Is New BEL road a sound Option?

Now that’s a question that has suddenly creeped into my mind…it has been giving me some anxiety…having changed focus of setting shop on New BEL road, had to do a recce of the local market and decided to visit Chung’s opp. Ramaiah Med. College and do a bit of a survey.

Visited Chung’s on Wednesday evening and was hoping to meet the owner. It was around 7:30pm, took the car, which was eventually a bad idea…neways….The guy at the cash desk was a mallu named Rakesh…I got his name as Rajesh…did some pleasant verbal volley with him…. I was surprised to find the cashier in the middle of things…Obviously the guy who ran the place did not have any formal training in the biz…

We’ve had food earlier at Chung’s and it was nothing to take home about. Put in one word it was “crap”.

Neways did chat up with Rakesh who came across as a friendly guy…The restaurant is about one year and three months old…Its been maintained fairly well… although I found paint peel and furniture marks in some places…My first meeting was a bonding thing I did…didn’t ask too many questions…just made him comfortable talking to him in mallu tongue. Sure made him comfortable…he agreed that he gets around 100 people every day…that was a fair sound bite from him and I started my number crunching…

Asked him for his takeaway menu card…Strangely it did not have any pricing on it. (I wondered if he was serious about home deliveries) would find out soon.

I got the restaurant menu card and made a note of their pricing. It was steep. Madan used to bring these noodles when he returned from Darjeeling…I had known the taste of that noodle…these guys calling it Chinese made no sense…Mebbe the Chinese did eat their noodles that way…but you cant be serving boiled egg noodles with some kind of taste maker and calling them a fancy vegetable szechuan chowmein. It had sounded appropriate on the menu…but ughhhhh…it had tasted yuck.

Well, my visit was never to review whether the food tasted any better. That chapter was closed long back…and am pretty sure it could never get better than that…will tell you why later…

I did visit Chungs again yesterday, calling Rakesh and fixing an appointment with him hoping to see Ajay who owned that place. I had an appointment at 2:30. I reached there on time…I decided to pedal it up…made a mental note to pedal push more often.

Chungs was fairly full…I mean it looked occupied…there were 10 people sitting on different tables…was not expecting too many people there in the afternoon anyways. Had to wait…and wait I did…read Asian age and killed time…tried to ogle at some chicks there…but felt them boring…they were too loud.

I waited…ordered for a coke which he didn’t have…“pepsi only” Rakesh said…I almost said O.K and quickly decided against it when I realized that I didn’t have my wallet…Dang!!!

Ajay came in at around 3:15…said Hi to him to let him know that I wanted to meet him. He had his mouth full with paan or supari…I dunno…well neways. I think he had come to check on the business…stood near the cashier and went through the billing. You really need to trust the cashier guy if u decide to stay away from the business and visit just to check on the collection. I did not see the cashier maintain a KOT or BOT…I saw him write on a slip of paper – 1 soft drink when the waiter ordered one…well in that case there was no control I thought…not my problem…I said to myself.

Ajay came to my table at 3:30. He had washed his mouth…which I appreciated…imagine otherwise. He came across as a decent chap… he had his fingers on the pulse of the restaurant…but I thought he could do more.

Introduced myself…told him…that I was planning to start a restaurant in Sanjay Nagar, on new BEL road or elsewhere…I didn’t want him going defensive straight away…He told me there were about 3 chinese restaurants in the area and that “Neel” also served Chinese…Neel…yeah more about that later…

He was more forthcoming than I expected him to be…and these were what he told me

  • I do about 4.5 lakhs every month {(i.e) Rs15000/- every day…not enough at all for us I thought}
  • On Fridays, Saturdays and Sundays he does 20000/- per day ( even worse news coz then you average daily sale drops to less than 15000/- per day)
  • He had expected good business from the Ramiah college students…before he took up the venture…but then it did not work that way.
  • All the doctors from the hospital does not give him more than Rs4000 per week. The students spend more he emphasized.
  • They spend more money at the coffee day than at his restaurant.
  • Pizza hut just opened…they seem to be looking at 17 lacs per month in gross sales…which was highly unlikely he felt. I told him that it was a possible number with their pricing and their focus on home delivery.
  • I said the only reason for them to put a swanky outlet next to his was becoz there was potential in the area.
  • He gave me his reasons for not focusing on home deliveries. – he said most people order Chinese at home when they are drinking ( I dunno) so they order their food and eat it later and chinese food needs to be eaten hot ( I agree) or else it would taste lousy…( and if it is Darjeeling noodles…the trouble is double)
  • Pizza guys promise delivery in 30 mins…so people expect him to deliver chinese also within 30 mins…very unfair, I agreed…people did not realize that Chinese is not precooked microwaved food and it takes time…for preparation…hey, if ur reading this blog and u did not know it takes 20 – 30 mins for preparation alone delivery time excluded…and you cannot deliver it hot..i mean u can but the costs mebbe high.
  • No he has not raised his pricing since inception coz he feeds mostly a budget concious crowd wudnt be happy with increased pricing on (an already fancy) current price list.
  • Prices have gone up, Gas was Rs 450??? last year is now Rs 720 this year.
  • Vegetables are delivered on daily rates.
  • Not gone into a contract with supplier coz not all that he wants is delivered by the same supplier. So, daily market price…he says he gets a good deal…(debatable).
  • Costs…salaries Rs 40000. Electricity and water Rs 28000 in summer and Rs 25000/- now. His a/c’s weren’t running while I was there.
  • Restaurant size 3000 sq ft pays Rs30000 as monthly rent. Coffee day pays Rs 38000/- rent for ground floor including the small open frontage. Pizza hut he tells me pays Rs 30 per sq ft. ( they always end up hiking market value…I thot)
  • Duty meals cooked for the staff in the main kitchen.
  • Uniform laundered by staff themselves.
  • Regular staff paid decent salaries…junior staff does not stay long…they are paid Rs 1500 or less.
  • Pays COT? and not VAT. He pays 4% of his total turnover and not 12.5% as VAT and bother about apply for returns. I also agree…coz most suppliers are not registered… and VAT insists on buying for registered suppliers only or else damages/ penalty is levied. He said “I have no problem…who will wait for applying for returns etc”
  • “I Pay my taxes regularly” ( good idea) “or after 2-3 years the tax guys will come…in which case u will still have to pay taxes with penalty and give them guys 15-20k extra”.
  • Pays PF he says through his CA… (I doubt)…mebbe he pays for a few and shows lesser number of staff and shows remaining as casuals.
  • Has 22 staff working in the restaurant.…I thought…isn’t that high…jeez. 80 covers…2 sessions…break shift…why 22 staff???
  • Most staff are from Calcutta, Darjeeling, Nepal…Obviously…
  • Timings…Breakshit…12 noon to 3pm (I saw him refuse an order at 3.30pm) 7:30 to 10.30pm.
  • He has one guy for soup one guy for main course…one guy for noodles…etc…Man, think in terms of money…I wanted to tell him.
  • Who indents for raw materials for the kitchen…I asked…He has three guys to do it for him…I doubt if he will be able to maintain a 30% food cost.
  • What about garbage…? Corporation cleans up owner takes care of that – pays 6000 once in 6 months to the owner…I dunno if I heard that correct…6000 or Rs1000 every 6 months.
  • What was the average spend I asked…? He laughed for the first time and said…I have had 9 girls come to my restaurant once and their bill was Rs 252/-…my mouth opened too…Students don’t spend more than 100 bucks per meal otherwise. They order for one portion and share it…Yeah probably your portioning is large I thought.
  • He was also pissed off at coffee day…“letting people hang out there…but not doing ‘real business’. That’s why I don’t have a TV in here” he said. “They’d just come and sit here and order for 100 bucks and stay for 2 hours if there is a match. Affects my serious diners”. he said.
  • The maximum I have made from a table is Rs 4000/- which again was from a group.
  • This outlet is not a franchise of Chung Hua on residency road. I am running it on a partnership basis…20% of my profits go to them.
  • So who measures quality…I asked? They send their people to check on quality he said but if you are a franchisee you will have to find your staff and practically run the business yourself.
  • The disadvantages of this location…Purely residential – a big disadvantage…take mainland china…u will not spend less than 500 bucks there for small portions…he is the highest selling Chinese restaurant in the city…IT guys have money and they don’t have problems shelling money…There is no IT biz here…so only family biz which was mostly at night.
  • I realized that when the cashier told him that lunch collection was Rs 5100/-.
  • He says it would be a good idea opening near hebbal or near the new airport…lost of new IT’s cos coming there…
  • My back ground he says…I am a Bsc grad…I worked for club Mahinrda on their time share sales…there goes…I thought.. I am ful time with this business now.

I assumed he should be making about 60 thou a month…which is again unlikely becoz he has limited controls in place… anyways wished him luck and took leave at around 4:15.

Its true I was thinking…if he did 5 thou in a afternoon and 12 g as daily average sales… (which again is very low) purely through a residential crowd…he could possibly have been looking at higher sales if he was located in a commercial area…although rentals there would be high…his turn over could also have compounded…and it would have been possible to get better rates and increased profits if he took care to control his variable costs.

It doesn’t matter if we have to spend more time deciding…but the location must be absolutely right…!!!

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