OPENING A RESTAURANT IN INDIA? IT'S JUST LIKE LANDING ON MARS
The First Restaurant on Mars
It is 2025 and life is discovered on Mars. You have been awarded the first Martian hospitality license. It is an enormous untapped market. What should you do fir
Hire a President? Design a menu? Find a location? Choose new decor or try to find a Martian who knows what's happening on Mars?
When foreign hospitality executives come to India to do business for the first time, it is just like landing on Mars. Success in their own country gives them the false confidence that they can simply transport their business model to India and succeed.
The hospitality business in India is evolving rapidly. Foreign and domestic hospitality firms find themselves adrift in a sea of competition from international brands, rapidly changing tastes fostered by customer's increased foreign travel, a new openness to experimentation on the part of Indian people, increased spending power, changes in governmental rules and widespread corruption.
In this dynamic and volatile market, Indian firms are vulnerable, as well, because many of them still work from a heritage point-of-view, often influenced by friends and relatives when making business decisions from their gut.
Like the first hospitality licensee on Mars, hotel and restaurant executives, both foreign and domestic, planning to build or expand in India, must talk to someone who knows what's going on in India. Seat of the pants management is no longer adequate to deal with this highly complex, inscrutable, rapidly changing Indian hospitality market. A feasibility study and report prior to making costly decisions is no longer a luxury. A hospitality consultant is required to produce accurate, actionable information that only the hotel and restaurant consultant has been compiling on an ongoing basis.
The hospitality business in India is evolving rapidly. Foreign and domestic hospitality firms find themselves adrift in a sea of competition from international brands, rapidly changing tastes fostered by customer's increased foreign travel, a new openness to experimentation on the part of Indian people, increased spending power, changes in governmental rules and widespread corruption.
In this dynamic and volatile market, Indian firms are vulnerable, as well, because many of them still work from a heritage point-of-view, often influenced by friends and relatives when making business decisions from their gut.
Like the first hospitality licensee on Mars, hotel and restaurant executives, both foreign and domestic, planning to build or expand in India, must talk to someone who knows what's going on in India. Seat of the pants management is no longer adequate to deal with this highly complex, inscrutable, rapidly changing Indian hospitality market. A feasibility study and report prior to making costly decisions is no longer a luxury. A hospitality consultant is required to produce accurate, actionable information that only the hotel and restaurant consultant has been compiling on an ongoing basis.
1. Are you ready to gamble away INR 1,00,00,000.00?. Utilizing gut instinct or experience to make investment decisions is too risky in today's India. Can your gut identify the key risk factors in infrastructure, regulatory, availability of product bouquet, rising inflation, intercultural differences or the shortage of skilled manpower?
How many rooms is Marriott International planning to build in your market? When will Hilton, Taj Hotels, Indigo, Olive, Hakkasan, Trishna, Woodside inn and bar, Cafe Zoe or Smoke House Grill open across the street? Only accurate intelligence will prevent you from making costly mistakes.
2. Is your financial plan realistic and accurate?. Investors and Bankers demand professional financial plans. Simply putting together your best guess is no longer adequate. All of the numbers must be supported by a realistic competitive analysis, industry standard expense ratios, historic results of like businesses in the local market, regulatory risk factors, stress tests on the initial capital structure and a disciplined ROI estimate, to name just a few.
Because of the unique nature of the hospitality industry in India, accounting firms must employ the services of hospitality consultants in India to research and compile all the industry specific supporting documentation.
3. The devil is in the details. The restaurant industry in India is comprised of the unorganized and the organized market. The organized market consists of the QSRs, full service restaurants and PBCLs. The unorganized market is made up of the roadside vendors, Dhabas, Chinese vans and trolleys. Although often discounted in official industry intelligence, the unorganized market competes successfully on price, local taste preferences and low barriers to entry.
A large foreign restaurant company failed to take this into account when they initiated their entry into the Indian market. This error has cost them millions in failed locations, improper pricing, unfortunate product selection and an overbuilt infrastructure that failed to pay for itself.
4. A static plan is worse than no plan at all. The financial plan you submit to your banker before your project begins is not the same plan you will use to operate your business. Rapidly shifting cultural tastes, local governmental regulations, population density, competitive positioning, currency conversion rates, cost of goods and infrastructure short falls all require constant revisions to any effective hospitality business plan, especially in the volatile Indian hospitality market.
Hotel and restaurant consultants in India constantly update their database to improve the real-time accuracy of their market intelligence. The updated data that they maintain at the hospitality consultant's expense is invaluable to foreign and domestic hospitality companies expanding into the Indian market.
5. You are too busy to conduct a feasibility study. Think of hospitality consulting services as the IB, the CIA, the SIS or the MI6 of a sovereign country. Hotel and restaurant consulting firms are constantly gathering intelligence to supply busy executives with accurate up to date information. Like any sovereign country's chief executive, the hospitality executive must rely on the hospitality industry's intelligence community to help him navigate the shoals and hidden obstacles within the exotic, confusing, rapidly changing, somewhat corrupt and highly competitive Indian market.
"Don't go to Mars without a feasibility analysis and assessment report"
Information is the rocket fuel of successful business. In the over-heated Indian hospitality industry detailed, accurate and up-to-date information is essential. Hospitality consultants gather industry specific, market, and macro-economic intelligence on an ongoing basis. This resource is new to the Indian market. Do not go there without it.
