Chef Manu Chandra on the business of fine-dining in India

Chef Manu Chandra. (Photo courtesy Nishant Ratnakar)

The hospitality business is a tricky one. Location, staff, infrastructure, chef and above all, the food – all these ingredients make a good (or bad) restaurant. And even if all the boxes are ticked, the business would still depend on the pricing. Paper thin margins are the norm in this industry. Yet, the restaurant business is a seductive one - ask chefs who indefatigably try to translate their dream into a brick-and-mortar reality.

So, we asked celebrity chef Manu Chandra five (and one more!) questions about the nitty-gritties of the business even as he and his partner, Chetan Rampal, open the doors of their new restaurant LUPA on MG Road in Bengaluru.

Can a passion for food and cooking keep a restaurant afloat?

A passion for food and cooking cannot keep a restaurant afloat but a passion for smart business and good cooking can. If you are only a good cook, it doesn't mean you would make a great businessman. If you really want to be in the business of restaurants, you must understand that it is, at the end of the day, a business. Money is exchanged for products sold and managing that money well is key. That is really where it starts making sense.

Usually, parents don’t tell their kids to ‘get into the restaurant business’. With paper thin margins and hefty investment, how have you been motivated for so long to be in the business?

Well, I wish my parents told me a lot more of that; maybe I should've been doing something else. But you must realise that restaurants are more about passion and less about commerce. It's never been an incredibly rewarding business in the monetary sense, especially in the luxury or the experiential space, but that doesn't necessarily mean that it is a bad business model given that restaurants have the ability to generate large income streams if run well and responsibly. Over a period, they do have potential to rack up substantial returns. Obviously, there is no comparison to tech or other industries, given that we are a largely labour-intensive business which is prone to a lot of disruptions; the pandemic being a classic example. But it is fuelled by extremely passionate people and that is where the excitement comes from, and I do wish that parents are open enough to push their kids to be braver and bolder as opposed to only taking the safer paths to success.

Also read: Restaurant review | Manu Chandra's European-themed LUPA is many restaurants rolled into one

Is it possible for a celebrity chef to elevate his/her restaurant?

Yes, absolutely! The ‘Celebrity Chef’ culture is not a phrase that I personally embrace with any amount of gusto but being known or credible in a market goes a long way and that isn't only limited to my profession, it is applicable to every (profession). A really well-known doctor has a similar standing as that of a well-known chef. The customer knows for sure that they will receive top-class products, much as they have seen and been a part of one's track record. There is the ability to be able to translate your previous work into more meaningful and profitable ventures in the future. For instance, a skilled celebrity chef on TV may not necessarily make it as successful as anticipated if they opened a restaurant for the first time. Restaurant chefs have their own little traits and I think that this goes a longer way in being able to make their places extremely pertinent business models. Gordon Ramsey is a prime example who has been able to marry both the restaurant and on-screen spaces equally well.

What are the challenges of running a fine-dining restaurant?

The challenges of running restaurants especially in India are multi-faceted and many. Owing to the necessity of reporting into multiple agencies, it's never really easy to get a business off the ground and then run it continuously without having multiple roadblocks that constantly need attention, time, bandwidth, and energy from the entrepreneur. I wish I could say things were a tad more structured in the space, which is why the industry has been seeking single-window clearance when it comes to restaurants. Also given the fact that excise policies differ from state to state, challenges present themselves irrespective of location.

Karnataka is no different and therefore Bangalore will have a certain level of price differential from that of Bombay or Delhi as far as alcohol is concerned. Besides that, of course, is the constant upkeep of a space, and given how large ours is, there is an operational expense which a lot of people don't consider in their business plans. With wear and tear, we require large reinvestments, and one needs to plough back revenues and profits into the space to keep it at the lux-levels that LUPA was envisaged to uphold.

Manpower remains a challenge despite our country being one of the most, if not the most, populous in the world. Getting trained staff is never easy, it becomes imperative to bring them in when they are relatively new to the business and train them thereon. Of course, it has its own benefits like leaving one's legacy behind but that never makes the work easier.

(Photo courtesy LUPA)

Talk about the key elements of a restaurant like LUPA and the investment on it. How long do you think it will take to break even?

LUPA is really a complex restaurant, a large space whose capex is much greater than anything else we've done in the past, but it was something that we went into by understanding inherently. We also had modelled our returns in a way that would justify that kind of capex.

What we weren't completely sure of was how much the post-pandemic disruption of supply chains would impact the cost of materials, labour and contracting. We definitely had to take a hit on that given that the dollar was fluctuating upwards and there was a need to make several imports for specialised equipment unavailable in India.

A restaurant the size of LUPA, would easily cost upwards of Rs 8-10 crore today and as far as returns on it are concerned, something we obviously have pre-programmed, we wouldn't make an unsustainable business model. This translates into hiring great talent, paying fair salaries, incentivising staff to make sure they are as invested in the space as we are.

As far as our operational break-even is concerned, that's one place I kind of specialise in and I'm not so worried. We should be able to break even operationally within our first month, if not the second.  The return on investment for a product/ brand like this, rule of thumb from the past would dictate an ROI calculation based on five years.

In the last decade or so, we've realised that this approach is untenable, given how large the market proliferation of new brands has been and how quickly customers are able to embrace and patronise a restaurant, social media being a significant game-changer for the space. So, there's usually a backward calculation of a three-year ROI which I personally think LUPA should be able to comfortably attain.

We will, of course, be doing numerous activities as time goes on to make sure we always have a steady income flow. As always, anything to do in India is dependent on the vagaries of holidays, religious festivals, elections etc. With all this pre-programmed, I am fairly confident that we should be able to meet our targets without much worry.

So, the business model is sustainable?

As far as the business model is concerned, LUPA has been conceptualised to be a finer space. The phrase 'fine-dining' has been thrown around a lot but as I have always maintained, is relative to people, crowds, cities, and there isn't a singular definition to fine dining.

Is it a luxury product? It most certainly has been designed to be one and looks and feels like one too. The service, food, and bar along with every highly detailed corner of the space essentially communicates that vocabulary.

The business models, of course, will need to be based on higher revenues and given the fact that we have a substantial number of seats and multiple zones within the restaurant, it lends itself to being activated for various events and occasions by bifurcating the space effortlessly.