In this business, if you don't evolve and change constantly, you die: TGIF's Jetley

Rohan Jetley, Managing Director of Bistro Hospitality, which owns international brand Thank Goodness It's Friday (TGIF) in India, discusses his expansion plan and future outlook with BT's Vivan Mehra. Here's his interview.

Q.TGIF is currently in an expansion mode. Will you tell us more about your plans?

Jetley: All our expansion is always financed through our internal accruals. We are a completely debt free company and don't have a third party investor. 74 per cent of the company is owned by us and 26 per cent by TGIF's American owner Carlson Hospitality . Right now we have 14 restaurants that range in size from 4000 to 8000 sq feet and we plan to add another 10 restaurants over the next 3 years. We will also plan to invest Rs 20 crores next year, and plan to go up to Rs 80-85 crores over the next 4-5 years.

Q. How much does it cost to setup a new restaurant?

Jetley: So typically , setting up a new restaurant costs anywhere between 3 to 4 crores,  depending on the size and location. Recently, we rolled out a  new design and look, which has doubled capital investment. So, now the setting up of a restaurant costs between 5 to 8 crore per unit. Typically, we would introduce two restaurant every year but now we are up to 4 restaurants per year. So, commitment has hugely increased in terms of expansion.

Q. How do you go about choosing a location?

Jetley: Since we are financing growth through internal accruals, every restaurant gives us the ability to open up more. But this also makes us very frugal in terms of location selection. We are more expensive than most other restaurants on a per square foot investment. TGIF is not just basing our product offering on food. We are the only brand having the versatility to be a beverage oriented party place but where a family can also visit. Our environment is carefully created to have such versatility. We're also going for a new look at our restaurants, beginning with Hyderabad and then Calcutta. In our new look, the kitchen is showcased and the cooking takes place live. Also the dining options are placed on different levels and the bar is always the central theme of the restaurant. All these are cutting edge design features, though they do tend to take away from the seating capacity. Therefore to achieve a good return on investment, you have to commit to a larger square footprint.

Q: So how long does it take for you to break even?

Jetley: A typical restaurant takes anywhere between 2 to 3  years. You first need to understand the restaurant dynamics. If we rent a place and put in the investment for the interiors, we get in to profitability once we pay back the interior cost. The operating profit finances the development of our restaurants going forward. If we start purchasing real estate, then we are tying up 4 restaurants worth of money into one piece of real estate. Then we start prioritizing the capital appreciation of the land along with the restaurant profitability. Then your priority changes from being in the restaurant business to being into the real estate business.

Q: Why did you feel the need for a revamp?

Jetley: In this business, if you don't evolve and change constantly, you die. Staying still means certain death. The definition of what's trending is a constant evolution. What's cool today is very different from what was trendy 10 years ago. The coolest restaurants in the world with innovative interior designs are in Soho, in Downtown New York. We have taken design features from bars and restaurants across Soho and incorporated in the New TGI Friday's. Our new interior is lot more premium, giving our restaurants a more mature feel.

Q: What is today's customer looking for in a restaurant, given that he has so many choices?

Jetley: Today's consumer keeps evolving with his priorities. There's not just one thing that they are looking for. Customers essentially want value; if you are charging a premium for food and drink, it better be top grade quality. What's trending amongst upcoming restaurants now is a clientele of young people and junior executives looking for cheap alcohol in a relatively premium environment. Location is equally important as accessibility and connectivity. If the connectivity is better than the location it's better to be in a well connected place.

Q: You pioneered the happy hours drinks concept? How important it is to sustain the business?

Jetley: When we launched the happy hours concept in India, even our own managers thought we had gone mad and would go broke. The customer was amazed at getting the same second drink free. From a perspective, it was a very aggressive offering. We are still making money on the happy hours. We are always trying to come up with marketing activities that are true game changers.

We have now come up with the Rs 77 menu, having a cocktail and food component. This scheme helps create a marketing buzz which keeps Friday's on top of customer's mind. In fact as a result of this menu our dinner sales have gone up considerably.