Café Delhi Heights to set up smaller format stores

Privately-held cafe and fine-dine restaurant chain Cafe Delhi Heights (CDH) will set up smaller formats of its flagship brand as part of its expansion blueprint, Vikrant Batra, co-founder of the brand promoted by hospitality company Batra Bros Foods & Beverages said.

"Lower rentals, quicker break even and servicing from centralised kitchens will give us more efficiencies on topline and profitability. We intend to go to markets where capex is low," he said.

In its eighth year now, CDH will fund expansion internally. "We have been approached multiple times by private equity players but we’re not opting for external funding in the mid to short term," Batra said.

The expansion will involve a mix of large and smaller format outlets, the latter to tap captive markets with relatively lower spending such as universities, he said. Railway stations and airports are the other potential channels the chain will tap, besides overseas where it may franchise operations. CDH’s first overseas outlet is scheduled to debut in Manchester, he said.

He added the chain is on track to cross sales of Rs 100 crore in 2019-20.

The plans to include smaller format stores come at a time when the industry is dealing with multiple challenges, including the withdrawal of the input tax credit and deep discounting by aggregators both of which have impacted their profitability.

A food services report by National Restaurants Association of India (NRAI) estimates the industry at over Rs 4 lakh crore in FY19, forecasted to grow to Rs 5.5 lakh crore by 2021.

In November 2017, the government slashed GST rates on restaurants to 5% from 18%, but scrapped input tax credit which the industry said escalated capital expenses and rentals by 15-18%.

"The withdrawal of the input tax credit has been a big setback on profitability and margins," Batra said.

Source:- https://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/caf-delhi-heights-to-set-up-smaller-format-stores/72367084