Prudent investment metrics back PE’s thinking in grabbing pieces of the
Rs 1,00,000 crore Indian restaurant industry. The industry is growing at
a brisk 20 per cent a year. But, only about one-seventh of the industry
is organised, says Technopak Advisors. And even some of that suffers
from a hangover of its unorganised past, where cash deals were the norm,
where contracts were a matter of spoken word and where much pivoted
around the promoter.It was in this complex concoction that restaurant promoters and PE shook
hands. Promoters wanted PE capital to grow. And PE came in with the
understanding that the path to that growth flowed through processes,
standardisation and corporatisation — essentially, organising the
unorganised. A critical factor in this transition is promoter buying.“The promoters should continue to run the business and help
‘institutionalise’ it, from a promoterdriven company to a process-driven
one,” says Ashish Bharadia, senior consultant at Mahajan & Aibara
Consulting, a management consultancy specialising in hospitality and
real estate. “The F&B (food and beverages) business is highly prone
to leakages and wastages. Therefore, in the absence of ‘promoter at the cash counter’, adequate
systems need to be in place.” At both Sagar Ratna and Adiga’s, even as
PE started improving systems, their relations with the minority
promoters began to deteriorate.
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