Why This Indian Casual Dining Chain Never saw a Single Shutdown
Buffets were always there in five-star hotels, but 'live grill' picked up as a concept with this restaurant
At a time when restaurant brands are at a rush in opening and then shutting down stores, how one brand has stood the test of time by never closing even a single store? To know the best practices of this company, which runs more than
100 stores on its own, we reached out to Kayum Dhanani, Managing Director, Barbeque Nation Hospitality.
Interestingly, Kayum was never the real owner of the brand Barbeque Nation. The story goes back to 2006, when his brother Sajid Dhanani, who ran the well-known Sayaji Hotels in Indore, once came across customers complaining of cold appetizers, during winters. He thought of experimenting by bringing ‘live grill’ on the customer’s table. Sajid was popular in Indore for doing things differently. Buffets were always there in five-star hotels, but live grill picked up as a concept. With this, it gave him the confidence of taking the concept out of the hotel and establishing it as an individual restaurant. The first one came up in Mumbai’s Pali Hills. And, soon, 18 more stores were added across the nation. However, with the sudden demise of Sajid in 2012, his brother Kayum took over Barbeque Nation and led to its growth in India and overseas.
Here are the Reasons why the Biggest Indian Casual Dining Chain Never saw a Single Shutdown
Keeping the Rent to Revenue in Control
Over the years, Barbeque Nation has become a favorite place for celebrations, that’s why you will find group tables at all outlets, rather than a table for two. With the bookings done by professionals and that too in advance, 70 per cent of their tables are always pre-booked. In fact, their rent to revenue ratio is 10 percent lower compared to other casual dining setups, as Barbeque Nation doesn’t look for a location which is most prominent. You can find an outlet in the third lane or on the third floor of a mall, instead of high streets.
Customer is King
From 20-25 per cent of tables the feedback is taken within 24 hours. It is incorporated in a text and sent to all the teams across the country. Hence, all the team members are aware of what their customers are talking about – good or bad. So within subsequent 24 hours, they have to correct their operations. According to Dhanani, “Every team member, even from faraway places like Guwahati or Jammu, can login with a password and read the message. This way, it is easier to operate.” They use their ‘Guest Satisfaction Index’ feature to
improvise their services further. If a customer is unsatisfied, from the
manager to the CEO everyone comes to know about it. In order to recover
the guest, the Regional Manager personally talks to him to understand
the problem he faced. If that doesn’t work, the CEO steps in to fix it.
Move Beyond Metros
In FY 2017-2018, the brand opened 23 stores. Till 2016, they had mostly
focused in metros and tier – 1 cities. Hence, they designed a different
model for tier III and the lower end of tier II towns. Metro stores are about
4,500 to 6,000 sq.ft, however, in the tier II and the tier III markets, they
are eager to give them the status of an anchor brand. “They offer us the
best positions in the malls and that too at a discounted rate. In the
tier II towns, rent to revenue ratio is about six- seven per cent. In absolute
percentage, the margins are quite similar. For the next five years, we will
be extremely busy consuming these markets,” shares Dhanani.
QSR Approach in Casual Dining
In Delhi, the Barbeque Nation has a central kitchen. “Products and marinades are supplied by our cold chain at the central kitchen. However, the marination and the grilling happen at the outlet kitchens. This way our dependency on the chefs has also reduced because the process doesn’t need very high-quality chefs because all they have to do is assembling and dispensing the food. It makes our supply chain more efficient, eventually helping us to expand to more
locations,” says Dhanani.
Every trade area is a different market, hence this national brand prefer to call itself as global yet local. “For an outlet to become successful, we need to have a strong idea of the trade area and which products fit in with its culture. In Lucknow, when we started off, our store was not doing very well. Initially, we were serving them the products that were popular in Mumbai. Eventually, we realized that people there don’t’ like our biriyani. To correct this, we hired a local chef who understands the local taste. And, it clicked for us,” shares Dhanani.
No Shutdown Command
As per Dhanani, Barbeque Nation didn’t close a single store in the last 12 years. “We have been successful in every store. Today, 95 per cent of our stores are profitable, only the 5 per cent which are fairly new are yet to reach profitability. At Barbeque Nation, break-even typically happens in six months and from then on, we become ‘store level’ profitable,” claims Dhanani.
For international expansion, they have set up their entire base in Dubai, shares Dhanani. They are reaching out to the Middle East and North Africa and then planning further expansions in South East Asia and North America. “We first go to a region and open one store. That’s the phase 1, this lets us understand the market and learn. In the second phase, we open three to six stores. Once the proof-of-concept is ready, we ideate a bigger expansion, like a five-year plan,” exudes Dhanani further adding, “In the Middle East, the yield from every cover is almost double. Our average cover price in India is around Rs 750. In the Middle East, it is Rs 1350. Our rent to revenue ratio is also 12 per cent. The margins
are much better. About 60-70 per cent of the middle eastern countries have no tax.” Going forward, the brand is looking at Nepal, Bangladesh, Sri Lanka and Malaysia.
(This article was first published in the June issue of Entrepreneur Magazine. To subscribe, click here)