The Plastic Carry Bag and related ban in Bangalore - Impact on restaurants

Over the last few weeks, several localities in Bangalore have started banning plastic carry bags. The BBMP (Bruhat Bengaluru Municipal Palike) has been setting up meetings with retailers and food businesses advising them of the ban. It looks like the ban will come into full effect from Feb 27, 2015. How will this impact the restaurant business?

Businesses with an active take-away and home delivery business:
1) You will have to start using woven cloth-like bags. These cost almost the same as the plastic carry bags and all the packaging vendors have started stocking these.

Through some research into these woven cloth-like bags I learnt that even these bags contain plastic.There are 2 variants of these bags - Virgin and Non-Virgin. The Non-virgin ones are the cheaper option and contain plastic. The virgin ones are made with cloth and are more expensive. I don't expect BBMP to enforce this differentiation atleast in the short run.

A question: Banning plastic bags should really mean banning several products available in gorcery stores like rice, dal, biscuits etc. I assume the BBMP crack-down is focused on only the carry bags to carry all the other stuff that anyway come in plastic bags. While any reduction in plastic is a welcome move, for real impact, the government needs to go to the heart of the plastic consumption zone - the FMCG companies. Guess that will have to wait for now.  

2) Plastic & Aluminium Foil containers -  These are the containers in which is actually packed by the restaurants. These can be used for now.

3) Pouches - Plastic and aluminium: These are the small thin plastic and silver foil pouches in which restaurants pack side dishes (sambar, chutney etc.), condiments etc. Several restaurants use these to pack the actual food too (e.g. Biryanis). All of these can no longer be used. This will probably be the biggest impact to restaurant and food businesses.  The pouches are cheap, very convenient to pack and are leak proof when tied with a thread or rubber band. Plastic container alternatives to these are expensive (over Rs.2 per container) and are prone to leaks. There are thicker aluminium foil pouches too available which can be used, but these again are expensive. To put this in perspective, bakeries will no longer be able to pack bread in the transparent plastic foils. Not sure how practical the enforcement of this can be.

4) Cling wrap and aluminium foil:
Plastic cling wraps can no longer be used. Aluminium foil rolls can be used. Plastic cling wraps are the cheapest and easiest way to cover food containers. Without these, the cost of using aluminium foil will be prohibitive. Every restaurant uses cling wraps extensively to store pre-cooked ingredients and pre-processed foods. These are used only in the kitchen so may not catch the attention of the BBMP officials when they come to inspect. But technically, usage of any of these will make business liable to pay fines and even have their licenses canceled for non-compliance.

While reducing plastic usage is a good thing, I feel that the BBMP is taking a measure that significantly affects small & local retail businesses, but ignores the larger problem of FMCGs and large companies using plastic extensively. Infact without the simple plastic bags, small retailers will find it difficult to sell loose products (e.g. rice, sugar etc.) which are cheaper for the consumers and the margins are better for the retailer. They will now have to sell branded pre-packaged products which anyway come in plastic bags (except that they look nicer and have branding on them).

For the restaurant business, this will be a pain to deal with. The biggest pain will be felt by the street food vendors and low cost food joints who extensively use the low cost pouches. For others, not being able to use cling wrap in the kitchen will be an operational problem. They will slowly have to get used to container with lids. 

Service Tax - Applicability for Restaurants

The cloud over the applicability of service tax in restaurants seems to have finally passed and clarity has now emerged.

1) Service Tax of 14% is applicable only for dine-in bills at restaurants which are air-conditioned. The 14% needs to be levied on 40% of the bill value.
2) Service Tax is not applicable for take-aways and home deliveries; This is the final resolution and the one that was causing the most confusion
3) If a restaurant levies service charge, the full 14% service tax is applicable on the service charge component of the bill.
4) Input credits for service tax can only be off-set against the revenue component on which service tax has been collected. E.g. If a restaurant is paying service tax on the rental, say 14% on Rs. 1 lakh per month, the Rs.14,000 service tax can be off-set only against the service tax collected on the dine-in component of the revenues. i.e. if 50% of the revenues of the restaurant are from dine-in, then only 50% of the input credit (i.e. Rs.7,000 can be offset).
5) Service tax will not be applicable for non-AC restaurants.

Item 4 above is the most complicated rule to follow for restaurants and needs careful computation by your accountant.

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.

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.

The big case for small menus

As a restaurant critic, I’ve always favoured restaurants with small menus. I found my reasons for this bias reinforced during my recent interaction with MasterChef judge, chef and restaurateur George Calombaris. His top-rated Melbourne restaurant, The Press Club, lists just 12 dishes on the menu and guests can turn these into 4-, 6- or 9-course meals. At the other end of the market, he has the Jimmy Grants chain which serves just Souvlaki, Salad and a few sweets.

Narrowing down the range of their offerings is something many of our traditional food businesses do really well. Take, for instance, Brahmin’s Coffee Bar in Basavangudi, which has just four dishes on its hugely popular menu, or Tamil Nadu’s favourite Murugan Idli Shop which thrives by selling idlis and, at the most, dosas.

It’s the casual dining and so-called fine dining restaurants that seem unable to give customers the pleasures only a small, highly specialized menu can offer. So, we have Andhra restaurants serving hakka noodles and sweet corn chicken soup; even chefs who set out to deliver gourmet class can rarely settle for a menu that has less than several dozen dishes.

The concept of small menus can work for both customers and restaurateurs. For the diner it means an assurance of freshness; long menus mean many dishes that are cooked ahead and stored. When a kitchen cooks fewer dishes, these can be prepared with greater care and attention to detail and the dining experience is enhanced.

For the kitchen team, it certainly means less stress. The chef and his assistants need to master fewer dishes and have a better chance of perfecting them. Inventories are smaller and restaurateurs can pay for better quality ingredients. Serving staff, too, can have a better understanding of, say, 60 dishes, rather than trying to remember what goes into 120 menu items.

And still, even the smartest chefs and restaurateurs are wary of cutting down the number of dishes on their menus. They worry that it will evoke that constant complaint of ‘Not enough choice’. The worry is justified, for Indian customers do indeed want to see huge menus and find satisfaction in the notion that they are spoilt for choice. They don’t seem to grasp that restaurants that attempt too many things, do not get most of them right.

 Clearly, we are still some time away from diners patronizing restaurants with small, specialized menus. Meanwhile, I’d love to see at least a few adventurous restaurateurs have the confidence to present small menus, backed by the belief that they are putting out their very best.

Exclusive interview with George Calombaris of Masterchef Australia

Draw from your culture, don’t set out to be the next Blumenthal or Redzepi, says MasterChef judge George Calombaris

Announce that you’re off to meet George Calombaris and you’re suddenly in an enviable position. In his role of MasterChef judge he’s become a celebrity, particularly in India, but he is primarily – by his own admission -- a chef and restaurateur. George was in Bangalore over the Independence Day weekend to present a taste of his highly acclaimed Melbourne Restaurant, The Press Club, and I got to chat with him at a tasting session here.

Chef or TV star, I ask him? ‘I’ll always be close to my kitchens,’ he says. George’s restaurant collection currently includes the swank Press Club, The Press Club Projects – which creates exclusive dining experiences on request – Gazi, which is a more approachable, affordable restaurant, the Hellenic Club, Mastic Café and Jimmy Grants, the fourth branch of which opens this month, serving souvlaki, salads and sweets in a casual setting.

All the menus find their origins in the chef’s Greek roots and he pushes them to the next level with his imagination and skill. Especially at The Press Club, the food is ultra-modern, but George abhors the term ‘molecular gastronomy’. ‘It’s a made-up word that means nothing,’ he says, adding that he’s all for experimenting and pushing boundaries in the kitchen. The master of such experiments is, of course, Heston Blumenthal and the two are friends. In fact, when George conjured up a rendition that resembled a clothes line with chips and crisps hanging from it, as if in a lawn, he wanted to infuse the presentation with the smell of cut grass. ‘We tried and failed several times, when Heston suggested using a rotting banana whose components give off the same smell. It’s about understanding those elements,’ George says.

It’s all about the food for this passionate chef. ‘As a restaurateur, I’m lucky that I have a great team that looks after the stuff I don’t particularly like doing,’ he says. So, George can continue to work on elevating the meal experiences he creates, sometimes borrowing an ingredient from another cuisine, at others, using a revolutionary new technique. While the imagination can run wild in George’s kitchens there is no compromising on the basics. ‘It’s about the freshest produce and the best ingredients,’ he says. That insistence was on display when, at the cooking demo-cum-tasting session, he swapped the salmon for Indian sea bass in a dish, because the former didn’t make the quality cut. He also used naan as the souvlaki wrap and made the observation that ‘You have to respect where you are’.

For George, it’s about celebrating the very essence of local culture and its culinary traditions. ‘India has such a wealth of cuisines and such a rich food heritage. That’s what young chefs should be drawing on, rather than aspiring to be the next Blumenthal or Rene Redzepi,’ he says with conviction. ‘On my visits to Delhi, I’ve seen these street stalls that do just one thing, say, jalebis, and do it so well,’ he says.

He’s a firm believer that specialization is important. At the Press Club, for instance, you wouldn’t see more than a dozen dishes on the menu. ‘It has to be that way if you want to deliver quality,’ he says. ‘It’s 12 dishes, 34 diners and 20 staff.’ I tell him that in most restaurants here anything less than 100 dishes on the menu would evoke howls of ‘no choice.’ ‘You come to my restaurant to be in my hands, right?’ asks George. Clearly, the Indian diner has some way to go before he appreciates that sort of specialization and the quality it can deliver.

Besides the food, George’s restaurants are known for their superb service and earn high ratings on customer review sites. ‘I’m not particular about whether they drape the napkin correctly over their arm or pour the water from the left. I enable them only to create a warm, fuzzy feeling for the customers who walk into my restaurants. My staff is my family, I love these guys,’ he says.

His faith in his staff doesn’t mean he’s not watching every move. Can he never stop looking at his phone? ‘Have you been talking to Matt Preston?’ he laughs. ‘Well, I wouldn’t say I’m a control freak, just a very controlling person.’

Among the things he controls is what he feeds his guests, himself and his family. Is it true that when his 4-year-old son James goes to birthday parties at fastfood restaurants he’s given a packed meal?’

‘Would you give a child drugs and alcohol? Junk food – processed, over-refined, bleached  -- is just as bad,’ George says. ‘People have religions, mine is food and I will not have it desecrated.’

Interview & Post by Priya Bala

9 Of Mumbai’s best burgers: The most delicious takes on this fave food

9 Of Mumbai’s best burgers: The most delicious takes on this fave food

The burger is enjoying a revival. No longer an assembly line product you grab and go, the meat-in-a-bun meal has taken on a distinct gourmet attitude. Here’s our guide to the must-eat burgers of Mumbai.

Ellipsis
This Colaba restaurant serves burgers that bear no resemblance to what the fastfood chains dish out. Try the In ‘n’ Out style Burger made up of brioche, beef patty, cucumber pickle, tomato, onions, cheese and ‘animal sauce’, which is a house speciality. You’d be lucky to finish it without sauce running down the front of your shirt.

Indigo Deli
Possibly among the priciest burgers in these parts, Indigo Deli’s creations also rank amongst the best. Indigo Deli’s Pulled Pork BBQ Burger is a big hit. For a deliciously different burger, order the Blackened Salmon Burger which has gourmets drooling about it.

Monkey Bar
The recently-opened Monkey Bar has been getting rave reviews for its food. Among the top orders is the Mobar Burger of two meat patties, American cheese and bacon in a delicious black bun.

Hard Rock Café
Hard Rock Café promises robust, American-style burgers and delivers just that. There’s the 10 Ounce Burger which will send beef lovers to meaty heaven. HRC also does burgers with a twist such as California, Tex-Mex and Mediterranean.

212 Café
This café at BKC stakes a claim for handmade burgers. Vegetarians, who often have to settle for boring veg patties, get lucky here with the flavour-packed Shroom Burger which uses Portobello mushrooms.

Café Sundance
Hearty, hit-the-spot burgers are a Sundance speciality with the classic Tenderloin Burger topping the charts. Try also the Fish ‘n’ Chips Burger which has a nice mustard kick. If you’ve got a gargantuan appetite for burgers go for the Sundance Sasquatch with nearly 600 gms of tenderloin, crisp bacon, egg, guacamole and cheese. They dare you to finish one by yourself.

Jamjar Diner
Regulars flock to this Versova diner for the Juicy Lucy, one of the stars of the burger menu. Check out also the Chicken Honey Mustard and Bacon Burger with Chipotle mayo giving it a nice zing.

Café Zoe
Meat, cheese and warm bun combine wonderfully in Cafe Zoe’s Tenderloin Cheese Burger. There’s also the recent addition of a Turkey Burger which is guilt-free, relatively speaking, that is.

The Nutcracker
The cozy café has quite a reputation for its comfort food. Check out here the Blackbean Burger. A great pick for vegetarians, it comes with caramelized onions and garlic mayo.

Compiled, written & posted by Priya Bala