Restaurateurs bet on ‘fast casual’ format for growth
In a laggard restaurant market where rentals are high, brand loyalty low and investor interest cooling off, restaurant owners are turning to the hybrid “fast casual” format for growth.
Fast casual straddles the line between mass popular quick service restaurants identified by self-service and casual dining which combines table service with simple and relatively cheaper food.
Restaurant chain owners and franchisees are looking at the fast casual format to boost expansion and growth as it offers several advantages including lower rental and manpower costs and flexibility in creating the look and feel of an outlet.
Anurag Katriar, executive director and chief executive of deGusbitus Hospitality, said the idea of setting up a fast casual network of restaurants first came to him when he realised people were no longer interested in fine dining and “stuffy” formal restaurant experiences.
Katriar launched D:OH!, a European fast causal chain in Mumbai in February this year. deGusbitus, that owns Indigo Deli , and the iconic standalone fine dining restaurant Indigo, has opened two D:OH! outlets in Mumbai – in the office district of Lower Parel and at Fun Republic Mall in Andheri West suburbs.
While the food at D:OH! is more complex than that on a fast food chain’s menu, the restaurants run on self-service and source food from a central kitchen in Andheri East. This brings down manpower costs as service is limited as well as rents as kitchens are smaller.
Franchise managers are also betting big on the fast casual format. Karan Tanna, founder and CEO of franchise management firm Yellow Tie Hospitality, says his biggest money spinner has been US-based fast casual restaurant Genuine Broaster Chicken. “The rental rates in India are really high,” Tanna said. “Rents in Mumbai or Delhi are similar to those in downtown Chicago, at ₹900-1,000 per square foot,” he said. “But the average ticket size in a restaurant in these areas can be one third of that in an outlet in New York or Chicago.”
With Genuine Broaster Chicken, whose menu is built on fast food around chicken including chicken wings, pastas, and grills along with alcohol, the format is easier to take to tier 2 and tier 3 cities where they also benefit from lower rents. Tanna has taken Genuine Broaster Chicken mostly to smaller cities including Lucknow, Surat, and Patna. He now has 14 stores all over India and is looking to open five more by June end.
Even classic quick service restaurants like McDonald’s are slowly introducing features of casual dining like table service. In March this year, Mint reported that the American QSR chain had launched the Experience of the Future Store in Mumbai that also provided table service.