Monday, July 30, 2012

Legacy/History associated with Restaurants

Over the last several years, I have been a big fan of restaurant businesses which have a legacy, a history - essentially a story of some sort behind them. I inherently seem to believe that you can convert these into hugely profitable businesses by making some minor tweaks.

During my last visit to Mysore a few days ago, I quickly researched for restaurants in Mysore and found the following to be interesting and checked them out over the weekend:

1) Vinayaka Mylari Hotel - #1 on the Tripadvisor list. Known to serve the best dosas in town.
2) Om Shanti at Hotel Siddartha - Supposedly serves some great meals.
3) Indra's Cafe Paras - A snack joint serving dosas, chaats etc.
4) Guru Sweets - Known for their Mysore Paks

Out of the list, Om Shanti and Indra's Cafe Paras were disappointing. No real specialty, history - just normal joints serving all kinds of food - probably hve become popular simply due to being around for a while and serving consistent food at OK prices.

I found Vinayaka Mylari (Sign board says - Hotel Original Mylari) to be very interesting. They serve one product - a dosa for 20 bucks. The Dosa comes with a veg stuffing (not the normal Potato Masala), but a gooey veg curry, served with a small block of butter and fresh coconut chutney. The dosa in terms of texture is close to the set dosas you get in a lot of places, but the taste is pretty good - soft and fluffy, and very light (very little ghee/oil) . Think of it as the Vidyarthi Bhavan Dosa without the ghee. The place is really small with a few bences and tables and does not appear very clean at first sight (because of the old building and worned out interiors). The interesting part is that the hnd wash area is in the kitchen - so you actually get to see the kitchen. With some minor interior changes, some nice old style painting, uniformed waiters and disposable paper placemats with their story will make this place rock. With the visibility the place is getting on the internet (tripadvisor, lonely planet etc.), the owners can churn this into a huely popular, must visit place in Mysore - especially given the dearth of eating options around.

Guru Sweets is even more interesting - this is a small corner shop at a very busy junction with two window counters for you to order your sweets. Their special Mysore Pak (300 bukcs for a kg) is the hot seller. The shop is loaded with all kinds of sweets, but in the 20 minutes that I watched, 80% of the orders were for their Mysore Pak and 10% for their Son Papdi. They make their Mysore Pak in limited quantitites everyday using ghee made using fresh butter delivered from a village nearby. They are a great business and with probably a small leaflet outlining their story dropped into every box of sweets they pack should do.

If the opportunity presents itself, I would love to buy out places like Hotel Original Mylari, Guru Sweets and similar such businesses in several cities (especially the touristy ones) - make some minor changes to make the customer experience better without taking away the legacy, tom-tom the story, and reap the benefits of their legacy.

Or maybe there is a case of building something like the "Small Hotels of the World" marketing model for such places.

Photos above from:
1) Guru Sweets -
2) Hotel Original Mylari -

Monday, July 16, 2012

How much Power (Electrical Supply) do you need for a Restaurant?

You obviously need sufficient power supply to ensure that all the electrical appliances in your restaurant are able to function simultaneously. As a general guideline, a typical restaurant will need atleast about 20 KVA power. 1 KVA is approximately equal to .8 KW.

The big power consumers are the following:

1) The Kitchen Exhaust System: The exact power requirement would depend on the motor capacity and the efficiency of the motor used. The capacity (power generated) would depend on whether the blower is kept right next to the exhaust hood in the kitchen or taken all the way to the terrace of the building. Most small restaurants will typically need a 2 HP or a 3 HP motor powering the exhaust system blower. 1 HP is approximately equal to .75 KW and assuming a motor efficiency (this is the efficiency of converting electrical power to mechanical power) of 50%, you will need 1.5 KW for every 1 HP. So a 3 HP motor (the most commonly used motor at restaurants) will need about 5 KVA power. Once running the motor may not consume as much power as the motors need an extra power surge during start-up.

2) Air-Conditioners: Depending on the number and type of ACs you install, you will need to calculate your power requirement. A typical 1.5 Ton Split AC will need about 2 KVA of power supply.

3) Freezers/Chillers/Water Coolers: The exact power requirement for these appliances are typically mentioned in the back of these appliances. As a guideline, most freezers and chillers need about 300-500 KVA of power supply.

4) Mixers, Grinders, Microwaves, Ovens, Electric Stoves, Beaters, Water heaters etc.: These small appliances you will use in the kitchen are large power consumers. Most of them need between 1 KVA and 2 KVA of power. Depending on the items you use in the kitchen, you will need to calculate your power requirements. For a typical restaurant you won't use all of these items at the same time - so can assume you will need about 2-4 KVA for these small kitchen appliances.

5) Lighting, Sign Boards, Billing System etc.: You will notice that most restaurants use low power consuming CFL lights and LEDs. As a guideline, you should budget about 1-1.5 KVA power for all your lighting, fans, sign-boards, computer/billing system and other small electrical stuff in the restaurant. If you use a Neon sign-board, the power needed will be higher (budget an additional .5 KVA atleast) 

Let's now take an example of a 2000 sft air-conditioned restaurant, with 4 split ACs of 1.5 Ton capacity each and a exhaust system with a 3 HP motor. The table below shows the calculation of the total power requirement for this restaurant. You will need to compute the power requirement for your restaurant based on the exact items you will need and will be using.

Tuesday, July 10, 2012

A 100 Cr Investment Vehicle for Restaurants!!!!

SAIF Partners, a large private equity firm (which invested in Mainland China in 2007 and made a killing on their investment during their IPO a month ago) has just announced a Rs.100 Crore investment vehicle focused on investing and managing a number of quick service and casual dining restaurant chains. I am trying to find more details about this fund and the nature of investments they will be making. Hopefully they will allocate atleast a portion of the funds for early stage investments. But this is great news for Restaurant business entrepreneurs. Hopefully SAIF's moves in this area will prompt other Venture Capitalists to take a more aggressive chance with restaurant investments and work with a longer horizon (7-10 years) for their investments to show results.