The essence of quick service

Nirula's is a name synonymous with the birth of the fast-food culture in India. Samir Kuckreja, CEO and managing director of the group, examines the current trends in the quick-service restaurant (QSR) industry and also predicts the future ones. By Dinkar Farwaha

Samir Kuckreja CEO and managing director Nirula’s

Samir Kuckreja holds the view that the Indian food retail market has enormous untapped potential. "As per a recent study, the Indian consumer, on an average spends Rs 35,000 crore on eating out in a year, of which the organised food retail market constitutes just Rs 2,500 crore. With only Rs 2,000 crore being spent on QSRs, we have over 100 million potential fast food customers to be tapped and served," he says. He believes that the growing disposable incomes and fast paced life is compelling people of all ages to take time out of their hectic life and explore the QSRs. With international brands and funds flowing into the Indian hospitality industry, Kuckreja feels that this will promote healthy competition in the market and would provide greater choice to all consumer segments. "The Indian market has enough space to accommodate all these international players. Every restaurant comes with its individual core competencies, which may lie in varied sections like the cuisine, ambience, cost, service, etc. This will be a win-win situation for customers, as they will have a wide variety to choose from and make decisions."

Differentiating a brand

Kuckreja believes that the essence of any food chain lies in the quality and the taste of the food it offers. Hence, product differentiation plays a critical role in differentiating a restaurant from its competitors. He is of the opinion that the design of a restaurant plays a key role in forming an individual identity for the food chain. "We at Nirula's believe that design is not only limited to the outlet's furniture, colour of the walls or its layout. It pertains to even the minor things like the uniforms of the employees, the lighting of the outlet and even the way each food item is displayed."

According to Kuckreja, it is integral for a restaurant to constantly innovate its design but at the same time not lose its brand identity. "Good food is a pre-requisite for any restaurant to do well and if ensured with excellent service, this forms the mantra for an efficient running. You may have a single cuisine restaurant or may master the art of managing varied variety, yet an efficient and courteous work force is the backbone of the system," he feels. With strong competition from both domestic and international food chains, it is integral for a QSR to always think futuristic and tap the right audience with the right techniques, explains Kuckreja. "It is important for them to constantly innovate and come up with creative and consumer friendly promotions and sales and marketing strategies," he says. When asked how integral technology is for a restaurant to keep up with its customers, he replies, "Technology is an integral part of the QSR business and a majority of food chains have realised this. Thus, they are not only adapting to latest technology in terms of process and systems, but are also innovating in terms of making the restaurant more chic and young," Kuckreja says.

He believes that environment has become an intrinsic part of CSR activities, followed by QSRs. "According to a McKinsey survey, environment is, and will be the hottest topic for the coming five years. I feel that its impact on the restaurant industry will also be strong," he adds.

Challenges and their solutions

Kuckreja believes that manpower crunch is the biggest challenge that the industry is facing today. "The essence of any service industry lies in the quality of its work force, and the hospitality industry is no different. The manpower crunch faced by the industry right now is the major factor that comes in the way of its rapid growth and development plans. With a flourishing economy and growing tourism in the sectors, the manpower need stands at around 9, 50,000 individuals by the end of 2010, "he says. Kuckreja believes that effective means of compensation and regular employee motivation programmes are the possible solutions for this problem.

According to him, mounting land prices and skyrocketing interest rates are giving rise to critical issues like lack of parking space or food chains failing to procure central locations. "This hampers the sales of the restaurants and the market standing."

The realty boom in the country will have different implications on different food chains, according to Kuckreja. "While on the one hand it will encourage restaurant owners to experiment with new formats which can be accommodated in lesser space, on the other hand it will also lead restaurant chains to focus on tier-II and tier-III cities," he says. Interestingly, he also believes that high rentals will encourage food chains to enter countries like Dubai and the UAE, where the rental is comparable to that of Indian metros. "For example in South Mumbai, one has to pay a rent of over Rs 400 per square foot, which is, if not equal, then comparable to the rent rates in nations like UAE and Dubai. Even the return rates are higher in these countries, and with figures touching Rs 30000 to Rs 50000 per square foot, expanding and investing abroad any day is a better decision as compared to contending with steep Mumbai and Delhi realty prices." Kuckreja is of the opinion that while metros for long have been the home ground of various food chains, it is time for restaurant chains to enter and explore newer towns and cities where there is an enormous consumer base. Whether it is airport, highway, railway station, corporate park or for that matter club, according to Kuckreja, QSRs have a tremendous potential to do well in any of these models. "With rapid development, the consumer today is always on the move, with little time in hand. Thus we would also have to keep pace with him and tap him to offer our services wherever he goes," he says.

On an expansion spree

"We are currently on an expansion spree where we not only see ourselves entering untapped metros but also plan to tap the tier II and tier III cities," says Kuckreja. Over the last two years, the group has undergone a major brand revamp. It has initiated new retail formats like Nirula's Express, Food Court unit and Ice Cream kiosk. "We are trying to provide a wide menu that can be adapted and customised to suit a particular format and cater to specific customer groups," says Kuckreja. The group has also opened Nirula's Food Court Units, which have a larger menu. The group is presently located across Delhi, Uttar Pradesh, Uttaranchal, Haryana, Punjab, Rajasthan and Chandigarh. "With investment plans of over Rs 200 crore in the coming three years, we plan to touch the figure of 200 outlets across India by the end of 2010," informs Kuckreja. The group will mark its presence in the western region this year by entering Mumbai. It is also eyeing overseas operations. "We also plan to move on to international grounds like the US, UAE, Nepal and Pakistan very soon," adds Kuckreja.

As far as the vision of the group is concerned, he remarks, "We have a confident vision for our company. Nirula's is synonymous with variety and choice, but we never compromise on the strict quality standards observed while preparing or serving any cuisine listed on our menu. Since 1934, Nirula's has been a leading name in the food retail market and we plan to maintain and strengthen the same position in the coming times too," Kuckreja concludes.