On the consumer side, the trend of revenge consumption is not going away soon. For Massive Restaurants, which operates brands like Farzi Café, Masala Library and Louis Burger, recovery has been slow, but it hit pre-pandemic sales numbers recently. Zorawar Kalra talks to Vaishnavi Gupta about expanding the company’s restaurant footprint to tier II cities and global markets, betting big on the cloud kitchen model, and more.
How would you recap the pandemic’s impact on your business so far?
During the time of the complete shutdown, there was no revenue; post the first lockdown, we noticed that the return of demand was a bit slow. During that time, we suffered over 50-60% revenue loss. We also closed down two restaurants last year in Mumbai due to lack of support from landlords in negotiating rents. However, post the second wave, the return of demand has been good; within a month of opening, things were looking positive for the industry. In November this year, we recorded pre-Covid sales numbers at a companywide level. In fact, a few of our markets are now performing better than they were before the pandemic. For instance, we are over 100% of pre-Covid sales in Delhi.
On the consumer side, the trend of revenge consumption is not going away soon. Consumers have also become quality conscious, and are now relying on brands they trust. They are enjoying eating out even more and are happy with small menus. Besides, we are observing huge growth in online orders as the ease of ordering good quality food has gained more traction.
Which markets will you expand your presence in, going ahead?
Currently, we operate 36 outlets of our restaurant brands Farzi Café, Made in Punjab, Younion, Masala Library, Bo-Tai and PaPaYa. We have 10 franchise outlets in the pipeline in Chennai, Kanpur, Nagpur and Gwalior. Most of these will be of Farzi Café, while the rest will be Made in Punjab and Younion. Our goal is to open at least 15 outlets every year — an equal mix of franchise owned company operated, and company owned company operated models. We aim to increase our restaurant footprint to more than 100 over the next three years.
For brands like Farzi Café and Made in Punjab, we see huge potential in tier II markets, as there are few avenues for people to enjoy and spend money. These cities offer a better profitability scenario, compared to the metros, as the occupancy costs are lower.
You started the cloud kitchen business in April, 2021, with Louis Burger and Butter Delivery. How has that taken off?
Louis Burger has become a runaway hit and is now present in four cities — Noida, Gurugram, Delhi and Mumbai. Our sales from Louis Burger’s 150 sq ft cloud kitchen is the same as that from a 4,000 sq ft restaurant. Additionally, Butter Delivery, which currently operates in Delhi, is soon going to be launched in Mumbai and Bengaluru.
Almost 50-60% of our senior management bandwidth is being devoted to building the cloud kitchen business as it is performing well for us. It’s a low-cost model with a high return on capital invested. At present, our delivery business is contributing 21-22% of our total sales, and we expect it to go up to 30% by March, 2022. We are planning to further expand our cloud kitchen business in Delhi, Gurugram, Noida, Bengaluru, Mumbai, Hyderabad and Kolkata by the end of FY22. We will be coming up with four new brands by March next year, which will follow the cloud kitchen model, starting with Biryani by Jiggs Kalra, and then a pizza brand.
How much revenue do global markets bring in? Is further expansion on cards?
Global markets contribute around 33% of our total network sales. We are present in nine countries — the UAE, Canada, the UK, and Bangladesh, among others. We see global as a huge white space as Indian cuisine is famous across the world, and yet there are no established Indian brands leveraging global markets. We plan to enter the US market with four new Farzi Café outlets by next year, and launch Masala Library in Doha, Qatar. We will also take our cloud kitchen business to international markets — Louis Burger to the Middle East, and Biryani by Jiggs Kalra to multiple destinations.
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