Today if you are in a restaurant business and you want to raise a large amount, it is not the place to be in. There is no easy way or the short cuts in the restaurant business. You have to start a restaurant that works because unit economics is very important in this space. The changing habit of eating out of Indian consumers backed by an over experience and indulgence has encouraged Indian entrepreneurs to take this space whole heartedly. We have seen blood bath of investments flowing in the space in last 2-3 years. Not only Indian investment firms but also global giant like Everstone Capital, CX Partners, Goldman Sachs and Samara Capital are not only making investment but also acquiring stakes in this space. “Restaurants in India have become an exciting space when it comes to being there. There is lots of noise happening in financing, innovations and also collaboration,” shares Anadi Charan Sahu, General Manager & Regional Head, SIDBI Bengaluru Region.
Catering to the specific region most of these players have posted consistent, rationale growth having a strong business model in whatever they operate attracting the investors to put substantial investment in them. According to NRAI food service report, geographical limitations have ensured the persistence of a gap in terms of creating the right brand pull which is reflected by the total footfalls at these outlets. Scaling operations will allow players a wide exposure to larger markets, and help them attain economies of scale. “Whatever you do today you require money which is acts as Vitamin M and without which your innovation, your technology, your dream will not come to picture,” adds Sahu who believes that with lack of guidance and resource available young crowd is unable to realise their talent because of the lack of finance. And, hence, one needs to create an enabling ecosystem to get this going.
Given the entry of a large number of players and in food business across categories staring from restaurants, food suppliers, food tech to a food truck model, the competition has become intense which has forced restaurants and food companies to offer huge discounts and loyalty offers to get the customers. As a result, we have seen many players shutting their doors or closing their operations size and city.
“Food business is one such business where in first three months of operation if the break even and profitability is not there it is very likely that you will probably not reach there. It could be that the concept is wrong or the location wrong. You need to make sure that the first unit you are setting works well. This business is all about passion, doing things properly and waiting for the right things to happen over a period of time,” points Srikanth Narasimhan, Founder & Director, Veda Corporate Advisors Pvt. Ltd.
Though, we have seen a slowdown in the capital flow a lot of investors is becoming cautious in terms of investments. Today, investors are looking at brands which are giving them quick return with high on profitability. So, with cash flowing in easily there is lots of opportunity for start-ups and amateurs to try hand in the food business.