Investor's Business Daily, June 1st, 2007
Can a gutsy woman entrepreneur do for Indian food in the Big Apple what others have done for burgers, pizza and tacos?
Is America ready for curry to go like they order from McDonald's MCD? Is a sign that reads "36 billion samosas eaten" somewhere in the future of U.S. restaurant franchising?
Sunitha Ramaiah, a 36-year-old New York City corporate attorney-turned-restaurateur, thinks she can do exactly that.
After all, it worked for KFC. And Ramaiah's already meeting with established restaurant chains to franchise out Bombay Talkie, her trendy New York City Indian cafe.
It's no cakewalk. To succeed as a restaurant franchiser, experts say you need a strong concept, an ability to raise capital, and chutzpah.
Ramaiah possesses all three.
Though she never owned a restaurant or worked in one before, she mixed her business and gastronomic smarts to open Bombay Talkie in Manhattan in January 2005.
From the outset, Ramaiah saw her restaurant as a "prototype" to build a network of Bombay Talkies in cities across the U.S.
Two years later, she's meeting with chains (which she won't name for confidentiality reasons) to form a joint partnership and franchise her idea.
Ramaiah's initial success proves two things: you don't always need business experience beforehand to succeed. Secondly, coming up with a novel concept often makes a bigger bang than being the fourth pizza or burger place in the neighborhood.
Exotic franchising ideas like this also work if careful attention is paid to customer taste and staff training.
Raised Own Capital
Ramaiah had one advantage over other budding restaurateurs. She raised capital on her own, using savings and a hefty investment from her parents (her father is a Long Island cardiologist). Since undercapitalization is often a cause of an eatery's demise, she had a leg up on rivals.
Though she won't divulge her exact opening costs, she says that building a new Bombay Talkie in Manhattan would cost $300,000 in 2007 based on building costs, architectural designs and kitchen equipment (she saved attorney fees because of her legal background).
As a Columbia University Law School grad and former corporate attorney at O'Sullivan, a boutique venture capital firm, and Dewey Ballantine, the global law firm, Ramaiah knew a fair amount about how businesses make money. She also knew to focus her business plan around her original idea.
She describes her concept as "a contemporary version of an Indian roadside cafe. They're everywhere in India." These roadside cafes serve bite-sized food, like Spanish tapas, that truck drivers can wolf down in their vehicles.
The most popular dishes at the 74-seat Bombay Talkie are papdi chat, which are crispy flour purses stuffed with potatoes and chickpeas, mint lamb kathi rolls and kolivada macchi, which is Indian fish and chips. In addition, Bombay Talkie has created 17 signature cocktails, which contribute nearly 50% of the restaurant's revenue.
But not everyone was thrilled with the cuisine. New York magazine's food critics said, "Street food was spicier than Indian street food, but was sometimes diluted for the American palette, which we think is a shame."
Bombay Talkie derives its name from the painted canvasses of Indian movies that adorn the walls of typical Indian roadside cafes.
The restaurant's design, overseen by Thomas Jullhansen, known for designing David Yurman's retail stores, is very modern and sleek.
Staff Trainer
Restaurant staff gets trained by a consultant who teaches them the fine points of each menu item and its ingredients. "The role of the server is to explain the in's and out's of the food and encourage people to try something different," Ramaiah noted.
Ramaiah opened her restaurant at a time when eating out in the U.S. is on an upswing. Hudson Riehle, the senior vice president of Research and Information at the National Restaurant Association in Washington, D.C., notes that consumers here are forecast to spend $537 billion dining out in 2007, an increase of $26 billion from 2006. In 2005, Americans spent 48% of their food dollars dining out vs. 25% in 1955.
Riehle says that growing numbers of Americans are open to eating cuisines such as Indian food that previously were considered exotic. "Ethnic cuisines such as Mexican, Chinese and Italian are so ingrained that people don't perceive them as ethnic anymore," he said.
NRA research says that people who dine at Indian eateries in the U.S. are "more highly educated, have higher household income and live in metropolitan areas. If she targets the right demographics, it can enhance her chance of success," Riehle noted.
Ramaiah describes her target audience as diners ages 22-44 who spend about $35 a person on dinner. She also adds that customers ages 45-65 "have the most money to spend" so a lot of baby boomers dine there.
For neophyte restaurateur Ramaiah, her first year of running the business included a steep learning curve. "I had to learn about watching the price of all items, about inventory, bar items and how the kitchen operates," she says.
Keeping an eye on client tastes is one factor in the restaurant's success. When the cafe first opened, Ramaiah studied the evening's checks to see what was selling and what wasn't. Out went entrees with dark meat chicken, for example.
Performance Bonuses
At the same time, keeping staff is critical to any restaurant's success so she rewards top employees through a performance-based bonus system. She gave her best busser a raise, though he didn't ask for one, and promoted her top server who brings in business to assistant manager.
After building up clientele and proving that Bombay Talkie's concept works, Ramaiah has returned to her initial pursuit of franchising. "Joining with equity partners to build the brand and relying on their financial savvy to help me franchise" makes the most sense, she said.
One chain that might work to franchise Bombay Talkie is Brinker International EAT. It has had success franchising ethnic eateries such as Romano's Macaroni Grill and On the Border Mexican Grill & Cantina.
Ramaiah thinks Bombay Talkie will thrive in cosmopolitan cities like Los Angeles, San Francisco, Chicago and Washington, D.C.
Ramaiah also learned from the success of P.F. Chang's Chinese Bistro PFCB, which has grown to 152 restaurants in 35 states through franchising. She says the success of that chain hints that franchising was viable for Asian cuisine.
