Foodservice includes the following formats.
- express counters
- food stalls
- ice-cream parlours
- fast-food joints
- casual and fine dines
- juice bars
The organized players are the following and their presence is shown in the table below:
|Retailer||No of outlets||No of cities|
|Yum! Restaurants India||507||50|
|Cafe Coffee Day||1350||185|
|McDonalds – North||130||32|
|McDonalds – West||140||13|
|Mad Over Donuts||38||4|
|Lite Bite Foods||65||7|
While global biggies, like McDonalds, KFC, Subway have entered India in a big way, there have been desi startups, who jumped into the bandwagon as well. Global biggies have modified western menu to accommodate Indian palette – KFC selling vegetarian products, pizzasselling tandoori variants etc. I will cover the journey of Jumboking (Vada pav), Subway, Mast Kalandar, Faasos (next post) etc and lessons one can draw from them based on their own account at Startup Saturday Bangalore and Startup Summit 2013 Mumbai edition by Franchise India.
Dheeraj Gupta is a 2nd generation entrepreneur based in Mumbai, who set out to start a vada pav chain in 1998. He was inspired by Mcdonalds: Behind the arches book, esp how they started a new price point of burger. He made a visit to UK to learn the nuances of fast food, chain business. He stayed with a Burger Chain franchise owner during his stay and even worked in a Mcdonalds for 10 days – talk about dedication! The vada pav market, mostly unorganized is Rs.20Cr per day in Mumbai and Thane alone. That translates to 7,300 Cr per annum!! He priced it at Rs.5 against street food price of Rs.2. He signed up Bharat Petroleum, HP, IRCTC in 2007 for setting these at their premises. [If any reader has spotted them at these, please provide it’s address, photo in comment or email prasoon DOT kumar AT gmail DOT com]. Jumbo King has 38 outlets in Mumbai and Thane (20 self-owned and 18 franchises). This compared to 20,000 vada pav stalls is only about 2% marketshare of the business in Mumbai.
Another great promising QSR is North Indian food serving joint, Mast Kalandar. Pallavi Gupta is co-founder and COO of the company. She worked in IT company as business analyst in Bangalore and abroad with long hours and would live on pizza. Her husband, Gaurav Jain was in sales function at IT company as well. They came up with an idea that even hot and piping paratha should come in a box. They started their first outlet in Bennarghatta Rd in 2004. Next outlet was started in Indiranagar. By 2008, they had 8 outlets and VC started showing interest. Post 1st round of funding chaos ensued and things did not go as planned. They were able to grow from 7 to 11 from that instead of the target of 30. By 2011, they had 25 branches, growing to 40 in 2012. As of July 2014, they have 47 branches in Bangalore, 7 branches in Chennai, 2 in Hyderabad and 5 in Pune.
Within the Rs 8000-crore organised eating out market in India, QSRs are witnessing the fastest growth of nearly 25% annually. Key reasons for this growth include a high number of nuclear families and urban migrant population, a growing preference for vegetarian food, especially, North Indian and a spike in the number of people “eating out”. We have seen Ammi’s biryani and Box8 (earlier Poncho) getting funded as well.
[Update: 24/Apr/2013] Restaurants and hotels across India will remain shut on April 29 in response to a call by the Hotels and Restaurants Association of India (HRAI) to protest against the new service tax by the central government.
Eating at AC restaurants like Speciality Group‘s Mainland China etc got dearer – [ref: Dine and While], as they are increasing prices by 5-10%. The ‘Indian Restaurant Report 2012′ released by Franchise India last month estimated the current market of Indian restaurant industry at Rs 75,000 crore and forecast it to reach Rs 1,37,000 crore in 2015, growing 17 per cent a year. But the last two quarters have seen growth slowing down on account of cautious consumer sentiment, with brands such as Jubilant FoodWorks’ Domino’s Pizza and McDonald’s reporting lower same-store sales than last year.
Further to Revenue Department’s bringing such restaurant under Service Tax as of CBEC circular 2 years ago in Feb, 2011, the service tax was increased. According to new fare, the calculation needs to be done as follows:
|MEAL||Rs. 5,000||Rs. 5,000.00|
|SERVICE CHARGE||10% on food bill||Rs. 500.00|
|SERVICE TAX||4.95% on food cost + service charge||Rs. 272.25|
|VAT||12.5% on food cost + service charge||Rs. 687.50|
|You pay a maximum tax of||29.19%|
The levy is usually 5-10%, although there is no minimum or maximum. The restaurant can decide the rate as per a February 28, 2011 circular. The amount raised is to be shared among staff. For instance, Sea Lounge at the Taj Mahal Palace doesn’t levy a service charge. If Service Charge is included, you need not include tip. Many patrons overlook this and end up paying twice. So, it is nice of Barbeque Nation Andheri West to put up this notice.
All restaurants don’t necessarily show it on t he bill.
VAT, Cess and Charity
These are other components.
I am reproducing 2011 circular as it relates to restaurant:
1. Services provided by a restaurant
Restaurants provide a number of services normally in combination with the meal and/or beverage for a consolidated charge. These services relate to the use of restaurant space and furniture, air conditioning, well-trained waiters, linen, cutlery and crockery, music, live or otherwise, or a dance floor. The customer also has the benefit of personalized service by indicating his preference for certain ingredients e.g. salt, chilies, onion, garlic or oil. The extent and quality of services available in a restaurant is directly reflected in the margin charged over the direct costs. It is thus not uncommon to notice even packaged products being sold at prices far in excess of the MRP.
In certain restaurants the owners get into revenue-sharing arrangements with another person, who takes the responsibility of preparation of food, with his own materials and ingredients, while the owner takes responsibility for making the space available, its decoration, furniture, cutlery, crockery and music etc. The total bill, which is composite, is shared between the two parties in terms of the contract. Here the consideration for services provided by the restaurants is more clearly demarcated.
Another arrangement is whereby the restaurant separates a certain portion of the bill as service charge. This amount is meant to be shared amongst the staff who attend the customers. Though this amount is exclusively for the services it does not represent the full of value of all services rendered by the restaurants.
The new levy is directed at services provided by high-end restaurants that are air-conditioned and have license to serve liquor. Such restaurants provide conditions and ambience in a manner that service provided may assume predominance over the food in many situations. It should not be confused with mere sale of food at any eating house, where such services are materially absent or so minimal that it will be difficult to establish that any service in any meaningful way is being provided.
It is not necessary that the facility of air-conditioning is available round the year. If the facility is available at any time during the financial year the conditions for the levy shall be met.
The levy is intended to be confined to the value of services contained in the composite contract and shall not cover either the meal portion in the composite contract or mere sale of food by way of pick-up or home delivery, as also goods sold at MRP.
Finance Minister has announced in his budget speech 70% abatement on this service, which is, inter-alia, meant to separate such portion of the bill as relates to the deemed sale of meals and beverages. The relevant notification will be issued when the levy is operationalized after the enactment of the Finance Bill.
Justdial is India’s leading local search engine. It has quietly forayed into Food Home Delivery business by tying up with some restaurants. It is entering crowded market with national players like JustEat, Foodpanda, bookurtable and a few local players like Titbit, TastyKhana, DeliveryChef, FoodKaMood (now a part of Titbit). Another player in restaurant menu business is Zomato, but they don’t do home delivery. I had written my 3 features wishlist for them earlier.
Justdial Restaurants Page is just a static page with links to Justdial’s main site. While Restaurants Vertical on the homepage is a shortcut to Restaurant search. They have a tie-up with bookurtable for table reservation at restaurants. Interestingly, bookurtable has quietly introduced Food home Delivery themselves, so let us see how long the partnership with Justdial lasts, as they are now direct competitors. [Update: Looks like the tie-up is no longer in place, as I could not find a restaurant with bookurtable link on Justdial’s site.]
Here is some praise for restaurant search of Justdial:
Ok after some real-life search for quality restaurant, Justdial wins! Rest (Burp, Zomato etc.) is really pathetic…Wdyt? #food
— Baskar Ganapathy (@BaskarG) January 18, 2013
How it works
You Search For A Restaurant
You will find an Order Food icon prominently below SMS/Email button. There is old Menu link at the left.
Area of Delivery and Time Selection
You are presented with text menu for such restaurants, unlike scanned copy for other restaurants. When clicking on plus icon next to your desired dish, you are presented with the following screen.
It shows areas, where the restaurant delivers. When you start typing, a different set of areas appear.
If the restaurant delivers to the area selected, Proceed button is activated. Else, an error message is thrown.
You can select addons, if available and even add customizations.
You can login with your Justdial credentials or as a guest. There is a verification code on mobile, which you need to enter.
Thereafter, order summary is neatly show and you need to confirm the order. Once you receive the food, you pay the delivery boy. Restaurant then pays Justdial their commission.
All in all, this is a really significant move by Justdial in the local search space. Probably, this is the first time, Justdial is moving from a lead-based model to transactions. The interface is fresh and convenient. The old Menu icon at the left bottom on the search listing page, as shown in the first screen should be different, as that icon is now associated with jpeg images of menu of restaurants, which Justdial used to show. This will help them in doing SEO for restaurants on food items. They will need to add options like online payment, loyalty program and increase restaurant coverage with their vast presence to differentiate from the competitors. Other players like Getit have integration with Bookurtable for table booking, not for home delivery.