As restaurant cheques in India compete with those in London, Singapore and New York, there's no stemming the country's growing appetite.
I am at a low-key, family restaurant specialising in Bengali cuisine in Delhi. Not quite the in-your-face best seller. The glitz is missing. But what’s this? Have I strayed into a babu’s office instead? Back to the old days when people had to inch up for a licence or passport or whatever? I am standing in supplication at the manager’s desk while the busy man speaks into the telephone. When he does deign to look up, it is to snap that, no, there is no table free. This, without any apology. “Sold out,” he shrugs with unbecoming cockiness, the opposite of what we accuse Indian hospitality staff of, servility. Did any one mutter “slowdown”?
This Diwali you may have trimmed your shopping list. And you may have put the big year-end vacation on hold. But chances are that you may go ahead with the Sunday brunch that’s become the weekly family ritual. And it is decadent alright. From free-flowing martinis to unlimited flutes of Cristal, from caviar to peking duck… The sum you pay could have bought you a modest holiday. But what’s a holiday in, say, Mussoorie compared to a meal at Wasabi or Varq or Ai, where a single piece of sushi costs you Rs 199? After all, there’s nothing like excess to drown out thoughts about the “R” word, right?
An economic crisis is the time to study not just finances but also human beings. There are studies these days showing us, for instance, how Playboy mates tend to be older, and, well, fatter in hard times. And American publications are churning out accounts of people turning not just to more solid fantasies but food too. Those unable to take their fat annual vacations are apparently splurging at Michelin Star restaurants. And there are stranger accounts: Of people hitting takeaways with the same seriousness with which they hit the bottle when values of dream homes turn to dust.
Is that happening in India too? Even if you argue that we, as a people, are hardy and prudent and resilient and less likely to crack up, there’s no denying the “deviant” ways of a middle class traditionally thought of as frugal: Even in these times when the word pink is likely to connote slips, not champagne, people seem to be eating out more lavishly, paying up no mean sums.
This Sunday, for instance, the Yum Yum Tree in New Delhi, one of those new, smart casual dining places that threaten to replace five-star environs in our mindspace, beat both Diwali and Sensex blues. Choosing to spread the word about its Sunday spread on Facebook instead of using traditional advertising, the 150-cover restaurant sold 120 covers despite it being Dhanteras when religion dictates that people stay off meat and alcohol.
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The enticing spread included dim sums, peking duck, crabs, spare ribs, Grey Goose martinis, goody bags for kids. At Rs 1,200 (plus taxes, plus service) it was deemed quite a steal —what with a similar spread at the Hyatt’s superlative China Kitchen in Delhi, costing Rs 3,800 plus, per person: peking duck, dumplings, noodles... Moet rose; a buffet nevertheless that has always been considered “value for money”.
Now, pause to note how middle-class India’s notions of “value for money” have changed: Think back and you may recall how Shangri-La kicked off its India operations with its Sunday brunch priced at about Rs 2,200. This was two years ago and the meal was one of Delhi’s most expensive. In 2008, in fact, this is the price the more “reasonably” priced ones command — at standalone restaurants.
Talking of the rise in restaurant prices, Manu Mohindra, the country’s leading consultant for restaurant projects, recalls, “When Shalom started its Rs 1,000 a head buffet six years ago, everyone screamed. But there were takers. Olive came at about Rs 2,000 per head and people screamed. Now, at places like Ai, you’ll still pay 4,500 a head for dinner.”
It is not by accident that Mohindra talks about Delhi restaurants. This is indeed the city with the most expensive “mid-market” restaurants, even though Mumbai with its Chef’s Studio at the Taj Mahal hotel (average cheque Rs 1 lakh plus for six people, includes an exclusive table, a plasma TV set to watch chefs cook, and menus including a taste of molecular gastronomy, veg caviar et al) would command top rupee. In fact, people in the F&B industry say that “perceived prices” are highest in Delhi. “In Delhi, people like to be seen,” laughs Riyaaz Amlani of Salt Water/Smoke House/ Stone House Grill(s) in Mumbai, Delhi and Pune. “In Mumbai, people pay for what’s truly worth it and in Pune, even if something is worth it, people will not pay,” he quips.
Restaurants vying to position themselves as more “luxury” is one reason for eating out to have substantially shot up. If you think that your bills are heftier these days, it is also because you are willing to foot them! Food consultant Rupali Dean in Gurgaon points out how even neighbourhood restaurants have started asking her “whether they should also increase prices because everyone else has, and people don’t mind.”
This is catching on. In “price-resistant” Bangalore, where eating out at tony standalones like Olive Beach, Giancario’s Place and Via Milano is at an all-time high of Rs 1,500-2,000 per head for a three-course meal (without wine) but reasonable compared to Delhi or Mumbai, food critic Priya Bala feels that the rise is due to hype. “If you ask chefs, they will say it is because of food costs. In newer restaurants, those downtown, it could be because of rentals. But some of it is also hype. Bangalore restaurants have abandoned the value-for-money concept because there has been a clientele with huge disposable income and expense accounts.” How things will change with the downturn remains to be seen.
While there is no study available on how much prices have risen, it would be safe to peg it at 25 per cent, an exceptional rise, if you take into account the business worldwide — in markets such as the US, prices have seldom risen, and never by as much. While Mohindra puts the leap as “12.5 per cent every six months, so, 25 per cent annually,” KPMG’s Raghu Venkat Narayan says there has been a 20-25 per cent increase in the last year-and-a-half due to restaurateurs “upgrading the experience of dining out and fundamental costs like raw material, real estate and people costs going up by 15-20 per cent.” (KPMG has not done any study on the matter, these are just based on interactions with F&B execs.)
Are rentals and inflation the chief villains? Property in Mumbai and Delhi is as expensive as London and Manhattan and that affects prices. What will be interesting to see is if now, with rates crashing, restaurants pass on benefits to consumers. For now, here’s a look at margins and how restaurants arrive at pricing:
At a well-run establishment, food costs comprise about 25-30 per cent of the expense. Rentals should be 12 per cent, but had risen to 20-25 per cent in the last two years. (The net profitability of a restaurant within a five-star hotel is about 40 per cent, that of a standalone is 22 per cent). Increasingly, substantial expenditure is also on hefty salaries, especially since trendy standalones are now employing expat chefs, something only five-stars did earlier. A new celebrity-driven restaurant in Delhi, for instance, sources say, has a monthly rental of Rs 30 lakh and a salary bill of Rs 30 lakh, which means to make even 10 per cent profit, the restaurant needs to make Rs 1 crore a month.
The new breed of “lifestyle restaurants” that have made an appearance this year, to the joy of those who’ve always moaned about the lack of Michelin Stars here, are, in many cases, more expensive than five-star restaurants. This is also because you can now expect to eat the very best on such tables.
Globally, the frenzy for gourmet foods has peaked. India is no exception: From Parma ham to New Zealand lamb chops to Norwegian salmon, everything is more easily available, for a price. As Chef Hemant Oberoi, the Taj’s top guy, says, “If people want to eat Waghu beef or truffles or caviar, they should be ready to pay for it.” Incidentally, a single portion of Waghu beefsteak can cost upwards of Rs 7,000 (Newsweek.com mentions the price as $250). And people seem more than willing to pay. At China Kitchen, a Rs 2,888 (plus taxes) abalone soup will still find takers. At the Orient Express, New Delhi, Forbes mentions paying Rs 5,500 ($123) for Kobe mignon while a similar dish at New York’s chic Tao costs roughly 30 per cent less. Foodie lore in Delhi involves an NRI businessman at Tabula Rasa who ran up a bill of Rs 2.5 lakh for six, one evening.
But such dalliance with luxury food nothwitstanding, there are benefits that restaurants may not quite pass on to consumers. A top chef, on condition of anonymity, explains how “everyone is in a race to find alternate sourcing for imported stuff to increase margins”. Scallops, for instance, “from Canada are expensive, for about Rs 2,800 a kg. But you can source them from a neighbouring country, almost the same quality, but at Rs 2,000 a kg.” Restaurants will charge you Rs 2,000 a portion; the benefit of lower cost is not passed on.
Here is more food for thought: The noodles that you have for an average of Rs 300-400 in a posh restaurant cost just Rs 25 to produce. The production cost of a Rs 600 Caesar salad is not more than Rs 150, while a naan costs just Rs 5-7 to make. So, do all these subsidise more expensive items on a menu? In most gourmet cities of the world, side orders are never charged. They are in India. At Varq, the cutting-edge new Indian restaurant at the Taj Mahal Hotel, New Delhi, the average dinner cheque is Rs 3,000 per person but you would still need to pay Rs 145 plus taxes for “accompaniment portions” — two spoons of dal!
Then, there are other ways in which restaurants jack up your bill. Consultant Rupali Dean says that soups and desserts are priced higher this year. “Earlier, the thought was that these should be priced lower since people may be tempted to order. Now, owners seek to jack these up as well,” she says.
Finally, alcohol: High duties mean that you pay more for the same bottle in India. The Chateau Lafite Rothschild ’01 at Leela hotel’s Zen in Bangalore fetches Rs 28,000 ($626). That same bottle costs roughly $200 in New York (Forbes.com). Five star restaurants that can import more cheaply thanks to a law that allows them to use foreign exchange earrings don’t always pass on the benefit to consumers — though larger chains tend to. Prices are higher at standalones — a bottle of Moet Chandon Rose for Rs 7,500 (costing about $ 70 in the US, retail price) at The Oberoi’s ThreeSixty may cost much more at other independent establishments.
Yes, it may be possible to get your Rs 10 bhelpuri on the beach, but for everyone who raves about these easy treats, there is an aspiring Indian who’ll shell out Rs 8,000-10,000 for his meal. Dining in New Delhi or Mumbai is now at par with that in New York, California, London, Dubai or Singapore.
Consider this: At French Laundry, the celebrated Californian restaurant routinely mentioned as the world’s toniest, a nine-course tasting menu (that is changed daily and where no single ingredient is ever repeated) comes for $240, service included. And at any of the Charlie Trotters, Alain Ducasses or other Michelin Star restaurants, you would roughly pay $150-200 per head, without wine. At posh restaurants in the US, dinner easily comes for $50-70. In Europe, a main course is around Euros 25, though cities operate on seasonal rates, locals eating much cheaper.
Now take top-of-the line Indian restaurants: At Wasabi in New Delhi and Mumbai, chefs trained under “Iron chef” Morimoto dish out five-course meals, including the likes of duck and foie gras steak for Rs 7,000-8,000 plus taxes (alcohol excluded). At the Zodiac Grill, Taj Mahal Hotel, Mumbai, the dinner cheque is Rs 7,000 plus taxes.
At the ever-popular Bukhara, you’d pay Rs 3,000-4,000 per person, while Hemant Oberoi’s cutting edge Varq is pegged at Rs 3,000, average cheque. What you land up paying at any of the “lifestyle” restaurants in Mumbai, Delhi or Bangalore is Rs 1,500-3,000 plus taxes, minus wine. So have we hit the ceiling in India? “We may not be there but are certainly getting there,” says Chef Oberoi, though he adds that everything must be value for money— “even Louis Vuitton”. Now, let’s hope more restaurants live beyond the hype.
| WHY ARE PRICES SO HIGH? 1. High cost of real estate, though this has already come down, say consultants 2. Higher food and fuel costs 3. Expat chefs commanding fancy salaries 4. New “lifestyle restaurants” positioning themselves at par with the five-stars 5. Luxury foods on the menu, demand for imported ingredients 6. Higher “perceived value” of dining out 7. High import duties on wine and alcohol |
| PREMIUM PRICING |
