“The industry has no reserves. And now with all the constraints from the curfew to the liquor ban to the reduction in the capacity we are all going to lose money for a few months. On top of the losses during the lockdown, this is very hard to recover from and hence many are closing,” said AD Singh, the founder and Managing Director of the Olive Group of Restaurants.

New Delhi: The restaurant industry fears 30-40% eateries (from the organized sector) will shut down shutters soon out of the half a million present in the larger cities. Popular restaurants in Khan Market, New Delhi have already announced closure and many to follow suit, as shared by industry sources.

Some ground realities

“The industry has no reserves. And now with all the constraints from the curfew to the liquor ban to the reduction in the capacity we are all going to lose money for a few months. On top of the losses during the lockdown, this is very hard to recover from and hence many are closing,” said AD Singh, the founder and Managing Director of the Olive Group of Restaurants.

It takes no science to understand why the restaurant industry is the worst hit as opined by the industry experts. The industry which thrives on socializing and creating good times with family and friends is surely the worst hit where maintaining social distancing now is the norm. Besides, one of the primary reasons for the closing of restaurants is that it’s a capital intensive business wherein the daily churn is required to get going.

National Restaurants Association of India (NRAI) President Anurag Katriar said the sustainability cost is very high in the restaurant industry. There is no working capital and there is uncertainty in business volumes going forward. The volume is expected to be subdued as will need cash to fund losses that restaurants are unlikely to get. Further, the operational cost including the rentals is very high to afford.

Even if the restrictions are not there, customers at this time will not be in that state of mind to dine out. Economic factors as well as the fear of spending some good amount of time (40 minutes to one hour) in a closed environment where many strangers will come and go does not look feasible for consumers.

Also, high rental is another cascading factor in the operating cost. Moreover, with the kind of guidelines to operate a restaurant business these days, many would not have the capability to follow such guidelines of social distancing and fewer footfalls, no liquor, etc.

“Eating out at restaurants is not a necessity, by and large; it’s a part of discretionary spending when you go out, socialize ― it’s all part of that. If you are not in a secure mind-frame about your future income, you will be as conservative as possible, and these are the kinds of expenditures that get knocked out first,” said Devangshu Dutta, founder, Third Eyesight.

“The restaurant industry was always a high mortality rate industry but the effects of the pandemic has been devastating. Some estimates say that 25-40% of restaurants may never open and even those that open will have to deal with low sales for a few months,” said Zorawar Kalra, founder of Massive Restaurants.

“I see the cost to sustain closure is very high. Many don’t have any resources which will impact the industry in such a way that 30-40% of restaurants will not reopen,” Katriar said.

Maintaining the utmost care in health and hygiene measures may prove a double whammy for restaurateurs. Firstly, it will add to their operating costs but they won’t be able to do away with this measure-as this is the only way to bring back consumer confidence. Adopting digital menus and digital payment solutions is another area they will have to travel around.

What’s in the offing?

Maintaining the utmost care in health and hygiene measures may prove a double whammy for restaurateurs. Firstly, it will add to their operating costs but they won’t be able to do away with this measure-as this is the only way to bring back consumer confidence. Adopting digital menus and digital payment solutions is another area they will have to travel around.

Besides, working with 50 percent or less of total capacity to ensure social distancing, the restaurants will probably have to get on the apps that provide online reservations, pre-ordering, and waitlist management to help minimize the queue of people waiting to be served. Popular restaurants have already started with thermal scanning for employees as well as consumers.

So, in the post COVID era, thermal scanning will be the new metal detection initiative that the restaurants will have to partake.

“Restaurants will have to opt for digital menus, contactless food, and sanitization among others. And with 50 percent occupancy, no alcohol and reduced working hours-restaurants will not make any money,” said Riyaaz Amlani, MD of Impresario Handmade Restaurants and the former President of NRAI.

Source: etvbharat

Written By Aditi Shrivastava & Samidha Sharma, ET Bureau

BENGALURU | NEW DELHI: In what would be one of the most significant consolidation moves in the sector, Uber Eats, the food delivery arm of the global ride-hailing platform, is in final stages of negotiations to sell its India business to rival Swiggy, three people privy to the development told ET. The deal, which is expected to close by next month, will be Swiggy’s largest acquisition till date, and Uber’s first divestment of its food business globally.

The transaction is likely to be a share swap, sources said, giving Uber about 10% stake in the Bengaluru-based company last valued at $3.3 billion.

The development is in line with Uber’s global strategy to cut down on losses as it prepares for a public offering at a possible valuation of $120-150 billion. For the ride-hailing giant, Uber Eats alone is estimated to be valued at over $20 billion. The business generated $1.5 billion in revenue globally in the first quarter of 2018, according to US-based tech news portal, The Information.

High Cash Burn

“It is prudent to be invested in Swiggy than burn capital competing for the same set of restaurants and consumers,” said a source in the know of the deal. “This should bring some rationality to the cashguzzling food-delivery market,” this person added, hinting that discounts are likely to significantly reduce post integration.

In the past year or so, both Swiggy and Gurgaon-based Zomato have been raising capital as they have gone on a tear to acquire new customers. Along with these two, the market has seen heightened discounting by Uber Eats and Ola’s Foodpanda which has led to high cash burn by these companies.

Sources said that Uber Eats had also held discussions with Zomato, but those talks fell through. In an emailed statement to ET, spokespersons for Uber and Swiggy said, “We do not comment on rumour or speculation.”

Uber Eats India racked up a cash burn of around $25 million on an average 9 million orders a month, a top executive at the firm told ET. Swiggy burns about $40-45 million a month on its food business, according to industry estimates.

The deal talks come at a time when Uber’s India rival Ola has put its food business under Foodpanda in the slow lane, and cut marketing and customer acquisition costs by two-thirds. The company is now focusing on its own private labels and cloud kitchens which include The Great Khichdi Experiment, Lovemade and FLRT brands.

“Last-mile logistics is an operations-heavy, low-margin business. In the long run, I don’t see how the market can sustain so many parallel micro-logistics networks,” said Kartik Hosanagar, professor of technology & digital business at The Wharton School.

Over the last couple of months, Uber Eats has grown in markets such as Hyderabad, Chennai and Pune. Experts say consolidation has been on the cards in the food-delivery business. “Consolidation will happen due to the thin operating margins and market acquisition costs, which will place enormous pressure on the companies to raise capital,” said Devangshu Dutta, chief executive of Third Eyesight, a specialist retail consulting firm.

In India, Uber Eats was launched in May 2017 and is currently present in 37 cities across the country. Swiggy’s largest investor, South African media and internet conglomerate Naspers, has been particularly bullish on the market potential in the Indian food delivery space.

“Food delivery is a perfect example of our strategy in action with online platform capabilities that address a large offline societal need in a high-growth market. It’s still early days, but if you look at the growth in revenue and the underlying operating metrics, it gives us real confidence in the potential here,” said Naspers CEO Bob van Dijk in a recent investor call.

Source: economictimes

In recent decades, the dependence on established medical disciplines has begun to be challenged. There is the oft-quoted dictum that healthcare sector tends to illness rather than health. Another saying goes that some of the food you eat keeps you in good health, but most of what you eat keeps your doctor in good health. With a gap emerging between wellness-seekers and the healthcare sector, so-called “alternative” options are stepping in.

Some of these alternatives actually existed as well-structured and well-documented traditional medical practices for thousands of years before the introduction of more recent Western medical disciplines. This includes India’s Siddha system and Ayurved (literally, “science of life”), which certainly don’t deserve being relegated to an “alternative” footnote. Ayurved is also said to have influenced medicine in China over a millennium ago, through the translation of Indian medical texts into Chinese.

Other than these, there are also more recent inventions riding the “wellness” buzzword. These may draw from the traditional systems and texts, or be built upon new pharmaceutical or nutraceutical formulations. Broader wellness regimens – much like Ayurved and Siddha – blend two or more elements from the following basket: food choices and restrictions, minerals, extracts and supplements, physical exercise and perhaps some form of meditative practices. Wellness, thus, is often characterised by a mix-and-match based on individual choices and conveniences, spiked with celebrity influences.

A key premise driving the wellness sector is that modern medicine depends too heavily on attacking specific issues with single chemicals (drugs) or combinations of single chemicals that are either isolated or synthesised in laboratories, and that it ignores the diversity and complexity of factors contributing to health and well-being. The second major premise for many wellness practitioners (though not all!) is that, provided the right conditions, the body can heal itself. For the consumer the reasons for the surge in demand for traditional wellness solutions include escalating costs of conventional health care, the adverse effects of allopathic drugs, and increasing lifestyle disorders.

After food, wellness has turned into possibly one of the largest consumer industries on the planet. Global pharmaceutical sales are estimated at over US$ 1.1 trillion. In contrast, according to the Global Wellness Institute, the wellness market dwarfs this, estimated at US$ 3.7 trillion (2015). This figure includes a vast range of services such as beauty and anti-ageing, nutrition and weight loss, wellness tourism, fitness and mind-body, preventative and personalized medicine, wellness lifestyle real estate, spa industry, thermal/mineral springs, and workplace wellness. Within this, the so-called “Complementary and Alternative Medicine” is estimated to be about US$200 billion.

There are several reasons why “complementary and alternative medicine” sales are not yet larger. Rooted in economically backward countries such as India, these have been seen as outdated, less effective and even unscientific. In India, the home of Siddha and Ayurved, apart from individual practitioners, several companies such as Baidyanath, Dabur, Himalaya and others were active in the market for decades, but were usually seen as stodgy and products of need, and usually limited to people of the older generations and rural populations. In the West they typically attracted a fringe customer base, or were a last resort for patients who did not find a solution for their specific problem in modern allopathy and hospitals.

However, through the 1970s Ayurved gained in prominence in the West, riding on the New Age movement. Gradually, in recent decades proponents turned to modern production techniques, slick packaging and up-to-date marketing, and even local cultivation in the West of medicinal plants taken from India.

As wellness demonstrated an increasingly profitable vector in the West, Indian entrepreneurs, too, have taken note of this opportunity. Perhaps Shahnaz Husain was one of the earliest movers in the beauty segment, followed by Biotique in the early-1990s that developed a brand driven not just by a specific need but by desire and an approach that was distinctly anti-commodity, the characteristics of any successful brand. Others followed, including FMCG companies such as the multinational giant Unilever. The last decade-and-a-half has also brought the phenomenon called Patanjali, a brand that began with Ayurvedic products and grew into an FMCG and packaged food-empire faster than any other brand before! While a few giants have emerged, the market is still evolving, allowing other brands to develop, whether as standalone names or as extensions of spiritual and holistic healing foundations, such as Sri Sri Tattva, Isha Arogya and others.

An absolutely critical driver of this growth in the Indian market now is the generation that has grown up during the last 25-30 years. It is a class that is driven by choice and modern consumerism, but that also wishes to reconnect with its spiritual and cultural roots. This group is aware of global trends but takes pride in home-grown successes. It is comfortable blending global branded sportswear with yoga or using an Indian ayurvedic treatment alongside an international beauty product.

Of course, there is a faddish dimension to the wellness phenomenon, and it is open to exploitation by poor or ineffective products, non-standard and unscientific treatments, entirely outrageous efficacy claims, and price-gouging.

To remain on course and strengthen, the wellness movement will need structured scientific assessment and development at a larger scale, a move that will need both industry and government to work closely together. Traditional texts would need to be recast in modern scientific frameworks, supported by robust testing and validation. Education needs to be strengthened, as does the use of technology.

However the industry and the government move, from the consumer’s point-of-view the juggernaut is now rolling.

(An edited version of this piece was published in Brand Wagon, Financial Express.)

When American fast food standard bearers McDonald’s and Domino’s Pizza stepped into India in the mid-1990s, the market was just ripe enough for take-off.

McDonald’s and later Domino’s Pizza can be credited with not just growing the consumer appetite for fast food but also for fostering an entire food service ecosystem, including fresh produce, baked goods, sauces and condiments, and cold chain technology.

India has been typically difficult for business models driven by scale, replicability and predictability. The customer is price sensitive, operating costs are high and non-compliance of business standards is a frequent occurrence. In this environment, these brands have reinvented the meaning of meals, snacks and treats.

Their growth has set the stage for other international players and also set business aspirational standards for Indian food entrepreneurs and conglomerates alike.

Product experimentation has also been an important part of their success; it keeps excitement in the brand alive and help improve footfall. However, how far a product sustains and whether it becomes a menu staple can’t be predicted accurately. New products also need significant investment in both supply chain and front-of-house changes in standardisation-oriented QSRs, so the new product launch cannot be undertaken lightly. This is one reason these successful QSR formats don’t overhaul their menus drastically but make changes incrementally.

For these market leaders, future scale and deeper penetration is only feasible with higher visit frequency. For growth in middle-income India, they need to become a significantly cost-competitive option to be seen as more than a ‘treat’ or celebration destination.

So, while both McDonald’s and Domino’s Pizza have invested significantly in Indian flavours and menu offerings, perhaps it’s also best for them to reconcile with the fact that there will be a significant part of the consumer’s heart, stomach and wallet that will remain dedicated to indigenous offerings.

In a global environment that’s turning hostile to fast food, India isn’t a quick-fix growth market, but it’s certainly one to stay invested in, for the longer term.

And I have no doubt that as much as these companies aim to change India, over time India will also change them.

(Also published in Brand Wagon, The Financial Express)

Horticulture production in India has been surpassing the production of food grains for many years. In 2014-15, the total production of horticultural produce was estimated by the Department of Agriculture, Cooperation and Farmers Welfare, Ministry of Agriculture to be approximately 281 million tonnes as against 252 million tonnes of food grain production and 275 million tonnes of oilseeds.

Horticulture and floriculture have result in growing foreign earnings, and India’s domestic market is also growing. In fact the demand for many types of vegetables and fruits which are not native to India such as lettuce, broccoli, gherkins, as well as for exotic flowers such as orchids, gerberas, carnations, is soaring. These crops were initially being cultivated only for export, but are now being bought by the urban population within India as well, as a result of growing familiarity with other cultures, and shifts in cuisines and lifestyles.

Many of these crops require specific climatic conditions which are not available in all parts of India, hence, cultivating them in controlled environments is a preferred option. Other than providing them a hospitable environment, the yield of the crop can be significantly better and availability can be all-year round, providing better market prices in the off-season. Greenhouses can be used by farmers for years to grow and sell exotic vegetables and other high-value commodities. Moreover, greenhouses help reduce the expenditure on pesticides by warding off insects and pests, many of which are carriers of viral and other infections. There is, therefore, considerable merit to extending the area under this system of cultivation, for the benefit of both producers and consumers.

While greenhouses have existed for more than one and a half centuries in various parts of the world, in India use of greenhouse technology started only during 1980’s and it was mainly used for research activities. The commercial utilization of greenhouses started from the late-1980s and with the introduction of the Government’s liberalization policies and development initiatives, several businesses were set up as 100 per cent export oriented units. Now many progressive farming organisations and individual farmers are using varied levels of technology in order to control the environment in which agriculture is done.

Although, there is an upfront capital cost involved in the setting up of a greenhouse, the scale of the greenhouse and proper management helps in yielding viable results. Most of the greenhouse projects in India at this point of time are on landholdings of up to 1 acre. However interest is seen to be growing towards projects of larger landholdings. Capital costs per acre range from Rs. 15 lakhs for a basic green house with simple techniques to control temperature and humidity, to Rs. 1.5 crore for automated greenhouses with superior humidity and temperature control, more closely managed water and nutrient dispersal etc.

Protected cultivation is one the important interventions of the National Horticulture Mission. Various patterns of assistance in the form of subsidies (ranging up to 50% of the cost of setting up the structures) have been devised by the government to encourage farmers to engage with this form of cultivation.

To encourage cultivation of vegetables under controlled atmosphere, Punjab government has empanelled five firms to assist farmers to set up polyhouses and polynet houses in their fields. The state government will provide subsidy on the greenhouse structures erected by these firms.
In Khammam, Telangana, the Horticulture Department is readying two poly-house demonstration units to popularise greenhouse technology and help farmers take up cultivation of high yielding vegetables round the year under controlled weather conditions.

Projects have already been taken up in Telangana, Gujarat and Himachal Pradesh ranging from feasibility studies of green house facilities and distribution halls for grading, sorting and packing to designing and setting up of green houses for breeding of rice and other crops and cultivation of tomatoes, strawberries, capsicum, cucumbers and lettuce.

For higher end, larger scale farms, Indian growers are also exploring technology from Europe. For instance, the Netherlands is the traditional exporter of greenhouse grown flowers and vegetables all over the world. The Dutch greenhouse industry is one of the most advanced in the world, and has now also become a provider of technology and support for the development of greenhouse cultivation around the world. Advanced technology solutions include climate sensors, air treatment devices, and software support.

However, success doesn’t only depend on equipment. Organisations such as Koppert provide biological solutions for natural pest control, natural pollination and seed treatment, to not only improve the quality and yield of the produce, but also make it safer.

There are many Indian as well as international organisations providing greenhouse solutions ranging from materials, technology and project consultancy. In the coming years it is expected that India’s rich agricultural, horticultural and relatively newer floricultural expertise will get enhanced and further competitive with the adoption of greenhouse cultivation to feed the burgeoning global and domestic demand.