An expansion spiced with variety

Papiya De

“We had felt the growing desire among the middleclass to eat out on a regular basis, and it is they who we have targeted” sanjay narang, CEO, Mars Hotels & Restaurants

They call it Mars Restaurants, but yet all their endeavours are to make planet earth a better place for foodlovers. Walk into any of its outlets, be it Dosa Diner, Roti, or Just Around the Corner and you realise that a little imagination can do wonders with the simplest of things. Says the thirty-something chief executive officer (CEO) of Mars Hotels & Restaurants Sanjay Narang, “We decide on the theme and menu of a restaurant based on gut-feel.” Setting up its first restaurant Jazz by the Way in downtown Mumbai in 1996, the group has now grown to 35 restaurants across 10 brands in Mumbai, Pune and Chennai. Clearly, Mars Restaurants has carved a niche for itself among the middle class gastronomes in this part of India.

In the mid-nineties, when McDonald’s, Pizza Hut, Kentucky Fried Chicken (KFC) and other international chains came into India, the concept of casual dining was fast gaining ground. Mr Narang was quick to move in and tap this new segment. The recipe for Mars’ success has been simple: innovations without experimenting with fundamental tastes. Today, the group is planning to get a larger slice of the burgeoning food business.

The overseas pie
Today, with successful brands like Dosa Diner, Roti, Just Around the Corner, Pizzeria, group company Birdy’s Mars is now all set to venture abroad. The company plans to compete with McDonald’s and other chains on their home turf. A Gallup research study conducted for Mars reflects that its brands are usually compared with outlets like McDonald’s, KFC and Pizza Hut by customers. But Mr Narang is still cautious. “It will be foolish to believe that we can compete with players who have pockets deep enough to show a loss of $30 million for the first 10 years, but we will start in a small way and let the customers experience what a fresh wholesome meal is all about,” says Mr Narang.

An expansion plan charted out by Horwarth Franchise Services, the overseas menu of Mars reads like this. Mars will look at setting up 29 restaurants across UK, USA, Dubai and Singapore in a span of the next one-and-a-half years. Dosa Diner and Roti are the only brands that will be promoted abroad. Each restaurant will span across 2,500 odd square feet with two separate service areas but a common kitchen to optimise space usage and backroom operations.

The first one of its kind will begin operations in New York by February 2002. Here again, Mars will look at a range of $8 to $10 for a meal. The one in New York will be followed by another in London by April and then Dubai and Singapore. “ We will start it as pilot projects and take it one at a time. If the initial response is good we will speed up our process of expansion,” says Mr Narang.

Each of these restaurants are estimated to require an investment of around $ 1 million, which will be funded through a mix of debt and equity. The company has already initiated the process of divesting another chunk of its share from the current 74 per cent to around 60 per cent. “ We might dilute it even further depending on the valuation we get,” says Mr Narang. The company is currently in talks with several interested parties including ICICI Ventures who had earlier picked up a 26 per cent stake in Mars for Rs 20 crore.

The Indian palate
Back home, Mars has chalked out an aggressive growth plan as well. It no longer wants to remain a regional player and plans to expand operations to Delhi and Bangalore initially and subsequently set up outlets in Kolkata and Hyderabad. Out of its existing list of 10 brands, Mars will take four of its most popular restaurants Roti, Dosa Diner, Just Around the Corner and Pizzeria to these cities. By December 2002, Mr Narang expects his chain to go up to 70 outlets in India. This will effectively increase the turnover of the chain from the current Rs 45 crore to Rs 100 crore. Currently, out of the existing 35 outlets, 31 are franchises, which gets a percentage of sales, whereas Mars manages the entire operations.

By December 2003, Mars plans to have about 110 outlets in India. Once it reaches a critical mass, Mars plans to tap the capital markets by making a public offer. “We need to have a national presence before we make an IPO,” says Mr Narang.

Also on the cards is two more fast food outlets: a Chinese snack joint Quick Wok, in Mumbai in the next three months, followed by an Indian snack joint Chaat Bazaar. Mars is also relooking at its plans to start a chain of coffee shop Big Cuppa. “ We have adopted a wait and watch attitude and letting others test the market because we don’t have the deep pockets to bear losses for a long stretch of time,” says Mr Narang.” The problem with such coffee shops is that the money spent is not directly proportional to the time spent by the customers, as it usually attracts the college crowd,” says a Mumbai-based analyst.
“We are still in talks with coffee companies to get the right blend and will launch the Big Cuppa once we feel that the return on investment will be substantial.” says Mr Narang.

The right recipe
What perhaps differentiates Mars from the other existing Indian chains like the Delhi-based Nirula’s is its variety. While Nirula’s is typically a fast food chain with more than 30 outlets in north India largely and a couple in Kathmandu, Mars believes it is more into the casual dining segment offering food with a difference. Dosa Diner, for instance offers novelties in terms of unique fillings inside the dosa. Roti again offers a range of stuffed rotis and rolls. The price range in all of its restaurants is between Rs 100 to 110 per meal. “We had felt the growing desire among the middle class to eat out on a regular basis and it is them who we have targeted,” says Mr Narang.

What has also perhaps been a key to Mars’ success is that the company has complete control over its quality. It has central commissary spread across 25,000 square western suburb of Andheri in Mumbai.

All backroom operations other than cooking the entire pre-processing and storing of items, including paper napkins and toothpicks are
centralised here. This enables Mars not only to keep a check on its quality but also helps achieve a better kitchen service space ratio for each of its eateries. Located within this space is also a training centre for its staff which at present is 1,800. In his efforts, Mr Narang is largely supported by his sister Ms Rachna Narang who heads the in-house design team. This team is responsible for the entire look of each of the outlets. “From designing crockery to writing out each of the details in the menu card, Rachna does it all,” says Mr Narang.

In June this year, Mars also opened a 30-room boutique hotel in uptown Mumbai. Gordon House has received good response from its customers with a repeat business of 98 per cent. With a price tag that is 30 per cent cheaper than its 5-star peers, Gordon House, Mr Narang believes, holds potential. “With a slump in the tourism industry, the five star hotels are offering huge discounts, in such a scenario it will be difficult for such hotels to survive,” says an analyst. “Also, it is a deviation from Mars’ otherwise focussed approach to build a restaurant chain,” she adds.

A sound business sense is the only factor that drives Mr Narang. In 1985, after graduating in hotel management from the Cornell University, USA, he joined the family-owned Ambassador Hotel’s flight catering business. In 1990, when there was a division of family assets, he joined Taj Hotel group and helped in turning around its flight catering service. In 1996 he cooked a new palate for future growth and has tasted success consistently. With an elaborate recipe for fast growth, it remains to be seen if once again Mars will get the ingredients right.