Interview: Garam Dharam, Junkyard Cafe will break even in next six months

Being in the hospitality business for years now, Umang Tewari, founder and chairman of Big Fish Ventures, has understood that profits for food outlets are in scale and large volumes. The owner of 12 large format restaurants tells Praveena Sharma despite the high risks in such food outlets, he prefers them as they have shorter breakeven. Tewari's company had raised funds from cricketer Yuvraj Singh founded YouWeCan Ventures in 2015.

Q. A report has pegged India's food services industry's growth at 10% annually till 2021 to reach the size of around Rs 4.98 lakh Cr. Today, however, a large chunk of the demand is in the unorganised sector. How are you trying to tap this huge potential that is likely to unfold in the next few years?
A. We have 12 concept-based restaurants in Delhi under the brands Junkyards Café, Vault Café, Garam Dharam, Café OMG (Oh! My God) and others. The Indian market has not changed much since the turn of the century. Your survival in the market depends on the brand you create and how well you are able to understand the prevailing trends.

Q. How is your business model different from others?
A. There is a difference between conventional and new restaurant business. Conventionally, you would open one outlet and try to grow it. You would stick to only one outlet. We are different in that way. I believe in scale and volumes. So, all my restaurants are built on more than 5000 sqft area and they are all based on a certain theme. For instance, Vault is 7500 sqft and Junkyard is 12500 sqft in central business district (CBD) of Delhi. Even in Mumbai, where I will open my restaurant next month, I have an indoor and outdoor space of 8000 sqft at Hill Road in Bandra and 14,000 sqft at Todi Mill in Lower Parel. The volumes and scale give me economies of scale and help me break even in less than two years. It also keeps my cost low as I buy in bulk from vendors and wholesalers. I don't go for small food outlets because the energy and time for them are the same as large outlets but you get more revenues out of the latter. The risk is more in large format restaurants but the profit is also better. The high risk is due to higher rental, staff and other costs, but the bigger the better. Also, today we try to reach people instead of waiting for people to come to us. So, we expand fast. Today's food service business is also about convenience and best pricing model. We have tied up with Paytm and Mobikwik for easy payment options. We are there on Dineout.com. We also have our own app, where customers can avail of many discounts and cashback offers from all our partners. So, the customers are able to get a fairly good deal. Since February, when we launched our app, there have been 25,000 downloads till now. I am targeting one lakh in one year. We have also tied up with Zomato for online delivery service. Today, there are many platforms available to make your brand popular, unlike earlier.

Q. How many of your outlets have broken even?
A. Garam Dharam (based on the concept of a Dhabha that cashes in on yesteryear's Bollywood star Dharmendra's popularity) and Junkyard Café are a year old. They will break even in another six months. Vault Café, which was started in 2014, has already broken even. Our business model is such that most of our restaurants break even in two years.

Q. How are you funding your business?
A. There is no dearth of investors in food & beverage sector because people think it is a promising sector and throughout the world this is the only sector which never goes down even during a recession, and particularly in India. In India, there are only two kinds of entertainment – either you go out to have food with friends and family or you go out for a movie. There is not much other than these two. We raised funding from YouWeCan Ventures last year. We are currently talking to Everstone Capital and Rabobank International for expansion into Mumbai, Dubai and other markets.

Q. What is your future plan?
A. We will also be investing in large-scale food outlets in Delhi and in outskirts of it. One will be pocket-friendly Local, spread over 14,000 sqft with an investment of Rs 50-60 crore and the other Garam Dharam at Murthal, which will be built on an area of 40,000 sqft. The business and revenue model of Local is disruptive and could change the way pocket-friendly restaurants operate in India. We are also looking to open some of our large format outlets in overseas markets like Dubai and others.