A 100,000 Thanks

A big heartfelt thanks to all of you for getting this blog to cross a significant blogging milestone - 100,000 pageviews. This gives me the energy and motivation needed to continue posting content that will hopefully  be useful.

Our Restaurant "Mani's Dum Biryani" now open in Indiranagar

The Birth of RestoFund: Your Opportunity to Run a Small Pizza Restaurant in Bangalore

This is not one of my typical blogposts, giving some gyan about the Restaurant business. This is about a rare opportunity for a passionate individual/team to set-up and run a small Pizza focused Restaurant/Cafe in Bangalore, thanks to the generosity of some well-heeled gentlemen, through an experimental initiative called "The RestoFund" to financially support passionate folks to become Restaurant Business Entrepreneurs. Here is a quick summary of the first opportunity offered through the RestoFund:

What you will get?
1) A 400 sft space on the ground floor in a prime location in Bangalore
2) Interiors, Furniture & Fixtures, the way you want it
3) All kitchen equipment needed for you to run a small Pizza & Ice-Cream joint including a fancy big Pizza oven
4) All statutory approvals needed to run a cafe/restaurant
4) Reasonable support to set-up and run your business both financially & operationally
5) All the money you need for doing the above (You are not dreaming), including a small fixed salary  to support you financially coupled with an aggressive profit share

What do you need to bring to the table?
1) Currently based in Bangalore
2) Strong passion for running a small restaurant/cafe
2) Willingness to spend the time and effort required to make the business a successful one
3) Strong interest in cooking with some experience making Pizzas and Baking. If you are chef/cook in a restaurant/hotel currently, that would be a huge plus
4) High energy levels and an ability to convince us that you are right person for us to invest in

If you are interested in exploring this opportunity, write to me at jayanth@jlnventures.in with a small write-up on why you are interested in this opportunity (a few lines will do). If possible attach your profile/resume. 

How critical are the Interiors for a Restaurant?

Most people would agree that it is reasonably important. My assessment is that it is actually very critical – much more critical than you can imagine. Again the exact look and feel would vary depending on your concept and your price-point. The trouble with interiors is that getting a great look is very difficult and is not really dependent on the amount of money you spend. 

As an analogy, I have seen several of my friends buying an apartment for 50-60 lakhs, paying about 5-8 lakhs additional towards VAT, Service Tax, Registration, Khata etc. But most of them spend as little as possible on the interiors (say 3-4 lakhs). I have a complete contra view on this. My recommendation would be that you spend a large amount of money on interiors, because that will determine your quality of life in the house you buy. If your overall budget is 60 lakhs, you should spend about 20% of the budget (about 12 lakhs) on the interiors.

On the same note, when you are starting a restaurant, be prepared to spend atleast a reasonable amount of money on the interiors. This is what your customers will see, use and end up making an assessment of your business on. Getting the right look, feel and ambience for a restaurant without spending a lot of money is not an easy task. You will need a good interior designer who can give you ideas after understanding your concept. A lot of times, I have noticed that interior designers opt for solutions that they are comfortable with and ones they have executed in the past. Eg. Most interior designers will push for a false ceiling with lights embedded into the false ceiling. While this gives a “No Nonsense” look to the restaurant, it reduces the height of your restaurant and may make the place look smaller. Creating a great look without doing false ceilings is tougher and the final outcome is a little bit of an unknown. Similarly, on the wall paneling. Most interior designers will push for a plywood based panel with laminate covering. It is possible to create a better effect with paint on the wall – again this is tougher, the final outcome may be an unknown and getting access to the right labour may be difficult for the interior designer. If you go and see a few places that the interior designer has done already, you will notice that most of them will follow a similar pattern. Eg. One interior designer may use glass extensively, another may use laminate based panelling extensively. In my experience, pushing a interior designer out of his/her comfort zone is not easy. Whatever ideas you talk about, the final design will boil down to something that they are comfortable doing.

So to find a good interior designer who will deliver what you are expecting, you will need to go and take a look at few of the interior works the designer has completed recently. If the theme fits what you have in mind, sign up the designer.  

There are several components that are part of the Restaurant Interiors. I will use the use the next several posts to detail out each of the components:

1) Furniture - Tables & Chairs

2) Lighting Works

3) Restaurant Entry Area

4) Walls & Ceilings

5) Flooring

6) Operations Related Stuff - Cash Counter, Hostess, Waiting Area, Side Stations etc.

7) Air Conditioning

8) Kitchen Entry Area

9) Blinds/Curtains

10) Painting Works

11) Rest Room & Wash Area

Happy Deepavali

Tip Adjustment on a Credit Card Machine

If you have paid at a restaurant using your credit card, have you wondered how the tip amount which you write on the credit card payment confirmation slip gets processed?

Once the waiter gets you the bill for your meal (say Rs.840 including all taxes), you hand over your credit card to him. He then takes the card and the bill to the cashier, who swipes your credit card for the amount (Rs.840) using the Credit Card Swiping machine (generally known as the EDC Machine or Electronic Data Capture Machine). The credit card payment receipt slip looks something like this, with the swiped amount shown and with a bank space for you to write the tip amount.

Once you write the tip amount (say Rs..60), write the total (Rs.900 in this case), you leave the slip in the bill folder, take your credit card and your receipt and leave. The waiter then goes back to the cashier, hands over the slip to the cashier. The cashier than presses the "TIP ADJ" or "Tip Adjustment" button on the EDC machine. The machine asks him for the Credit Card Bill Number. Once the number is entered, the machine shows the earlier amount swiped (i.e. Rs.840) and gives an option to the enter the new amount. Once the cashier enters the new amount (Rs.900), the EDC sends this data to the bank and the customer is charged Rs.900. The earlier charge of Rs.840 gets replaced with the new amount.

While chances of fraud using the "Tip Adjustment" option are technically possible, it generally does not happen for the following 2 reasons:
1) Even if the cashier were to charge the customer, the money goes into the restaurant's bank account. So it is not Cash that becomes available right-away (If the restaurant has the practice of taking the tip amount from petty cash, then it becomes a case of cash being available readily and the chances of fraud increases to some extent).
2) If a watchful customer notices a different amount on his credit card statement and complains to the bank about an additional charge, the banks typically place the amount in a suspense account and initiate an investigation. The banks are very strict about this and the investigation process is quite painful for the merchants and requires submission of the signed credit card receipt copy alongwith other transaction details.

For a restaurant, it is prudent to check the credit card transactions once in a week/fortnight (randomly) to ensure that no fraudulent practices occur.

Tips?????

Most people leave tips for the waiters after paying for their meal at the restaurant. The tip amount varies depending on the customer, the service provided by the waiter and the overall restaurant experience. No offence here, but in India, the tip amount left by customers at most restaurants is typically very small - essentially the loose change is left behind or if it is a credit card payment, the amount is rounded off to the closest 10's or the 100's.

Tips are a very integral part of the waiter's and the restaurant staff's work lives. Think of it as a discount you get on something that you buy. Though you may be spending a 1000 bucks for the product, the 5 or 10% discount makes you feel quite happy. The tip amount that a waiter receives has almost the same effect. How do restaurants deal with tips and how does the money go the waiter?

In most restaurants in India, contrary to popular perception, the specific waiter does not pocket the tips. All the tips received are collected in a common box and a formula is used to divide the total tip amount among the waiters, the clearance boys and the cooks. Typically the amount is divided and handed out before the staff leave work at the end of the day. In some restaurants, the cashier or the restaurant manager collects the amount and then the distribution happens once a week (typically on a dull day like Monday). For credit card payments, the tip amount is noted down by the cashier and the amount is taken out from petty cash (cash kept for petty expenses) and added to the tip pool and distributed.

Over the last year, most fine-dining/premium restaurants have started including "Service Charges" in the bill - Essentially this is a forced tip ranging from 5% to 10% of the bill amount. Most of these restaurants mention this in small print on the menu. In this case, the restaurant has the accurate data on the tip amount (Service Charge) collected during the day/week/month through their billing software and distributed to the waiters based on a pre-determined formula.

A number of restaurants, especially the ones which charge customers a forced tip (service charge), deduct a portion of the total tip amount collected towards breakages (e.g. glasses, crockery etc. that invariably breaks either due to the customer's fault or due to the restaurant staff's fault while washing/carrying). This amount could range from 10-25% of the total tip amount during a period.

In the case of home delivery, the delivery boys are typically allowed to pocket the tip, as there is no easy way to track the tip amount. Plus it is generally accepted by the rest of the staff in the restaurant, that doing door delivery is a very difficult task and they are quite comfortable with the delivery boys pocketing the tips.

In most western countries, the tip amounts are quite generous (10-15% of the bill) and in most cases the respective waiter gets the tip amount in full. While it is generally perceived that the specific tip amount depends on the quality of service the waiter delivers, the tip amount range stays between 10-15% of the bill, unless the waiter has done something to upset the customers. The upside is limited.