In Indore, it can get quite chilly in November. The temperature by the poolside at Sayaji Hotel was hovering around 7ºC, and restaurant manager Prosenjit Choudhury was getting complaints that kebabs served to the guests were going cold.
One evening at home, Choudhury saw a television programme about nomads facing a similar problem while camping on riverbanks. They erected a grill using stacked armour, and roasted meat on it.
Choudhury began serving kebabs, which were 90 percent cooked, on mini-grills at the tables. It was a hit.
After a successful stint in Sayaji Hotel’s banquets division—he had started with parent company Sayaji Hotels as a management trainee in 1995—Choudhury got the go-ahead from Sajid Dhanani, then MD of Sayaji Hotels, to enter food retail. As CEO of Barbeque Nation, Choudhury brought the idea from Indore to Mumbai in 2006, with the city’s first Barbeque Nation at Pali Hill, in Bandra.
Between 2006 and 2008, Barbeque Nation grew from a single outlet to 13. Today, it has 35 outlets, 18 of them opening in the last year alone. With a revenue of Rs 200 crore last year (it is expected to touch Rs 350 crore this fiscal), the chain brings in roughly Rs 9 crore per store, one of the highest for restaurant chains in India. Profit margins are 19 percent, which, for a buffet service serving unlimited meat and seafood, is remarkable.
The chain—it operates on economies of scale, which is difficult to replicate—has found a way to scale and replicate standards across 14 cities by offering customers an ‘independent’ dining experience: They pay a flat price (between Rs 650 and Rs 800 per head, depending on location and time), get a choice of five vegetarian and five non-vegetarian starters that they can season and cook on the grill at their table, move to the main course buffet, and eat as much as they want.
At the back end, purchases are meticulously planned, while at the front end the service is homely and the atmosphere informal. The chain expects to serve 55 lakh guests in 2013-14.
The Dhanani family owns Sayaji Hotels. After visionary MD Sajid Dhanani passed away in November 2012, brother Kayum took over. “The enterprise he created wasn’t so easy to understand initially, but now I’m discovering my brother through his work,” says Kayum, who recently secured Rs 110 crore in PE funds from CX Partners to help fund further expansion. He plans to use the money to strengthen the existing centralised kitchen system, invest in marketing, and add 34 new outlets by the end of 2016. He has also moved the corporate office to Bangalore for better access to a talent pool.
Setting up shop
Starting in Mumbai was a challenge for a little known brand from Madhya Pradesh. The owner of the Pali Hill outlet premises had had trouble with tenants and was cautious about letting it out. Choudhury had to pay advances on rent and building material to convince all parties concerned that he was there for the long haul. Luckily for him, the store generated a steady income from the first day itself. “I wanted to see if the hoopla around the live-grill would wear off, but after six months, we had 50 percent return customers,” he says. “Two rivals copied the idea but failed miserably after three months because they tried to cheat the customer.”
“I let my servers assess how to deal with customers, since they are closer to god,” he jokes, “The customer is god.” Everything at Barbeque Nation, he says, is about the customer, rather than the process. It has done well because it doesn’t short-change the customer. Jacob Kurian, partner at New Silk Route (investors in Udupi restaurant chain Adigas), says, “Barbeque Nation doesn’t begrudge you on portions. If they say they are serving prawns, they will really give you unlimited amounts of prawn.”
“Advertising unlimited prawns and then putting in more vegetables or giving smaller prawns won’t work,” says Choudhury, “You cannot fool the customer.”
Kurian also feels that a fixed price makes it easy for groups of professionals to visit because there’s no uncertainty about the bill. He adds that although the concept of an unlimited buffet is not new, Barbeque Nation’s execution has been superior, making imitators struggle to compete. It has been able to deliver consistency at every outlet: Unlimited food, prompt service and clean toilets.
But the journey hasn’t been without its challenges. Last year, Choudhury’s mentor and friend Sajid Dhanani suddenly passed away after an illness. Choudhury attributes much of the chain’s success to lessons Sajid taught him. “I learnt my hoteliering from him,” he says, “His style helped me take key decisions pertaining to customers, staff and systems.”