Thursday, April 26, 2012

Vegetarians eating at a Restaurant serving both Veg & Non-Veg food

I saw a news article in the Times of India - "McDonald's goofs up on veg order". The article is quite dramatic and ends with a BBMP (equivalent to the Corporation of Bangalore) diktat - Restaurants must have separate kitchens for Veg and Non Veg food. 

The BBMP diktat is highly amusing - I can bet that all restaurants (there may be a handful of exceptions I may be unaware of) including those within the 5 star hotels do not have a separate Veg and Non-Veg kitchen. They may have carved out a small section , a small area, but it will essentially be one kitchen area and one washing area. If this is the case, and you are a strict vegetarian, what should you do? My recommendation: Visit only Pure Veg restaurants. 

Why do I say this?
  • The staff in the restaurant are generally careful about Veg orders and in 99.9% of the cases you will not see any non-vegetarian food mixed with the Vegetarian food. But like in every process, there will be a rare occurrence that a piece may get mixed. The McDonald's issue above is clearly an exception - infact they are pretty good in separating Veg and Non Veg food and take extensive care that such incidents do not happen. It was simply a case of one of the employees have a momentary lapse in attention.  
The bigger problem is with what you don't see:
  • Soups: Most restaurants prepare soup using Stock. Stock is essentially water in a pot that is on sim (i.e. getting heated slowly), with veggies and flavour enhancing pieces (e.g. Bones). In most cases, the restaurant will have one stock pot and it will of course have the bones in them. So when a soup is prepared, the same stock water is used. 
  • Entrees: All entrees are prepared upon order. The cooks have a few sauce-pans in which they prepare the dishes. In a busy restaurant, the same sauce-pan gets used for preparing veg and non veg dishes. If you are expecting the cooks to be so careful as to use different utensils during busy hours, suit yourself. Having said this, most good cooks atleast wash the sauce-pan a little before preparing a new dish. Even if they use different sauce-pans, the ladles etc. are the same. Again, expecting them to wash each time is impractical. Check where the closest washing area for the cook is and you will know why washing the ladles, sauce-pans and utensils after each order is virtually impossible. 
  • Frying: When you order fried dishes, most restaurants, use a "Kadai" that has hot oil on boil to fry the specific dish. In most restaurants, the same Kadai of Oil is used to fry everything - from French Fries to Paneer Pakodas to Chicken Wings. So you are not served non-veg pieces, but your dish is fried in the same oil.
  • Handling of Food: Most cooks use their hands (in some cases with disposable gloves) to handle food. Do you believe they will have the time and luxury to wash their hands or change the gloves everytime they prepare a new order? So even if they wear gloves, the same gloves which picked up a chicken piece for the previous order, picks up the Paneer piece for your order. 
  • Cutting boards and knives: All orders which require cutting fresh veggies and meat (salads for instance) are done in the same area. While the cutting board is probably wiped with a cloth and even the knife may be cleaned with a cloth, they are not really washed for every new order. So the same cutting board and knife used to cut boneless chicken pieces for a curry are the same ones used to chop the cauliflower for your order. 
  • Washing: Find me a restaurant which has separate washing areas for Veg and Non Veg food - I would say it does not exist. So all the plates (different colours or now), spoons, forks, bowls etc. are cleaned in the same area. The same area is also used for cleaning all the utensils used to prepare the food. 
In summary, if you are extremely finicky about Veg and Non Veg food, simply go only to restaurants which serve pure veg food. If you go to restaurants serving both Veg & Non-Veg food, be assured that the staff will in 99.9% of the cases ensure that you do not have any non-veg food/pieces in your order, but all the back-office kitchen activities that happen as described above - you really don't have a work-around. 

The Article below talking about the McDonalds goof-up was published in the Times of India, Bangalore, Friday, April 27

McDonald’s goofs up on veg orderBBMP Penalizes Eatery After Family Served Chicken BurgersTIMES NEWS NETWORK 

Bangalore:A global restaurant chain’s outlet on New BEL Road, near MS Ramaiah College, has been slapped a fine of Rs 15,000 and shut down for a day and a half after it allegedly served non-vegetarian food to a family that had ordered vegetarian fare. 
Vikram, 45, businessman and resident of New BEL Road, and three of his family had gone to the McDonald’s food joint on Tuesday. The family, strictly vegetarian in food habits, ordered for four veg burgers, paid Rs 246 towards the bill and were served the food. But after eating the burgers, the family 
suspected that something was amiss and that they mighthavebeen suppliedwith non-vegetarian burgers. 
Vikram went to the supplier at the counter, who admitted that he had by mistake served the family chicken burgers.Thebusinessman insistedthat he be allowed to record his complaint in a complaint register. The staff failed to produce a complaint register. He immediately called up the BBMP control room and was asked to give a written compliant to the zonal medical officer. 
Dr Devaki Umesh, medical officer, BBMP west zone, said Vikram complained to her about the incident. “We are a vegetarian family and had performed Lakshmi Pooja on theoccasion of Akshaya Tritiya on Tuesday. But due to no fault of ours we were cheated into eating chicken burgers. This has hurt our religious sentiments,” she quoted Vikram as telling her. 
BBMP personnel swooped on the restaurant on Wednesday. “We found out that there were problems with the serving of veg and non-veg food from the same area. We have asked the restaurant to have separate kitchens for veg and nonveg food and also supply them in trays of different colours. A fine of Rs 15,000 was levied on the restaurant. We have locked the restaurant and the keys are with us. We will inspect the restaurant again on Friday for compliance,” she said. 
The restaurant remained closed on Thursday too. When contacted, a restaurant employee only admitted that the BBMP had inspected their premises. “We closed down because of technical issues,” the employee, who did not want to beidentified, said. 
A McDonald spokesperson said she had no details of the incident but claimed that the outlet was operational on Thursday. 
Restaurants to be checked BBMP will now inspect premier restaurants in the city. “We will pay surprise visits to restaurants and see if everything is in order,” said Dr Devaki Umesh. 
BBMP DIKTAT: Restaurants must have separate kitchens for veg and non-veg food

Wednesday, April 25, 2012

New Silk Route Buys Into Fast Food Chain Adiga's

Adigas (, a homegrown Quick Service Restaurant brand in Bangalore with 11 units and a catering business (estimated revenues of 80-100 Crores totally) has managed to attract a Private Equity investor to cough up (according to Rumour mills) about 100-150 Crores for a majority stake (51%+). That means the company has been valued at 200-300 Crores. Fantastic stuff for a small home-grown business and potential hope to a number of budding QSR entrepreneurs. This investment and the valuation of the business underlines how difficult it is to build a sustainable restaurant business and the premium investors are willing to pay once you get your act together. 
For those unaware, Adigas started out as a neighborhood joint "Brahmin's Coffee Bar" in Chamrajpet in the 1960s - still operational. The second generation of the family scaled up Adiga's. 
Article Credit:; April 24, 2012

NSR is looking to invest $100 million or Rs 500 crore in a portfolio of food & beverages (F&B) formats

Private equity firm New Silk Route has completed its fourth control transaction by picking up a significant stake in Bangalore-basedVasudev Adiga’s Fast Food Ltd, which runs a chain of South Indian restaurants. The deal came following the private equity firm’s plans to create a platform in the food & beverages (F&B) sector. New Silk Route is looking to invest $100 million or Rs 500 crore in a portfolio of F&B formats.
“Certain factors like liberalisation of the economy, growing income of the middle-class population and macro-economic conditions have had a positive impact on consumer spending and consumption in both rural and urban areas, thus boosting the growth of this sector,” a statement from NSR said.
The deal with Adiga’s marks NSR’s second investment in the F&B space after backing the holding company Cafe Coffee Day, India’s largest coffee chain, along with Kohlberg Kravis Roberts & Co (KKR) and Standard Chartered Private Equity.
Cipher Capital was the sole advisor to the transaction.
Vasudev Adiga’s currently has 11 restaurants in Bangalore and one on the Bangalore-Mysore highway. Adiga’s is an offshoot of the famous Brahmin’s Coffee Bar at Basavangudi (Bangalore), which was started in 1965 by late KV Nageshwar Adiga. The company is now run by second-generation entrepreneur KN Vasudev Adiga who is also an engineering graduate.
Besides restaurants, Adiga’s also has presence in event catering business. Its corporate clients include marquee names like SAP, NDS, Ingersoll Rand and Honeywell.
“We see tremendous potential in Adiga’s as it has combined the strengths of two different and popular formats – restaurants and event catering. Our aim is to help Adiga’s expand, initially in Bangalore and eventually across India, so that it can become India’s first homegrown national chain of restaurants. Since there is an unmet demand for good quality south Indian food even in other parts of the country, achieving our goal should not be a challenge,” said Jacob Kurian, partner at NSR Advisors.
NSR Eyeing Significant Stakes
The deal is the third investment announced this year by New Silk Route, an Asia-focused private equity and growth capital firm with $1.4 billion assets under management. It recently invested Rs 175 crore in VRL Logistics Ltd and also picked up a significant minority stake in Hyderabad-based education support services provider Varsity Education Management Pvt Ltd.
It had earlier picked up controlling stakes in companies like Ascend Telecom Infrastructure (telecom tower), 9X Media Pvt Ltd (which runs the Hindi music channel 9XM) and Destimoney Enterprises (financial services).
NSR also acquired minority stakes in companies like Nectar Lifesciences, Reliance Infratel and Rolex Rings.

Monday, April 23, 2012

Cavinkare's QSR business? Another big company with a big QSR plan rethinking their strategy - Is the Restaurant business even worth getting into?

I saw an article in the Times of India today (article below) stating that Cavinkare is mulling an exit from its QSR business. When they launched CK's Restaurant in Pondicherry and Vegnation in Chennai in 2009, the group was exceptionally bullish about the QSR space (they were talking about a 300 CR business - . Having a strong entrepreneurial culture and mindset, I was really hoping that Cavinkare would be in this for the long haul and figure out a highly scalable and profitable business model and execute their plans. But it looks like they are considering throwing in the towel early. I am terribly disappointed. 

To me C.K.Ranganathan of Cavinkare represented a common man who managed to bootstrap, fight against the odds and the goliaths, had a never say die attitude and managed to create a large successful company - For those unaware, Cavinkare's big innovation was sachet shampoos (Chik Shampoo) and they are now a large FMCG company battling with the Unilevers and the P&Gs. 

There are 2 possibilities with their QSR business:
1) They would rather invest in businesses which will offer them success faster and is also more easily scalable. Understandable given their expertise is in the FMCG space (they also have Green Trends, their salon business) 
2) In their assessment, making a QSR business work in India will be tough, given the high real estate costs, ever increasing inflation on food costs and increasing difficulty in finding labour at low rates.

If the reason Cavinkare is exiting the QSR business is the latter, then it will be a great cause for concern for everyone in the restaurant business, given C.K.Ranganathan's visionary thinking. 
If the former is the reason, then I am disappointed. Come on Cavinkare - you took on the Unilevers and the P&Gs, now don't give up against the Dominos, Pizza Huts and the McDonald's. 

Article Credit: Times of India, Bangalore edition, Monday, April 23, 2012

CavinKare mulls exit from QSR biz 
After getting into Quick Service Restaurant (QSR) business in 2009, CavinKare is contemplating an exit from the segment. It is learnt that C K Ranganathan is not happy with the progress this business has made. More importantly, the one outlet in Pondicherry and two in Chennai, besides industrial canteens, have not helped CavinKare standardize the business for rapid rollout. An insider said that food was not shampoo which one could ‘sachet it and sell it’, but it needs a different kind of approach.

Thursday, April 12, 2012

PremjiInvest, Carlyle in talks for stake in JSM Corp

JSM Corp ( run by Jay Singh and Sanjay Mahtani, owns and operates Shiro (UB City, Bangalore, Delhi & Mumbai), all Hard Rock Cafes ( in India, all California Pizza Kitchen's ( in India. In the industry, Sanjay and Jay are considered to be the folks who have really figured out the restaurant business in India and are known for their uncompromising execution skills. 

Article Credit: Times of India, Bangalore Edition (Thursday, April 12, 2012)

PremjiInvest, Carlyle in talks for stake in JSM Corp
Private-equity funds including Carlyle Group and Sequoia Capital are in separate talks to invest about $40 million to $50 million in JSM Corp, which operates the Indian franchises of Hard Rock Cafe and California Pizza Kitchen, two sources with knowledge of the matter said. 

JSM Corp, which runs 12 outlets across different brands, is looking to raise capital to expand its networks and operations, said the sources, who declined to be named as the discussions are not yet public. Premji Invest, the venture capital arm of Indian software services exporter Wipro, and New Silk Route, an Asia-focused private-equity firm, are also in talks to buy a "significant minority holding" in the company, said the Sources. 
JSM Corp, PremjiInvest and Carlyle did not respond to emails seeking comment. Sequoia and New Silk Route declined to comment. 
The company plans to set up 60-80 outlets of California Pizza Kitchen in the next three-four years, and is also looking to expand the other brands, the sources said. REUTERS

Thursday, April 5, 2012

Sodexo & Ticket Restaurant Meal Vouchers - Pain in the *** for Restaurants

The most common payment forms at restaurants are Cash and Credit Cards. Other than this, there is another mode of payment which gets used to a reasonable extent, atleast in the metros - Sodexo and Ticket Restaurant meal vouchers. While there may be several reasons for these vouchers to exist, As a restaurant business owner,  Sodexo/Ticket Restaurant coupons are extremely painful to handle - why?

1) There is a commission of 7% (the figure could be lower for high volume large establishments) that is deducted by Sodexo/Ticket Restaurant on the value of the vouchers. For context, when you use a credit card, only 1.8-2% gets deducted. There is also a upfront fee of Rs.5,000 that Sodexo and Accor each collect from the establishment to set them up in their system.
2) The denominations of the coupons keep changing and are not always clean numbers like 10,20 etc. You have coupons for 27, 31, 17 etc. So while collecting the payment, it is impossible for the steward/delivery boy to count and verify the amount - These guys are not math wizards and the customers are not patient enough to allow these guys to slowly count the vouchers. They just leave the payment and walk out or hand over the payment and close the door. 
3) The Sodexo & Ticket Restaurant vouchers also have expiry dates on them (printed on the vouchers). When customers use these vouchers, it is impossible to expect the steward/cashier to check for the validity. Imagine if someone gives you 540 rupees (four 100 rupee notes, two 50 rupee notes, four ten rupee notes). If the currency dates had expiry dates on them, do you think you will be able to check these everytime you do a transaction. So if the restaurant ends up with expired vouchers, Sodexo/Ticket Restaurant would reject these and not pay the restaurant. 
4) Once the payment is collected, the cashier has to store the vouchers (which are like Cash) carefully and safely for atleast 15 days (will explain why below)
5) Sodexo and Ticket Restaurant have a collection and payout calendar (approximately every 15 days). The Restaurant needs to stamp each voucher and submit the vouchers for payment to Sodexo & Ticket Restaurant before a certain date. The payment is then received after 2-4 weeks. So in essence, the restaurant gets paid almost after 4-6 weeks after the vouchers has been received from a customer. On top of the 7% commission, the money also gets locked in for a period of 4-6 weeks.
6) Practically, several restaurants use the vouchers to buy provisions from some of the large wholesale suppliers. They take Sodexo/Ticket Restaurant coupons for a 5-6% commission in lieu of cash for provisions/groceries. 
7) Several Sodexo/Ticket Restaurant coupons are restricted by usage - i.e. only within the company campus. There is a small text printed on the coupons. If these coupons are used at a stand-alone restaurant, there is no way for the steward/cashier to find it out at the time the customer presents these coupons. When they submit the coupons for payment to Ticket Restaurant/Sodexo, these coupons are treated as invalid and the payment is not made.
8) Grocery stores have stopped accepting these coupons recently. So the usage of these coupons at restaurants is only increasing.  
9) Customers tend to use these coupons at low cost eateries/food courts. Fine Dining restaurants typically refuse to accept these and the bills are also high prompting customers to use credit cards/other modes of payments. So with these coupons, the guys who bear the brunt are the low cost restaurants whose margins are anyway very thin. 
10) It is difficult to determine whether the coupons are authentic at the retail locations. It appears quite easy to print these coupons and use it. There are a number of security features built into the vouchers - the water mark, bleeding ink, anti copy feature amongst others, that are easily identifiable. The good thing is there  are hardly any instances of forgery that the 2 companies have noticed in the last 15 years of operation in India. 

I believe I have clearly made a case for completely getting rid of these coupons. Till the time this happens, Restaurants will have to put up with the burden of dealing with these coupons. So the next time you use Sodexo/Ticket Restaurant coupons at a restaurant leave a generous excess amount or atleast be mindful that these coupons are a Pain in the A** for the restaurant business. 

The biggest advantage these vouchers offer is "Targeted Usage' - i.e. allowing the user to purchase only food related items. In the US, the government provides food stamps to economically downtrodden people to buy food products. They do not want them to use the money for buying cigarettes, drugs, alcohol etc. So the food stamps help in targeted usage. In India though my understanding is that the primary purpose of food vouchers currently is for tax benefits and the folks getting these vouchers are those working in IT companies/MNCs. 

If the government's idea is to provide tax benefits to employees for meal related costs, wouldn't it easier to simply allow the amount of say Rs.12,000 per year to be tax free (like in the case of conveyance allowance). 

Some articles related to this issue:

PS: A reader sent me an email asking me what the picture of a lion roaring, is doing in this post. This is a pic of a lion getting bitten in the *** by a cub lion. So the lion is not roaring but is howling about the Pain in the ***. Source:

Outsourced Kitchen Start-up ItsMyMeal Gets $10-m Funding

One more positive development for wannabe food entrepreneurs. Investors seem to be betting big on businesses built on a hub and spoke model - centralized processing with a distribution mechanism. All the best to the folks at

Article published in the Economic Times, Friday, April 5, 2012

Outsourced Kitchen Start-up ItsMyMeal Gets $10-m Funding


A handful of angeI investors have pumped in $10 million in ItsMyMeal, an online outsourced kitchen start-up that seeks to profit by delivering homemade ethnic food to the doorstep of the customers. 
Started by IIT and IIM graduates Nikhil Gupta, Anoop Agarwal and Neeraj Kumar, the firm provides customised basic daily home cooked meals to a growing number of Indians who have no time to cook. 
The premise has been strong enough for investors to make one of the highest first round investments in a new start-up, which typically attracts funding of about $1 million to $4 million even in the high-profile e-commerce segment. “Cooking food is an art, but we do it with technology which is helping us sustain the business,” said Nikhil Gupta, chief executive, ItsMyMeal. He declined to name the investors. Venture capital for very young start-ups has picked up pace this week. Accel Partners has invested $1.2 million in Delhibased Hotelogix which provides a cloud-based platform for hotels. Inventus Capital Partners invested $1 million in Bangalore-based Savaari Car Rentals. Founded by Gaurav Aggarwal, Savaari has grown to a network of over 100 operators across 60 cities. It derives more than half of its revenues from small towns and cities. 
“Car rental services are estimated at . 14,000 crore,” said Aggarwal, who will use the funding to grow its sales network and build technology to run back-end services. Shekhar Kirani, partner at Accel, said the ability to sell online is giving rise to a new generation of Indian companies. 
ItsMy Meal offers a custom 
built online platform and a mobile application for meal planning, budgeting and ordering. The firm, which has a central kitchen in Bangalore, will use the money raised to build kitchens in technology parks and company campuses. Each kitchen will cater 1,000 packs of lunch, evening snacks and dinner per day. It uses artificial intelligence technology and software to determine the exact amount of ingredients required to make the meals which helps to reduce food wastage. 
The firm also uses an innovative packaging technology that it plans to file a patent for. 
Gupta calls his business a combination of food and online commerce. A former merchant navy sailor, Gupta put in a stint at the BPO arm of Infosys where he once got into a discussion about homemade meals at the cafeteria. 
“We were fed up with the oily canteen food which lacked taste. We made the business plan on the same day,” he said. The company has created a panel of top chefs and nutritionists who have built a database with 250 dishes from all over India. It adds 10 new dishes every week and even offers comfort meals such as curd rice for customers who are unwell. 

On the Platter • ItsMyMeal offers a custombuilt online platform and a mobile application for meal planning 
• The firm, which has a central kitchen in Bangalore, will use the money raised to build kitchens in technology parks and company campuses

New Silk Route Seeks Gastro Delights

Please note that this article is simply a reproduction of the original article published in the Economic Times on April 5, 2012, Bangalore Edition. If you come across any other interesting articles that I miss out, do email the link/article to me and I will review and post them for the benefit of all readers. 

Article Credit: Economic Times, Apr 5, 2012, Bangalore

New Silk Route Seeks Gastro Delights
Fund has set aside . 500 cr to invest in a portfolio of four food and beverage firms by crafting a unique model


New Silk Route has set aside $100 million (. 500 crore) to invest in a portfolio of four food and beverage firms by crafting a model that has never before been implemented in India. 
The investments will be channelled through a holding company that will take a controlling stake of 51 % in mid-size promoter–led firms in an initiative that has been informally termed ‘Project Gastronomy’. 
Promoters will be asked to cede control of accounting, human resource management and project management in return for fresh capital and handholding to expand their firms both in India and overseas. 
“Promoters have to buy into the fact that the whole is more valuable than the sum of the parts for this model to work”, said Jacob Kurien, a partner at the fund which invests out of a corpus of $1.4 billion in emerging markets 
in Asia. The fund is in advanced talks with ethnic fast food chain Adiga’s, run by the Bangalorebased K N Vasudev Adiga, and another person who runs a network of fresh fruit juice kiosks. The two other companies under this umbrella will include a chain specialising in Indo-Chinese cuisine and a network of fine dining restaurants. Kurien declined to identify the companies it is looking to invest in. 
“Once we sew up the first deal, it will offer a proof of concept to other promoters,” he observed. The innovative model is a response to the challenges faced by risk capital investors in India, who have reduced the amount of money they have committed over the past few quarters in the food & beverages business. While last year they pumped in $256 million across sixteen deals, there has been just one deal in the first quarter of 2012, according to research firm Venture Intelligence. 
“Funds such as New Silk Route 
will never find one single company in the food sector to back with a $100-million deal. But food & beverages is a great investment opportunity and they are figuring out new innovations to get a slice of the action,” said Mayank Rastogi, a partner at consulting firm Ernst & Young. 
High valuations demanded by promoters and very low scale of operations were the reasons why New Silk Route, which is an investor in CafĂ© Coffee Day, devised this model, according to Kurien. “If market leaders are trading at 40 times over earnings before tax then smaller promoters feel they should be paid at least twenty times. That is too high a valuation,” he said. 
Adiga’s which owns twelve vegetarian fast food joints across Bangalore and in the town of Maddur, has ambitions of taking the brand global. It hopes to add 15 outlets in India and overseas in three years, a person aware of the plan said. “The primary motivation for a promoter 
to consider such a model is the need to expand.”
The New Silk Route model will also offer a central pool for real estate and project management as well as a health & hygiene division to standardise processes that will be necessary to build a global brand. “A platform allows 
the opportunity of partnering different companies with diverse cultures. Funds that resort to such investments will have the confidence to back themselves in a sector”, said Jaspal Sabharwal, partner, Everstone Private Equity which also invests heavily in the food & beverages sector.

Monday, April 2, 2012

VC/PE Appetite begins to build for ethnic Indian Restaurants

A reader suggested that I compile and post interesting/useful articles written about the Indian restaurant industry that are published in the media. I am starting to do this with a recent article published in the Times of India on Monday, April 2012. Please note that these are simply reproductions of the original articles published. If you come across any interesting articles that I miss out, do email the link/article to me and I will review and post them. 

Article Credit: Times of India, Monday, April 2, 2012. Bangalore Edition

VC/PE appetite begins to build for ethnic Indian restaurants

Pranav Nambiar & Shilpa Phadnis TNN 

Bangalore: Indian quick service restaurant (QSR) chains have caught the attention of both the early stage venture capital (VC) as well as growth and late stage private equity (PE) investors. A host of traditional Indian joints like Adiga's as well as the next-gen chains like Mast Kalandar are in the radar of private investors.
Kanwaljit Singh, co-founder of VC firm Helion Venture Partners, said that macro factors like the growing quality of life and the scalable nature of the business make it an attractive bet. Helion invested in Mast Kalandar in late 2010 and over the last one year the chain has scaled from 10 to 35 stores across 4 cities – Bangalore, Chennai, Hyderabad and Mumbai. 
Prashanth Prakash, partner at VC firm Accel Partners, said that globally QSRs are not a venture play. Typically it receives later stage investments by PE or strategic investors. However, in India some VCs are experimenting with investments in new generation QSRs. VCs enter when the QSRs have at least 10or so units established. These formats rely on differentiators around the menu, formats, locations etc. 
Accel Partners has invested in Bangalore based Kaati Zone, which serves kaati rolls. Another VC firm Sequoia Capital recently invested in Mumbai based Kebab and wraps chain Faaso's. “The trend of people eating out more often and growing urbanization are helping these restaurants. Also, our street food is now served in a cleaner yet affordable format,” Prakash added. 
The more traditional restaurants that are of reasonable scale have received interest from later stage PE and strategic investors. In 2011, PE firm India Equity Partners invested $35 million in Sagar Ratna, a Delhi-based South Indian restaurant chain. Late last year Everstone Capital bought a 45% stake in north Indian food chain Pind Balluchi. There is also global investor action in traditional QSRs. The New Silk Route Partners is holding talks to buy a big stake in Vasudev Adiga’s. 
Investors are betting on ethnic Indian cuisine as it has a much larger target audience as compared to other organized quick service formats that serve Italian or American cuisine. Gaurav Jain, promoter of Mast Kalandar, said that the Jubilant Foodworks IPO has attracted PE players into the QSR space, providing profitableexits. Jubilant operates Domino's Pizza in India and has the rights for Dunkin' Donuts. 
Despite the promise, investors in QSRs face several challenges. Jain feels profitability at the store level is a key challenge. Food inflation has been in double-digits in the last three years, affecting the margins. 
Investors say that the business is operationally complex and finding the right talent is a huge challenge. Scaling into newer cities and standardizing of the backend is a major point of concern. 
So investors have to be prepared for a longer investment timeline. It typically takes about 8-10 years for a VC investor to reap decent returns. 
Kiran Nadkarni, CEO of Kaati Zone, said that competition from international QSRs is forcing home grown companies to keep the pricing competitive. "International players like McDonald's have expanded the snacking market by making the entry-level pricing attractive. We are exploring a kaati at price points starting at Rs 25-30," he said. QSRs also compete against darshinis and street food vendors for wallet-share. 

• Accel Partners has invested in Bangalore based Kaati Zone, which serves kaati rolls 
• Sequoia Capital recently invested in Mumbai based Kebab and wraps chain Faaso's 
• India Equity Partners invested $35 million in Sagar Ratna, a Delhi-based South Indian restaurant chain 
• Everstone Capital bought a 45% stake in north Indian food chain Pind Balluchi 
• New Silk Route Partners is holding talks to buy a big stake in Vasudev Adiga’s