Amit Bagaria's Blog

India’s Next PM Likes Chicken

This is THE FOURTH PART OF ‘YESTERDAY ONCE MORE’ – A series of stories initiated by Images Retail about successful local OR REGIONAL retailers spread across urban India, who continue to expand and grow despite tough competition from national and international retailers.

RAHUL MEETS RAHUL

India’s crown prince (or should I say the country’s next prime minister?) Rahul Gandhi recently enjoyed chicken 65, chicken kathi rolls and crunchy chicken at the legendary Aryan restaurant opposite the Uttar Pradesh Governor House on Lucknow’s M. G. Marg, in the state capital’s well known Hazratganj area.  When Aryan’s owner Rahul Khanna tried to convince his namesake that the lunch was on the house, the young Gandhi insisted on paying in full.  Gandhi even chatted with some young ladies attending a birthday party at Aryan and posed for photographs with them. “He (Gandhi) is a very decent man,” comments Khanna.

Rahul Gandhi is not the only celeb to have dined at Aryan.  The list includes film writer-director Shyam Benegal, ghazal singer Jagjit Singh, actor Vivek Oberoi and recipe book author Tarla Dalal.

Coming from a family in the institutional catering business, Rahul (Khanna, not Gandhi) started his first restaurant when he was only 29, back in 2001.  The catering business continues to thrive and parent company Yash Foods even caters to the Chief Minister of Uttar Pradesh.  I’m wondering if Rahul Gandhi would have still dined at Aryan if he knew Mayawati eats the same food.

Today, there are nine Aryan restaurants, eight in Lucknow and one in Allahabad.  The tenth – a restobar under a new brand name “ZINNG” – will open early next year, coinciding with the chain’s tenth anniversary.

The second and third Aryan restaurants both opened in 2004, the fourth in 2005, fifth in 2006, sixth in 2007, seventh in 2009 and the last two (a pure vegetarian restaurant and the one at Allahabad) this year.  Put together, the nine restaurants have a seating capacity of 720, plus additional banqueting space for 600 people. Zinng will have 120 seats.  The original restaurant on M. G. Marg still remains the group’s flagship, with 150 seating and banqueting capacity (under the name of “Essence”) for up to 500 people. While all eight restaurants at Lucknow are company operated, the newest one at Allahabad is franchisee run and is located in a mall.

Aryan does home delivery throughout Lucknow city. That should not be difficult, considering it has eight locations to cater from. Annual turnover this year will cross `18 crores, excluding the franchised restaurant at Allahabad, which will do almost `3 crores of business. The ABVs in Aryan’s QSR formats is `90, while it touches `200 in the casual dining formats.

Apart from the restobar, 2011 will also see the opening of franchised restaurants at Varanasi and Gorakhpur.  Next on the agenda is Agra, followed by ……  hold your breath …… London. Yes, Khanna is seriously working with London’s official FDI agency “Think London” to open a restaurant in the city’s well-known upscale West End area, which includes Mayfair, Park Lane, Oxford Street, Regent Street and Bond Street, the most expensive properties in the board game Monopoly. At Lucknow, a Chinese restaurant will also open very soon.

The multi-cuisine Aryan restaurants already serve Chinese food, apart from North Indian and South Indian.  Someone on the website TripAdvisor complains about the restaurant not serving Lucknowi food. Lucknow resident Sonal Gidugu says, “This is the best restaurant in the city. Whenever I have to go out for dinner with relatives, Aryans is the most preferred. You get a very pleasing ambience with good music.”  Loyal customer Asha Adlakha adds, “I cannot remember the number of times I had lunch or dinner at Aryans. It’s a perfect place for birthday parties and also for family get togethers.” Kapil Bansal, who was raised at Lucknow and nor lives in Bangalore calls Aryan “a fusion between a Nirula’s and Shanti Sagar, with pretty decent food and consistent quality.”

Even though Rahul Khanna was born in Kanpur, this neighbouring city is not on his radar, because “it has people of much lower income levels.”  Hmm…I wonder when the Gandhi scion is scheduled to dine next at Kanpur?

In the next five years, Khanna expects to have 20-25 restaurants, mostly spread throughout Uttar Pradesh. Delhi is not on his radar, “as it is overcrowded”. He is also considering larger banqueting facilities, starting a packed food business and even a foray into 4-star hotels.  Younger brother Ruchir also helps him run the business.

Even 12 restaurants for a local restaurant chain is certainly impressive. While international F&B chains such as McDonald’s (160+), KFC (100+), Domino’s Pizza (300+), Pizza Hut (140+) and Subway (180+) have all opened more than 100 outlets each in India, no Indian chain has managed to reach even 75.  Blue Foods has less than 70 outlets, Nirula’s has <60 (excluding ice cream kiosks and pastry shops), BJN <40, Mainland China <30 and Haldiram’s <25.  McDonald’s, KFC, Pizza Hut, Domino’s Pizza, Café Coffee Day and Barista are all present in Lucknow.  Costa Coffee, Nirula’s and Blue Foods opened outlets but had to shut them down due to low performance.

Khanna is not impressed with the international chains. “McDonald’s, Pizza Hut and KFC are assembly lines – they do not manufacture food like we do, as Indian food is always made-to-order,” he says.  He claims that while his M. G. Marg outlet does annual business of more than `3.5 crores, the neighbouring Pizza Hut is struggling at less than `1.5 crores.  His inspiration originally came from Nirula’s and now he is learning from Haldiram’s.

I’m looking forward to dining at Aryan whenever I visit Lucknow next – who knows, I may even bump into Sonia Gandhi there.

KANPUR IS NOT A BAD MARKET

Even if Rahul Khanna of Aryan thinks that his birthplace Kanpur does not have good market potential, Kanpur-based Raj Ratan is experiencing a monthly ATD of almost `3500 psf in one of its stores. This is more than four times the ATD of Westside or Pantaloons.

Apparel retailer Raj Ratan has four stores at Kanpur and one at Lucknow.  The first (and at 10,000 square feet, the largest) opened at Nayaganj in 1999.  The family was already in the womenswear wholesale business, which was started by Ratan Chand Khatri back in 1964.  Other businesses of the group include real estate, BPO, castings, healthcare and a club.

The second store opened five years later in the city’s posh Swaroop Nagar area.  A third opened in 2006 at P. Road, followed by a fourth in Lucknow (on the Kanpur highway) in 2008 and a fifth in Kanpur’s Lal bangle area in 2009.  The chain expects to close this year with a topline of `100 crores from 37,000 square feet of total retail trading area, giving them a monthly ATD of `2250 psf.

Expansion plans include several more company operated stores in Lucknow, as well as new places such as Varanasi, Allahabad, Gorakhpur and Rae Bareli.  Raj Ratan expects to be a 20-25 store chain in 5-6 years.  They are not interested in franchising and do not believe in malls. “We like to be apart (away) from the market,” says CEO Preet Singh. When I informed them that Tamil Nadu based retailer RMKV does more than `10 crores of monthly business from its 55,000 square feet anchor store at Brookefields Plaza mall in Coimbatore, Singh and his boss Raj Kumar Khatri (Director of Raj Ratan), did not seem to be too impressed.

In fact, neither Khatri nor Singh were aware of the fact that local/regional retailers in the South have single stores as large as 125,000 square feet.  “Ours is the largest store in Kanpur,” was Khatri’s response. Singh expressed surprise and commented that he would visit the South with his team to see these stores and study the South Indian market.

In this context, the Images initiative of organizing Regional Retailers Conclaves at the IRF and the Images Regional Summits needs to be applauded, as it will give much needed exposure to local retailers based at cities such as Kanpur and Guwahati, who seem to be disconnected with what is happening around India. Asipac is happy to be associated with these conclaves.

While Raj Ratan started and grew primarily as a womenswear store, men’s apparel now comprises 30% of the business. “Men used to come with women to buy sarees, so we thought we should convert ourselves to a family shop,” says Singh.

Sarees comprises 42% of the total business, while salwar-suits and lehengas make up the balance 28%.  Their saree offerings include cottons, silks, crepe-de-chines, chiffons, Benarsis and Kanjeevarams.  Frequent customer Beena Batra says, “They have the best variety in sarees at Kanpur. I generally shop there for myself and my daughter and have also recommended others for purchasing sarees and suits for various occasions.”

Khatri is proud of the fact that Raj Ratan treats all customers equally and that his shops are “fixed price shops” whereas other Kanpur retailers have huge and never ending negotiations.  Well, that is the first step towards becoming an organized retailer.

LORD SHIVA ON MONDAYS, HANUMAN ON TUESDAYS AND SATURDAYS

Standing on the western bank of India’s holiest river Ganges, Varanasi is the oldest surviving city of the world and the cultural capital of India. Deen Dayal Jalan started wholesale apparel trading business there in 1974. In 25 years, the business was flourishing, with 4000 regular customers and almost 6000 ad-hoc customers.

That prompted his son Krishna Kumar Jalan to start a 4000 square feet retail store in 1999, under the name Jalans at Gyanvapi, close to the famous Kashi Vishwanath Mandir (Shiva temple). This 4000 square feet store does annual business of `30 crores, with a monthly ATD of a whopping `6250 psf. Sales here are highest on Mondays, the day most devotees/pilgrims visit the Vishwanath temple.

Six years later, in 2005, the second store – a much larger one at 25,000 square feet – opened opposite the Sri Satyanarayan Tulsi Manas Mandir, at Durgakund.   This store does annual business of `60 crores, with a 30% y-o-y growth. Here, sales are highest on Tuesdays and Saturdays, due to its proximity to the Sankat Mochan Mandir (Hanuman temple).  This flagship store also has an economically priced Indian fast food restaurant.

Another four years later, in 2009, a small 2200 square feet store was set up half a kilometre from the first store at Gyanvapi.  This year, the fourth store opened at Kuccheri.  This 18,000 square feet store will also soon have a restaurant.

The three locations (Gyanvapi has two stores) of Jalans form a triangle in Varanasi.  The four stores together do an annual business of `150 crores, with a monthly ATD of a whopping `2550 psf.  Next year, Jalans will open their fifth store at Allahabad.  In the next five years, they expect to have 8-10 stores, with a turnover of more than `300 crores.

Three years ago, Krishna Kumar Jalan had sent his son Bhagirath Jalan for training at Future Group (he knows Kishore Biyani very well).  Young Bhagirath worked under Future Group Director Damodar Mall for one year, and returned in November 2008 to join the family business.

“This experience gave me confidence to expand the business and to add categories,” says Bhagirath.  He quickly converted the Durgakund flagship store from a 100% apparel store to a department store format, adding categories such as footwear, cosmetics, mobile phones, cameras, watches and fashion jewellery. The Kuccheri store was started as a department store.  Jalans sells over 450 pairs of footwear per day across its stores.

Jalans customer Anju Taneja says, “Shopping at Jalans is surely value for money and this is one of the very few stores where you get products of all ranges. I generally shop there for clothes. This is the best department store in Varanasi.”

Apparel still constitutes 85% of Jalans business, with sarees accounting for 40% of that 85%. The range starts from a saree with blouse piece for only `65/- to a lehenga for as much as `30,000/-.  The price range is displayed through shelf talkers, so that customers do not get embarrassed in asking for products within a price range. Winter wear is amongst the fastest growth categories.

Compared with the people at Raj Ratan in Kanpur, Bhagirath Jalan is much more aware of similar retailers around the country.  He visits Chennai every year to see the T Nagar market there. “It’s a very good place to learn retailing,” he says, “the retail stores there get customers from across the region and customers are very loyal to the retailers in South India.”

Today, Bhagirath runs the retail business, while his father and uncle run the wholesale business. The training under Damodar Mall seems to have had another effect on young Jalan – he wants to add supermarkets adjacent to his two large stores. He is also working on professionalizing the organization. “We need to change mindsets,” says Bhagirath, “1-2 stores can be run by family members, a chain has to be run professionally.”

Did Kishore Biyani help create a formidable future competitor? Let us wait and watch.  Au revoir till next month.

ABOUT THE AUTHOR

Amit Bagaria is Chairman of shopping centre development consultants and managers Asipac Group and retail chain Men and boyS.

This entry was posted on Sunday, November 13th, 2011 at 1:00 pm and is filed under Article in Images Retail. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.