In an interaction with Franchise India, Sunil Kallerackal speaks about the objective behind his business, the challenges faced and the technology focus required.
We were inspired by what OpenTable did in the US. So we are a business focused on solving the challenges of clients, which are the restaurants. We service around 20,000 restaurants in India connecting about 30 million consumers through our B2C and B2B engagements. At the restaurant end, we address the number one challenge and that is marketing spend by restaurants. They spend on TV, radio, print and hoarding or pamphlet, but there is no commitment on footfall. So we tell restaurants the best way to go visible.
At the restaurant end, firstly, we provide digital store front to update the content real-time so that consumers always get the latest. Second, we give them a smart listing where when they list with us they list on all the B2B sites who are partners with us like mobile companies (Samsung, Nokia), search engines, content sites, review sites, etc. Third, we help them upload their live inventions to become more visible in the market so that consumers can book their order.
Four, we help restaurants to have the ability to push the spot offer depending on their daily PNL situation. Say, if out of 30 customers who walk-in, only 10 customers have come in. In that case restaurants can push a spot offer which becomes visible by location, profile and contact and consumers can download it. Once the customer downloads the coupon, his name and number shows up on our system at the restaurant real-time.
For fine dining, we specially help restaurants in table utilisation management. Six, we let restaurants capture feedback. Lastly, we help restaurants manage their analytics in terms of utilisation – capturing he the data on the last recent users, the most frequent users, etc. That’s the depth of what we offer.
We commit to 10% increase in new business, 20% in repeat business and 30% improvement in the customer satisfaction levels, which is very critical for a brand. In a way we tell them that since they cannot afford an expensive CFO or CIO, we take over their job at a very small player. At the consumer end, we tell them that we take care of their loyalty with their restaurant because we count the number of times they have been to a restaurant, how much they have spent in a restaurant and we ask the restaurant to give them a discount. So for a consumer we are like a dining concierge at this stage that bring in experience, convenience and cost savings to consumers.
Now we are at the point of scaling up the business because we are primarily B2B. B2C we think is an organic process. But B2B is our primary business, where we enable OEMs, mobile brands, search engines, content review companies, map companies with the ability to discover contents or restaurants for their consumers per se and give them an option from their mobile sites. This allows a consumer to book which we power through backups.
So our business is all about working with B2Bs and tampering into database. We offer revenue share for each transaction. So the business model is a small subscription and we charge on, say bookings for customers for covers (Rs. 30 a cover). We have a revenue share on each transaction.
On the challenges faced and overcome
Challenges have purely been the technology adoption for us, which is slow. The fact of sheer country size and reach out and getting things going is the biggest challenge. So we are doing it organically. It is actually very simple for restaurants to do. India is still at its early stages. It is a huge industry and no one is monitising it well in terms of adding value to business.
The solution to our challenge is very clear to our minds. We focus simplify and activate a certain segment of restaurants which are mid-tier. We are helping them use our technology very well. We are working with 5-stars at the higher end and at the lower end we are giving a premium model so that they adopt us for just directory, for pushing an offer and capturing a lead. We have different products for different segments. We invest in account management so that people are using our products to adopt and discipline themselves so that they can see the benefits.
There is definite reluctance by restaurants in adopting technology. So until the owner and management feel the need for it, it has to be cascaded downwards. When they cascade it downwards and make it part of their performance criteria and when everyone understands the benefits for doing it as it is communicated, it becomes very simple to use. We also have the facility to record the call that a customer has with a restaurant; we enable a direct call or we record a call and give it to restaurants. So it is not just a technology product. We provide a voice solution, sms solution and a social marketing solution. So we present that there is much less complexity of technology usage.
On foreign players’ success in Indian markets
Most of the foreign brands come with a lot of process, history and structure. The only way to scale is to create an efficient working model and then step and repeat it. Unfortunately, in India, people scale before they have a characterised model. The second issue is high real estate costs. Food costs have gone up in 3-5 years. These two directly compound the issue for both Indian and International restaurants. Local restaurants manage better as they are stand alone or unorganised which stand at 80% today. Big companies struggle a bit because of big issues. The cost of food is 30-40% so some deviation could affect the margin. Certain things like cost of supply and rental they cannot change.
Advice to budding entrepreneurs who are entering into this field
From the restaurant industry standpoint, the two biggest costs are real estate and people. The only way to optimise that is to do a scale. So you need to put up a chain kind of a business. You need to connect with the local audience because 70% of business comes from locality. So ideally one should study their eating patterns and their favourite cuisines and overlap with that.
If you don't get 30% of the menu reordered or extend the menu adoption to 70%, most likely the customer will not come back. So it is important to connect with the consumer and overlap with the cuisines they prefer in that location. It is no point doing something because it is popular. Locality needs to be accepted; 30% business comes from outside the locality.
There is no science to marketing spend on TV, radio and hoardings and getting a direct correlation to the footfall. Restaurants cannot clearly say the performance ROI on marketing spend. So it is important for restaurants to figure out an efficient way to market locally and move on with the digital age because nowadays 100 million people in India use smart phones and Internet. So the point is how to capture these people efficiently rather than having pamphlets on the street or having the ad carried one day in the newspaper. Here there is no correlation to the direct business. So we are here to coach them on connecting to people who are adapting to social media networks and make this a very cost-effective paying model rather than spend upfront with no commitment. That is where we come to say that the ROI of marketing will not work the traditional way because there is no scale like a FMCG brand.
Indian restaurant industry is a vibrant industry and it is the third largest growing market. It is big opportunity for eco-system players, food service guys and menu engineering guys and players like us who add value to different pieces of the business service like marketing to operations. It is an exciting space and in the next 5 years we would see a 20% CAGR growth. One who handles challenges will prevail.