Strategy

Standing out

Setting up standalone restaurants in hotel premises is gaining prominence as a business proposition. Sanjeev Bhar finds out what will make this strategy a win-win situation for both parties

Today, food means big business, especially so with the growth of standalone restaurants. While they have made their presence in many retail outlets, fine dines in hotels is a different story altogether. Here the prices tend to be exorbitantly high in comparison to standalones and run on high operational costs. In India, the market brand equity has always been attached to restaurants - the specialty ones - in hotels.

A standalone restaurant inside a hotel premise might come in picture of franchise or renting out space to a brand for restaurant operation, new trends that are slowly catching the attention of Indian hotels. They are imbibing standalone restaurants (QSRs or fine dines) which are providing a distinct identity to it. Manju Sharma, director (Operations & Finance) at Jaypee Group feels, "Restaurants are increasingly having a strong brand presence within hotels and thereby imparting key prominence to hotels."

Branding of a restaurant within a hotel is not a new concept; the likes of Bukhara in ITC Maurya and The Great Kabab Factory (TGKF, owned by AB Hotels) in Radisson have made their mark. But it is difficult for every hotel to replicate this success. However, a good option would be for a hotel to have a branded standalone restaurant, which could also be found at another hotel within the city, thereby removing any traces of the exclusivity tag. Hotels are slowly realising that giving away spaces for specialty fine dines which are doing well is a good option to reduce their operational costs, especially those hotels whose forte might not be F&B.

What's the flavour

Good restaurant brands attract in-house guests and space is therefore being offered by some leading hotels for restaurants on lease. Le Meridien Bangalore recently advertised 2,762 sq ft of split level restaurant/lounge space for lounge bar/Indian cuisine. Vijay Gollarahalli, its GM and director (Development) remarks, "It is not new for us. We have been practicing this concept for over two decades and want high-end restaurant chains to be part of our hotel." This synergistic approach is already visible in the tea/coffee kiosks segment.

Recently, Radisson Hotel's TGKF had an international tie-up with Jawad Group that would manage the restaurant in Bahrain, Dubai, Sharjah, Qatar and Oman. According to the group GM, R. Ramkrishnan, "Five-star hotels are a perfect location for a restaurant like TGKF and we would be looking forward to such possibilities in future in the Gulf Cooperation Council (GCC) region." Anjan Chatterjee of Speciality Restaurants which operates restaurant chains like Mainland China and Oh Calcutta avers, "There are a number of NOCs and licenses required for establishing standalone restaurants. Therefore, hotels are a perfect venue for such restaurants. The trend of leasing out F&B spaces to standalone restaurant operators is very practical for a hotel operator in more than one way."

Service outsourcing has already started with basic F&B products like cookies and breads. Perhaps it will ultimately grow into sourcing pre-packaged ready-to-eat food stuff. Chatterjee says, "Some of the five-star properties might even decide to have small luxury dining run by world-famous chefs on a franchise basis. This trend will only become stronger, particularly in two- to three-star category hotels."

Standalone v/s hotel restaurants

Standalone restaurants often tend to have a good mind recall with customers. However, fine dines at hotels are usually associated with the hotel and sometimes even overtake the property's own branded restaurants. It is also true that the number of popular restaurants found in hotels are easily outnumbered by standalones. The extensive choice the latter offers also contribute to its success. Yet, running a standalone is said to be more difficult; it is a separate entity and has to go through a lot of research in terms of location, licenses, etc.

Ultimately, both have their own pros and cons. Chef Shivananda Kain of Old World Hospitality is of the opinion that specialty standalone restaurants command a different sort of respect. "They are more approachable to guests and people relate to it easily," he adds. So a marriage between a standalone restaurant and a hotel needs to be seen on a larger canvas.

One of the reasons why diners visit a standalone restaurant is for the kind of choice they offer. Executive Chef Sudipto Bhattacharya of Radisson New Delhi opines, "They are conventionally driven by chefs and follow a price-sensitive strategy when it comes to the menu. Hence, the way fine dines would operate as standalone properties are essentially a contrast to hotel restaurants. I personally feel that the concept of fine dine standalone restaurants selling themselves in a hotel property would be lucrative for both parties. But it will be some time before we see this become a successful business module."

The plus point that actually favours this model of business is the cost factor. Kain says, "There are numerous costs associated with a restaurant operation. For a hotel to get a restaurant and simultaneously being assured of a pre-determined revenue earning every month (through leasing space) is going to be a sure blessing. The Ashok Hotel offers authentic south Indian food through Sagar Ratna Restaurant, which is a big revenue grosser considering its sale vis-à-vis some of the best known fine dines." But there are a few who feel that this phenomenon will be restricted to budget hotels as big chains would never want to dilute their brand with standalones at the same premise.

Either way it is clear that the boom in this sector is giving rise to a new face of institutional consumerism. How this strategic tie-up between hotels and standalone brandings will move ahead into making this a successful business strategy, only time will tell.