong belief that brands with purpose grow; companies with purposelast; and people with purpose thrive.
Ln the year under review your company achieved a turnover of overRs.367 crores registering a marginal growth of 3.35% as against the previous year. Thiswas achieved despite the headwinds that the economic environment continued to throw upcreating hurdles to unfettered growth. Through this period your Company retained itsstrong focus on innovation by creating novel offerings; by investing in relevanttechnology to enhance customer experience; through intelligent menu engineering; byrenegotiating rentals for increased reduction; and by taking appropriate measures toreduce raw material costs.
Staying responsive to opportunities even during this period yourCompany has signed up for the second restaurant at Dubai with the existing franchisee.This is due to the tremendous response and ensuing demand for Mainland China Asia Kitchen.Additionally the St Regis Hotel at Doha has signed an operating contract with yourCompany for the Indian cuisine restaurant - Riyasat.
As you are aware that in the year under review your company was ontrack with all its growth plans till the month of February 2020 till the disruption dueto the Covid-19 pandemic which began to spread in March 2020. With the hospitalityindustry among the worst affected especially in the United Kingdom your company has takenthe judicious step of deferring the launch of its first restaurant in London till nextyear. With the same perspective your company's expansion plans in the US market havealso been placed on hold as of now.
Considering that the impact of the pandemic is likely to be felt fortbe next several months your company has been diligently working to reduce all majorfixed costs. These include the expenses under all heads that fall within Restaurantoperations. This is being done through re-negotiations of Rental s/CAM/AMC and annualcontracts of raw material suppliers and relevant parties in order to neutralize theimpact.
We have reviewed the existing contracts judiciously negotiated andsought relief during the lock down period with property owners wherever possible and planto exit those that do not fit into our scheme of things. Your Company has undertaken astringent exercise of rationalisation of restaurant operations including change in servicedesign contactless ordering as well as manpower requirement.
The pandemic has also imposed incremental operating costs on thebusiness. While we foresee impact on the profitability for the FY 20-21; it is difficultto assess the exact quantum at this stage. A redeeming factor is that your Companydoesn't have any debt on its book. Hence there is no impact pertaining to debtobligations on the Company.
A quick response
One outcome of the pandemic has been the increase in the trend ofdeliveries and takeaway services. Recognising this as a long term opportunity yourcompany responded rapidly. During the lockdown period in keeping with Governmentdirectives some kitchens in select and approved locations were kept in operation fordeliveries and takeaway services. Going forward your company's food delivery andtake away operations will remain operational. Additionally we are in the process ofidentifying more locations at our existing kitchens/outlets to make them operational. Weare also making a foray into the cloud kitchen segment to tap the existing markets tooptimise the recall value and brand equity of our various restaurants.
Recognising the potential and having been able to stabilise at theback-end your Company is also getting into the sale of its proprietary sauces under thebrand 'Mainland China' in the B2C segment through e-commerce platform to generate highervolumes and revenues.
Your company lias always placed a great emphasis on hygiene andquality. During the pandemic we have added even more stringent measures to reassure ourcustomers of the quality of the food and the hygiene. This has resulted in your companyexperiencing higher customer preference due to the unwavering faith and confidence in ourestablished brands. The safety of our employees and customers remains our highestpriority. Your Company had already moved to work from home' policy for itscorporate office thereby significantly reducing risk to them in this period. In thekitchens a stringent social distancing' policy is being adhered to keepingall employees safe. Various other proactive measures have been initiated viz. best inclass sanitising with Virex treatment everyday through Johnson Diversey checkingtemperatures of all staff and tagging all delivery packets with the recordings frequenthand washing as an SOP etc.
We have seen significant business impact due to multiple lockdownsrestrictions and social distancing norms and the uncertainty of the situation makes itdifficult for us to anticipate the extent of the impact. However we are confident ofbouncing back as soon as the external environment returns to normalcy.
Restarting dine-in operations of the restaurants and bars is a decisionthat is governed by the Central Government and respective State Government directivesunder the Disaster Management Act with regulatory strictures and guidance. These will beadhered to and hence our schedule for reopening key restaurants is dependent on it.
Thanks to 25 years of unparalleled brand equity your company is wellentrenched in peoples' minds and hearts as delivering quality food and diningexperience. With well established brands for takeaway and delivery your company continuesto be in a position of strength to overcome this crisis and capitalise on future growthopportunities.
Staying responsive to the ever blowing winds of change your Company isadapting strategies to the changing business environment and responding suitably tofulfill the needs of its customers. Keeping our ear close to the ground we are closelymonitoring the external situation and restrictions imposed and phase wise relaxationsbeing granted by the regulatory authorities from time to time.
L would like to take this opportunity to thank each and everystakeholder who has reposed their faith in us employees partners customers and allstakeholders for their commitment and service to Speciality Restaurants. I would also liketo thank the Board of Directors for their unstinted support. Most importantly L wouldlike to thank you shareholders for your overwhelming trust support and confidence inSpeciality Restaurants Limited.
(Chairman and Managing Director)