Fine-dining chain Speciality Restaurants is likely to take a price increase of 5-7 percent post July 2013.
Speaking to CNBC-TV18 about the financial performance of the company, CEO Anjan Chatterjee said reduced manpower costs and food cost to manage input cost pressures and maintain the level of growth of profitability.
“There is already pressure on the discretionary spends so we do not count ourselves looking at a same store growth. It’s been flattish overall. Also, we took a decision that we are not going to look at any price rise, in spite of all that we have been able to manage this,” he added.
Speciality Restaurants opened 14 new stores last year, but its same store sales growth remained flat in this quarter.
The company’s fourth quarter net profit rose 2.4 times year-on-year to Rs 5.3 crore on higher other income. Net sales grew by 23 percent from Rs 44.2 crore to Rs 54.4 crore year-on-year. Other income jumped 6 times year-on-year to Rs 2.67 crore from Rs 43 lakh.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: Take us through what kind of trends you are seeing in same store sale growth?
A: There is already pressure on the discretionary spends so we do not count ourselves looking at a same store growth. It has been flattish overall. However, we been very prudent in terms of controlling our manpower cost, the food costs in spite of not being able to increase our revenues through increase of the menu prices.
We have been able to maintain this kind of a growth on profitability and that is commendable because our whole team has worked very hard right from the beginning of Q1 of this financial year.
With the kind of headwinds we had in the economy, we took a decision that we are not going to look at any price rise. In spite of all that we have been able to manage this. We are not in a 100 meter race but are in a long-term marathon and we have been working over a period of time on this. Therefore, we are satisfied with the growth we have done.
Q: When we spoke last quarter you did point out that the environment seemed lot tougher than you had seen in the last few months. What can you point to through the course of FY14 - both in terms of whether you can keep sales growth intact and whether now you have some elbowroom in terms of increasing prices and helping your margins?
A: I think that we will be definitely increasing our price, not to the extent that we do is 8-10 percent, but we will definitely be doing it between 5-7 percent, which should be anything between July and the end of the year. We are looking at right opportune time when we will see a little more push coming in. Therefore, we will be able to do revenue growth as well as the margins will improve.
Manpower costs has been very important for us; we have worked very hard because the standards, which we were operating, with the number of people we were operating with, we have drastically reduced them and with service not being affected. That has been very commendable for us.
We have opened around 14 restaurants last financial year and next year also we are looking at 15-16. So, we are on track. The new stores are giving us growth and I am sure it is a matter of time then we will get the economy helping us. Overall we know what we are doing and we are very confident of the fact that we will been able to continue the growth.
Q: How much of this is because of sharp cost cutting measures and how much is about pure improvement in volume, just to understand what is happening in terms of sales trends because some of your peers from the hospitality industry are pointing to a fairly difficult FY14 and they are saying that volume growth is falling, demand is not as high?
A: I agree with you, it is from the quick service restaurants (QSRs) to fine dining and fine dining’s do get affected first. However, fortunately we have a very strong brand, particularly the flagship brand Mainland China and Oh! Calcutta and Sigree Global Grill, which has come in and which is only one store now. We are changing all the Sigree’s coming through.
There have been very interesting patterns, which have been going on over a period of time. We are doing some interesting things. For the first time we have introduced regular and large portions in fine dining. I do not think anybody in the world has ever had this kind of a concept coming in. That has given us a lot because at this point of time the customer does not want to splurge, they don’t want a doggy bad and we have been able to understand that clearly. So, we are getting more and more regular portions being ordered and that has given a lot of comfort to our customers.
We have been in this business for 20 years. In 2007-08 we have seen recessionary trends in the economy and we have dealt with it in our own way. We have been prepared earlier on and in coming year also we think we will be able to do this.