Monday, November 30, 2015

Lessons from a 25-year-old restaurant

Every November, Karavalli, the award-winning coastal cuisine at Gateway Hotel, Bangalore, stages Aquafest, an annual celebration of seafood. I’ve been going every year now for several years and was there the other night, to taste the off-the-regular-menu dishes and to catch up with the hotel’s Executive Chef Naren Thimmaiah.
While much effort goes into creating the Aquafest menu – this time including seafood cutlets, coconut-rich squid thoran and spicy crab ghee roast – Chef Thimmaiah tells me food festivals and promotions today are now really about brand-building. There was, of course, a time when restaurants, especially those in five-star hotels, peppered the calendar with food festivals as a way of offering guests variety and off-menu dining experiences. But now, with the multitude of choices available all around, thanks to the burgeoning number of restaurants, the food promo has become a marketing activity than a culinary initiative.
But heavy duty marketing is not what brings the crowds into Karavalli. On the evening I was there, the restaurant was close to full with regulars, families, out-of-towners and expats. It’s this sort of custom that has kept Karavalli in business for 25 years, while once-popular restaurants even within the Taj group have shut shop, the Zodiac Grill at Taj Mahal, Mumbai, being the most recent.
Karavalli has got many things right. To begin with, it’s built on a simple, yet clear concept: bring the traditional home cooking of the west coast of India to a restaurant setting and serve it in style. The core of the menu has remained the same all these years and there has been no succumbing to the temptation to tweak, get quirky or ‘progressive’ with an ethnic Indian cuisine. This need to be different and surprising I see spreading like a rash amongst new restaurants where callow chefs run the kitchens. Karavalli’s unchanging nature is also thanks to the steadying presence of Chef Thimmaiah who has been at its helm for well over two decades.
He and his team stay on track without making any compromises on the quality of ingredients or in the cooking techniques. The fish and seafood is of superior quality, the spices are freshly ground and they are concerned about provenance, sourcing the best chillies, coconuts and jaggery from where they are grown or produced.  They care as much about the chutneys that are served with complimentary nibbles as they do about the Karimeen Pollichathu.
Guests come here – and the restaurant possibly attracts more diners than any other five-star place in town – for comfort and familiarity. They know that the Aleppey fish curry and appams will taste the same on every visit, that the meal will please and satisfy and that the staff will be warm and friendly.
The Karavalli lesson is that success isn’t about dazzling the crowd with exotica or extravagant cooking. It’s merely about doing the simple things well and all the time. Clearly, that’s easier said than done or we’d have lots more restaurants celebrating silver jubilees.

Thursday, November 19, 2015

The Food Tech wave in India - is it for real?

Over the last few months, the term "Food-Tech" has been in the news because of the extensive venture capital funding activity in the space. The larger players in this space are Foodpanda (which has acquired both Justeat and Tastykhana), Tinyowl, Swiggy, Freshmenu, Roadrunnr and of course Zomato. There are several smaller players such as Yumist, Holachef, Spoonjoy, Dineout, Delyver, Opinio, Limetray, Pickingo, Grab, Jomaange etc., who have all raised some sort of funding.
I have been grappling with food tech in the same manner brick & mortar retailers have been grappling with e-commerce. First off, calling these companies "Food-Tech" seems very misplaced to me - there is nothing these folks are doing with respect to technology related to food. All they are doing is enabling consumers to order food/transact with a restaurant.

They are really providing a computer/mobile device channel for consumers to do 4 things in a loop - search for info on food joints, transact with them (order food for delivery, book a table etc.), handle logistics (i.e. deliver the food) in some cases and provide feedback for everyone else to search better. For convenience and to go with the flow, I am also going to use the term "Food Tech" to refer to these companies, but in the above context.

I do believe that tech & "e" in the food space is different from other segments because of the following reasons. I will explain each of these reasons in detail in separate posts. I will also try and evaluate each of the companies in this space and provide my perspective on their business models.

1) This is a segment where the entire transaction needs to be completed within a very short time frame - i.e. the food needs to be delivered to the customer within 30-45 minutes. This makes it virtually impossible to achieve efficiency in logistics since orders cannot be easily clubbed based on just the delivery location as both the source and the destination are variables. I am not sure how technology (other than something like drones) can really make a significant difference to this. Having a Uber style model where you have delivery boys on standby in the local locations to go the restaurant, pick up the food and deliver it, seems unsustainable because of the dependencies involved with the restaurant and the concern mentioned in point 2 below. If companies like Roadrunnr, Swiggy are able to crack this, I expect them to be more like a on-demand delivery staffing firm with a lot of staff in every local area. Restaurants would love this as they don't need to employ delivery staff, buy bikes, maintain them etc. The trouble will be with the economics - the cost of delivery is estimated to be upwards of Rs. 80-100 per order, when you average it out over a week. This means that the delivery companies will need to charge restaurants over 25% of the bill value as their fees for the service for the model to make economic sense.

I will write a separate post evaluating the business model of the specific companies mentioned above. The trouble is that this becomes more a staffing business (like what a Group4 is to the security space) and managing labour on the ground will not be easy.

2) The orders are clustered in short time blocks - Lunch & dinner times account for 90% of a restaurant's business and within this the window for orders is about 90 minutes. Majority of customers eat lunch and dinner around the same time - in a block of about 90 minutes. This makes staffing and the associated logistics of delivery impossible to manage in an efficient manner. For e.g. if a restaurant has 4 delivery boys, it will be great if they receive lunch orders sequentially between 12 noon and 330 PM. The problem is that the orders come in a bell curve pattern - 10% of order between 12 and 1 PM, 80% of order between 1 and 2 PM and the remaining 10% post 2 PM. The restaurant needs only 1 delivery boy between 12 and 1 PM and post 2 PM to deliver the food promptly. But they would love to have 10+ delivery boys between 1 and 2 PM. This problem cannot be solved using fancy tech - whatever analytics, clustering you do, the only real solution is to have more staff available between 1 and 2 PM.  

3) The product has a very short shelf-life - therefore cannot be stored in a ware-house and shipped upon receiving the order like with a product such as a phone or a digital camera. This again makes the opportunity to use central warehouses, logistics planning, optimisation etc. ineffective.

4) The product needs to be prepared and packed only upon order - cannot be shipped right away. The moment of truth in food retail is at the retail unit. This means that the restaurant needs a minimum of 10-15 minutes to keep the product in a manner that is ready to be shipped. Companies like Freshmenu have cut down this 10-15 minute period by having a small fixed menu everyday, allowing them to prepare and pack in advance and upon receiving an order, simply handle the delivery process.

In summary, I believe that food-tech companies will be better off focusing on static restaurant activities like information services and pure technology related components such as order taking (with payment). Handling logistics at the last mile is going to involve dealing with ground level and labour management issues.

Thursday, November 12, 2015

Folks who have figured it out - Rajdhani

In my assessment, there are a few restaurant concepts/businesses in India, who have figured out a scalable model (i.e. create a chain of restaurants), have got their basics right, have executed well and are on the path to becoming a really large and successful restaurant company. I will talk about one such business in each posting under this title.

Rajdhani - A single product offering (A Gujarati/Rajasthani Thali) served in a comfortable ambience - they seem to have made a decision to try and open all their new units primarily in malls. 

Why I like their model:

1) In general have a strong liking/bias for single product models - It makes the operations very easy to manage, customers exactly know what I will try and explain this in a separate post.

2) Whenever a customer walks into their restaurant, the APC is given (Rs. 325 to Rs. 400). From a customer's perspective, it is unlikely that he/she will go unsatisfied after the meal, simply because of the variety of food on offer and the great desserts. Feels like an Indian wedding lunch.

3) From an operational perspective, the local chef has some flexibility to choose which dishes to make based on the cost of the ingredients/vegetables in season. Plus there is no order taking - so saves a lot of time and confusion in the kitchen, but helps them rotate the seats in the restaurant a few times without the customer feeling rushed.

4) All Veg model - Attracts a lot of customers who simply won't visit a restaurant that also serves non-vegetarian food.

I believe that their concept can be tweaked to make it a very successful international brand. 

Challenge: Their service levels need to be kept in check as with their aggressive growth, they seem to be focusing less on training heir front-line staff to be polite to their customers.

Rajdhani is experimenting with a premium version of their offering "Rasovara". The early reads of this is that the same Rajdhani food is served in a slightly more elaborate manner and in courses. The service levels, the ambience and food quality differences are very minimal. In my assessment, additional effort needs to be put into their premium brand to allow customers to clearly understand the additional value they are getting from the premium brand.