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Jiggs Kalra, better known as the founder of Punjab Grill, the restaurant chain that offers north Indian cuisine, has inked a new joint venture (JV) agreement with city-based Mirah Hospitality to promote a network of restaurants and sweet shops.
The move comes after months of speculation after Kalra’s exit from Wrapster Foods, the JV that ran Punjab Grill and quick-service restaurant Street Foods in partnership with Dabur's Amit Burman. Kalra, along with his son Zorawar, had sold their stakes in Wrapster to Burman's Lite Bite Foods this March. Wrapster has since been merged with Lite Bite and both Punjab Grill and Street Foods are brands now owned by Burman.
The new JV, Massive Restaurants, will see the Kalras own a majority stake. Zorawar Kalra, in a conversation with Business Standard, did not specify the stakeholding held by him and his father in the new venture.
The JV will set up two fine-dining restaurants called Masala Library, four casual-dining restaurants called Made-in-Punjab and five-to-six sweet or mithai shops.
While the Kalras will bring their expertise to the venture, the business will be funded by Mirah, who will bring in Rs 25 crore in the initial stage. "The first phase will see us set up the Masala Libraries, one each in Mumbai and Delhi," Kalra said. "We intend to do this by March-April next year. The properties have already been identified and work has begun," he added.
The second phase, to be initiated after September next year, will see the company set up the casual dining restaurants and sweet shops at an investment of Rs 40 crore. Kalra says the company will look at adding new outlets once the initial number of restaurants and sweet shops are in place.
India's eating-out market has been pegged at over Rs 30,000 crore by retail consultancy Technopak Advisors. But a significant portion is still unorganised, with the organised portion constituting Rs 8,000-10,000 crore. In recent years, both national and international brands have rapidly expanded in India, taking advantage of the consumption boom.
A slowdown in discretionary spends, however, in recent months has lowered the pace of growth of the industry. According to Samir Kuckreja, former managing director of Nirula's in Delhi and president of the National Restaurant Association of India, growth levels are down to 10 per cent from 15 per cent over the last six months.
Among other reasons, Kuckreja blamed the late onset of festivals this year and people staying back at home as a result of it for the slowdown. This reflected in same-store sales growth (SSG) of food chains. SSG refers to sales at stores open at least for a year.
Jubilant Foodworks, among the few listed food-chain companies in the country, reported an SSG of 19.8 per cent for the three months ended September 2012, the lowest in thirteen quarters.
Ajay Kaul, chief executive officer, Jubilant Foodworks, had admitted when announcing the company's results recently that SSG had slowed in the last one year. "If same-store sales growth for the last three years for Jubilant is taken into count, the figure works out to about 37 per cent," he had said. "But yes, the last one year has seen SSG slow down to about 13 per cent."