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Jul, 26 2018

Indian restaurants have aggressive strategy to enter overseas markets

Lite Bite is opening a 150-seater Punjab Grill in Washington DC this September, and two of its other brands, Asia 7 and Street Foods, will be debuting in Dubai and other Gulf countries, including Kuwait and Jeddah.

Several Indian restaurant chains such as Lite Bite Foods, Jiggs and Zorawar Kalra’s Massive Restaurants, Sanjeev Kapoor Restaurants, RJ Corp-owned Devyani International and Barbeque Nation Hospitality are accelerating overseas expansion in the US, Dubai, London and Singapore. The reasons are attractive growth options, ease of doing business, fewer regulatory issues and higher returns on investment than back home.

“Regulations are more streamlined in these countries. We don’t need multiple clearances and licences and there is consistency in policies,” said Rohit Aggarwal, director at Lite Bite Foods. “While the dynamics of eating out are growing rapidly in India as well, overseas is a robust growth vertical.”

Lite Bite is opening a 150-seater Punjab Grill in Washington DC this September, and two of its other brands, Asia 7 and Street Foods, will be debuting in Dubai and other Gulf countries, including Kuwait and Jeddah.

Executives said this signifies that Indian chains are going more truly global in the sense that it’s not just the desi population overseas that’s driving the expansion.

“It’s easier to do business outside India on account of compliances on multiple accounts being much better, for example reporting of sales,” said celebrity chef Sanjeev Kapoor. “The downside is getting the required manpower and visas, for example. There are challenges on both sides but a distinct lack of quality Indian restaurants in many overseas markets is creating demand.”

He runs a chain of restaurant brands through Sanjeev Kapoor Restaurants Pvt Ltd (SKRPL). Of the roughly 70 stores SKRPL has, about half are overseas. He plans to expand in London, New York, Toronto and Saudi Arabia.

While Kapoor operates casual dining brand Yellow Chilli at home, SKRPL’s international restaurant brands include Khazana and Signature. “Most locations in India struggle with the paradox of developed world rentals and developing world revenues,” said National Restaurant Association of India (NRAI) president Rahul Singh.

“The returns on investment for the same brand are higher outside India. Since it’s evident that there’s global demand for Indian cuisine as its popularity caters to the diaspora, homegrown chains are leveraging that with financial and management bandwidth to invest and harness this opportunity.” Massive Restaurants announced this week that it was setting up stores in seven countries within this calendar year.

“For every two restaurants we set up in India, we will have one overseas. Our Farzi Cafe restaurant in Dubai gives three-four more times the sales than any of our restaurants in India — profitability is 50% higher, regulations are simplified and rentals are lower or at par,” said Zorawar Kalra, managing director and founder, Massive Restaurants. “In India, we are paying the same rent but getting onethird the sales, because average ticket sales and purchasing power is typically higher overseas.” Massive, which has 28 restaurants in India, has shortlisted sites in London and Qatar among other markets.

The past 12-18 months have seen the eating-out sector in India grapple with the rollback of input tax credit that has dented profitability, steep rentals, a highway ban on liquor that was imposed and then relaxed, food inflation and intermittent localised regulations such as a clampdown on rooftop restaurants. Others such as entrepreneur Ravi Jaipuria promoted Devyani International, which is the franchisee for KFC and Pizza Hut in India, made its European debut with TWG Tea, a Singapore-based, high-end tea parlour this summer.

In 2017, NRAI reported that 48% of the total amount Americans spent on food was on restaurants.

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