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Food

Fine dining: surviving takeout

Anoothi Vishal
June 19, 2020 16:13 IST
Updated: June 19, 2020 16:13 IST
Anoothi Vishal
June 19, 2020 16:13 IST
Updated: June 19, 2020 16:13 IST

DIY kits to butler service — as five-star hotels and high-end restaurants get into food delivery, they must navigate questions of quality, pricing and profits

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DIY kits to butler service — as five-star hotels and high-end restaurants get into food delivery, they must navigate questions of quality, pricing and profits

Indian Accent London, the poster boy for Indian dining internationally, has shut permanently, even as I write this — a victim of post-Covid restaurant economics. As other restaurants reopen around the world, they too are struggling. Old business calculations have fallen apart and, as lifestyles get redefined, there is a hunt for new ways of earning revenue.

In our altered world, dining-in has turned fashionable overnight. In Singapore, the Michelin Guide lists more than 25 starred establishments now offering delivery, including Odette, Asia’s reigning best — with a new ‘at-home’ menu that comes in boxes described as collectible, and commanding prices to the tune of $98 for classics such as Kampot Pepper Pigeon (for one) and $248 for Duck Apicus (for four).

Anil Chadha, COO, ITC Hotels

Anil Chadha, COO, ITC Hotels

In India, too, food delivery is seeing a move away from an emphasis on price to quality and brand. Before Covid-19, an average order value (AOV) may have been ₹300. However now, with the entry of top restaurants into the delivery business, the attention is on premium. “Consumer preference [cognisant of hygiene and safety] has changed from deep discounting and anonymous cloud kitchens to quality. Brands that were extremely low AOV are now finding it difficult to stay relevant, and even aggregators like Zomato and Swiggy have shifted their focus from deals and discounts to hygiene, family combos and health foods,” says Ishita Sudha Yashvi, co-founder of Cross Border Kitchens, which runs seven delivery brands across the NCR.

The game is being upped further by five-star hotels who want to bring in “experience”. Hotels that were initially testing the waters by offering coffee shop or limited menus are now looking at deliveries as a long-term business and thinking up ways to augment the dining-in experience to be at par with what restaurant dining used to be. “If the customer cannot come to the restaurant, the restaurant must go to the customer,” declares Anil Chadha, COO, ITC Hotels, which is set to launch gourmet deliveries from its super brands Bukhara, Dumpukht, Ottimo and others across cities. “We will be competing not on price, but on the experience. Our food is well-known, but we are also looking at things like mood lighting, butler service, chefs on call [when it becomes safer], and wine recommendations to up the dining at home experience,” he says. What seems to have bolstered hopes is a recently-concluded, four-day biryani festival across outlets, where, according to some accounts, 900 biryanis costing upwards of ₹1,700 were sold.

Chicken and Olive Panini from ITC Maurya

Chicken and Olive Panini from ITC Maurya

Banking on quality

That Covid-19 has accelerated the delivery business’ shift to a more premium space is indisputable. In fact, both Swiggy and Zomato are working on fleshing out their premium segments. “Restaurants that were earlier focussed on dine-in are now working to build similar delivery experiences for their customers. We believe such offerings will help us render premium food experiences,” said a spokesperson at Zomato, that has tied up with hotel chains like Hilton, Marriott and Hyatt. Swiggy, meanwhile, has a nationwide tie-up with ITC restaurants.

But the big question is how feasible is it for restaurants to get into the delivery business? Can they ever look at making the kind of revenues they once did from dine out, pressing their staff and kitchens to a newer dynamic? “I am treating these two as completely separate businesses,” says chef and restaurateur Ritu Dalmia, who has no plans to open her restaurants till air conditioning, alcohol and extended hours of operating are permitted. But she has launched Diva Casa — DIY kits with a limited menu — for which the cooking and delivery is being done from her base kitchen in Delhi.

Ritu Dalmia of Diva Casa

Ritu Dalmia of Diva Casa

Dalmia lists many reasons why delivery is not as lucrative as restaurateurs may be assuming. “My daily sanitisation cost is ₹7,000, then there is the delivery — we are sending our own staff in cars with full PPE gear. If we pay 20% commissions to aggregator apps, we will be in losses,” she says. Despite Diva Casa doing well (and functioning out of a space where the rent is lower than restaurant rents), it is just about breaking even. “I am making no money. All I am getting is keeping the brand Diva alive and the system oiled till we can figure out better ways of augmenting business,” she adds.

Shift from red to black

Restaurant economics work differently from deliveries. For a well-run, 1,000 sq ft, 50-cover restaurant, revenue can be estimated as ₹35-₹40 lakh per month. A good delivery brand in just one location, on the other hand, can expect to do only about ₹8-₹10 lakh — which can perhaps be pushed by another ₹2-₹3 lakh, even though the market is already getting cluttered and competitive.

“Brands have become important. Yet even well-loved restaurants have been able to do just one-third of the business that they did from dine out,” says Saransh Goila of Mumbai’s Goila Butter Chicken, who says that the business works on scale and only when you have multiple outlets.

Delivering change

    A single restaurant operating at 30%-40% of its earlier capacity in a socially-isolated world will find it tough to make up for revenue loss even if it adds deliveries to its model. One-third of the business can come from the latter, one third from restaurant operations, but there is still a substantial chunk missing. Given that even exceptional restaurants earlier brought in just about 10%-15% profits, deliveries cannot make the red black.

    There is also the question of price. While a brand can command a premium from its loyal customers, repeat customers are generally estimated at just about 30%-40%. The rest are influenced by factors such as competitive pricing and easy access. Something that restaurateur Gauri Devidayal of The Table and (home delivery-only brand) Iktara agrees on. “In the early days of lockdown, when fewer delivery options were available, I thought of ordering pizza from a five star, but then decided that ₹2,000 for a pizza was just not worth it,” she says.

    In many ways, the delivery business is an equaliser. Hotelier Tanveer Kwatra of Andaaz hotel points out how many hotels started off with high-priced menus and soon realised there were few takers after the initial period. To get more people, prices need to be competitive, he says, something he did with the Annamaya menu.

    Ultimately, the balance everyone is seeking is how to give that ‘experience’ at home while remaining competitive, quality-conscious, and trustworthy.

    Anoothi Vishal is the author of the book, Business on a Platter: What Makes Restaurants Sizzle or Fizzle Out.

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    Printable version | May 18, 2022 2:09:12 pm | https://www.thehindu.com/life-and-style/food/fine-dining-surviving-takeout/article31869083.ece

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