‘We are doubling down on our cloud-kitchen brands’
October 6, 2020
While the nationwide lockdown hit India’s eating-out segment, forcing several casual dining outlets to shut shop, Impresario Handmade Restaurants, which runs the popular Social and Smoke House Deli, was quick to pivot to home deliveries, and is now set to launch its first covid-ready outlet. Riyaaz Amlani, CEO and managing director, Impresario, is certain that diners will come back to celebrate milestone occasions and to socialize, but admits that the next few months will be tricky. Edited excerpts from an interview:
With several states allowing restaurants to resume operations and serve liquor, how are dine-in sales shaping up?
Tier-2 towns have been really great in the bounce back. In the first month, business was at about 50%. It’s still early days, we still have to go through that 2-3-month period where we will have to normalize dining out again. Chandigarh started off with 50%, Delhi started off with 30-35%, Bengaluru was at 25-30%. Each day, each week, we’re seeing these numbers climbing up slowly and surely. For Smoke House, we have seen a greater comeback in some markets.
Impresario has opened two new Social outlets with partitions. Is that the future of eating out?
I don’t know if this is going to be like this forever. Yes, for the foreseeable future, people will be careful. I think for a very long time people are going to come into spaces to enjoy the vibe, but to be among people that they trust and know. This kind of creative partitions is a fun way of making sure that people have a good time. We just launched Dwarka Social (Delhi), Elante Social in Chandigarh and we have one more coming up in Thane.
Will you expand in these times of uncertainty?
We will be creating more stores, it is not like we are slowing down, but we are going to wait for a while till we press the button on new stores. There are a lot of opportunities presenting themselves in tier-2 towns, which we will be taking up. Our plans are not fully crystallized but we know the direction. For now, we are taking Social to Indore in November; we are also doubling down on cloud-kitchen brands and we are trying to increase the share of our delivery business.
What formats are doing well?
We have seen an exponential growth in brands that people trust. For Social and Smoke House Deli, we have seen delivery business go up by 200% and, in some cases, even 300% (of pre-covid levels).
Our cloud kitchens saw a little bit of a drop, because trust is a major factor when people order. Delivery or direct-to-customer is definitely becoming a big component of how we consume. And it is not just about restaurants and food deliveries, but about all businesses. Customers are getting used to going directly to a brand’s digital store front and ordering directly from there. This is coupled with the fact that there are also third-party delivery solutions such as Delhivery, Dunzo and Shadowfax. Customers will start ordering directly from brands they trust and are comfortable with, and not go through aggregators.
Once business resumes fully, how will delivery perform?
Definitely about 10-15% (of total business). Dine-in is not competing with delivery. There might be a certain degree of cannibalization, maybe 5-6%. But overall, there’s a whole new customer base.
Do you expect consolidation in the industry?
Right now, everybody’s waiting and watching, nobody’s rushing into anything. But it’s also a really great time because right now is where the opportunities are. Debt as well as equity is a little restricted in the restaurant business. On the back of a strong recovery, we feel a lot of savvy investors will see the opportunity. For a very long time, consolidation within this space was required and it is definitely on the cards.
Will you participate in this consolidation?
We are trying to put together something, and looking to put together a consolidated play. There will definitely be mergers and acquisitions. Hopefully, (we) will be involved in some way.
What are your demands from the government?
Now more than ever we will need the government’s help. Financial costs are mounting, and we are operating under 50% due to social distancing norms. It is going to be challenging bringing customer confidence back, and de-stigmatizing dining out. We are urging the government to extend credit facilities (for restaurants). We are lobbying very strongly to allow input tax credit (under GST) for restaurants. We are also asking for loan restructuring and moratoriums.