Speciality restaurant pvt lmt : Speciality Restaurants has been a growing food and dinning operator in India for

almost the past two decades. Company runs 82 Food & Beverage outlets in various cities of India under 10 brands. They are backed up by a strong team of 3000 employees and they have grown to the extent of serving 2 lakh meals for a single day just in mainland china dining restaurant. It owes its success to a very high degree of professional management at every level, from quality to service and hygiene. The entire senior management consists of professionals with top-notch industry background. Their Mission is To consistently provide world class cuisine and experience at a rational price. To create a dining experience whose uniqueness lies in its elegance and refinement which is brought alive by caring and personalized service in a warm and vibrant environment. They work on guiding values like Team-spirit - Helping, Communicating, Tolerance and Respect for others, Holistic development - Knowledge, Competence and Personal growth, Entrepreneurial spirit - Individual initiative and Achievement, Family values - Trust and Personal regard. Their outlets includes Mainland china Oh! Calcutta Sigree Machaan Sweet Bengal Flame & grill Kibbeh Haka Mainland China: This is the flag ship restaurant of the speciality restaurants. They have 30 outlets across India, Mumbai, Kolkata, Chennai, Bangalore, Pune, Hyderabad, New Delhi, Guwahati, Ahmedabad, Baroda, Nashik, Bhubaneswar, Chandigarh and Dhaka (Bangladesh). New outlets have recently been opened in Jaipur, Surat, Lucknow, Ludhiana and the most recent one is at Vashi (New

Mumbai).Their recopies are deep rooted from China and chefs frequently search china to find new recipes and their raw material is brought on daily basis from the fresh markets of Beijing. Oh Calcutta: A cuisine that brings out the flavor of Calcutta. The recipes are brought from the interiors of Calcutta, with modern tweaks but still contemporary recipes. They come up new unique recipes frequently for the customers to keep coming back to dine with them. The whole point of the exercise is to consistently surprise the palate to ensure a constant stream of unique experiences. Sigree: The traditional Indian slow cooking on the heat of coal, bringing back the northern-western Indian cuisine. It was simple, minimalist and retained the original flavors of each ingredient. Sigrees large iron vessels over a slow-burning charcoal fire and a lot of patience did the trick. Machaan: Themed restaurants that are spread across the country. The menu ranges from the jungles of the country. The restaurants are with the leopards stealthily watching you, birds calling out, deep woods and strange sounds all around. Sweet Bengal: The taste of Bengal was brought down to Mumbai. They concentrate on the sweets of Bengal. Sweet Bengal is spread through the city of Mumbai. This is targeting the sweet tooth of Indians. And Bengal sweets are famous in the country. Flame & Grill: Indian kebabs are amazing. It is the grilled cuisine of the speciality Restaurant. It is the newest addition of the restaurant chain. A culinary journey that takes you around the world. Kibbeh: A newest offering from Speciality Restaurants, Kibbeh is an oasis of Middle Eastern hospitality and magical flavors in the city. Hakka: Speciality Restaurants ventured into the potentially unexplored territory of Chinese fast food and this thought developed into our quick service restaurant brand HAKA. The menu is very

practical, not aimed at exotica. The basic notion is to provide wholesome Chinese food at very reasonable prices. Strategies: Speciality restaurants gives value for money to their customers, the chairman says their restaurant has both bens car a maruthi alto cars in their parking lots. Thus this restaurant chain gives a dining experience and a reasonable priced menu. The restaurant chain has a unique dining experience to offer their customers. They have the touch and originality from those particular places. Also they renew their recipes for the repetitive buying from their customers. This way they stay in the growing market and demand their existing customers. They offer loyalty cards to their customers, called the speciality preference card with a membership in the connoisseurs club. This way their customers get incredible privilege charges, exclusive offers, rewards, advantages and invitations. They will be invited for many exotic food festivals and the members will be pampered for their every single visit. These privileges extend to the family members too and thus making it easy to book a table and dine with ease. For every 100 points there is a redeemable voucher that can be redeemed through their online website and email, so the members neednt carry their membership card always. They also have a kidz club. Since its incorporation, the company has successfully grown its business to 62 restaurants and 11 confectionaries under 11 brands in 17 cities in India and one in Dhaka. In FY2010, the number of guests served at its corporate restaurants was approximately 2.40 million, or, on average over 7,192guests each day. Share offered to public As per cent of post issue equity Object of the issue 11.73 mn 25% Development of new restaurants Development of food plaza Repayment of term loan facility General corporate purposes NA NA Kotak Mahindra capital company limited

Amount proposed to be raised Price band Lead managers Source: DRHP

Favorable demographic profile and growing working population to augments demand for restaurant chains in India thus there is a high probability for the food chain growth in the country. Also increasing urbanization and rising middle class will expand the dining out

consumer base. Speciality has developed a successful brand amidst a strong competitive environment, diversifying into multiple cuisines in tune with changing consumer preferences. Quality of food and guest services leading to high number of repeated guests. Strategic locations lead to higher cover turnaround even for new restaurants. Robust internal control process ensures stringent quality control. They have huge expansion plans to drive future growth Mainland China continues to dominate. Focus on COCO (owned and operated by the company) model reduces the risk of dilution of quality, service and overall brand value. Clubbing other brands with Mainland China enhances visibility for newer brands and optimizes costs and expansion through internal accruals enabled the company to manage overall risk. Some of the factors in the fine dining industry will be as follows. Food service industry is highly fragmented and competitive with numerous players. Too much dependence on one brand will lead to concentration of risk at one place. High real estate costs and shortage of skilled manpower may affect fine-dining players. However speciality restaurants have a variety in of brand from Chinese to Indian, and from sweet Bengal to jungle dining experience. STP: Segmentation: People who want to dine out. The food lovers who want to try the different cuisine. Target: Targeting the age group 18 to 30 years, middle income groups, working professionals. Positioning: To provide five-star dining experience at affordable prices and You would see the Audis and BMWs parked alongside the cheapest Indian cars at our restaurantsthats our hallmark, says the owner. Logo:

SWOT: Strength: Mainland China the flagship is original Chinese and is for the Indian food lovers. They concentrate on the Lebanese food and the Mediterranean food. Indians like Indian and then comes the Chinese cuisines then comes the Lebanese and Mediterranean cuisine. Their chef and the frequently changing menu make it customers to visit again. The price is nominal, and there is always a good service. And loyalty cards for the privileged customers. They have a diversified business model, strategic location, Stronger financial profitability, robust process and scalable model which include Quality control, Brand standards, Operations monitoring & Food and service audits. They focus of the guest needs, they are headed by a very experienced founder and a skilled management. Weakness: High competitive industry The target are todays youngster they want change in everything, thought the menu changes they will also want a change in the ambience, and speciality chain offers it with different menu in different format. Threat: Entry of Chinese restaurant chains, however Indian consumers are not the favorites of real Chinese food. Government commodity rates and license Local players in the food and dinning industry Multi cuisine hotels Chinese take-away When time is a constrain even street food vendors are a threat to the chain Opportunity: The IPO itself is a great opportunity to expand the chain Their plans to open more outlets in metros, tier I, tier II cities More personalized cuisines like Italian, Mexican etc can bring in more customers and profitability.

Poters Five Force: Bargain power of suppliers (moderate) Their suppliers are from their respective places, thus there is possibility of mismanagement. Thus when raw materials are needed they may not in available in the local market or they may not get the required quantity of raw material. There are multiple suppliers, there will be separate supplier for bread, ingredients, wine, and towels etc managing them will be risky. Separate purchase for different brands under the same roof. Bargain of buyers (high) Value for money Good ambiance and service provided Variety in menu to choose from Frequent change in menu bringing in more repetitive customers and new customers too Preferred customers to retain the existing customers 10 brands under the same roof thus a customer to any one food & dining outlet is a profit for speciality restaurant chains. Threat of New entries (high) New trend of take-away International hotels entering into the market Threat of substitutes (High) Low street food Noodles as a ready to eat food dish Other Chinese restaurants or barbeque nation hotel, even Indian tandoori chicken vendors in the local stall and food outlets As the cuisine is non Indian customers dont very often visit, its an occasional dining and no multi cuisine at each of the brand, they are specialized and available at different location not at under the same place.

Industry rivals (High) Every multi cuisine hotel is a rival example Taj, oberoi, Ohris, royal rasoi etc etc Local food vendors are major rival as its cheap and Indian Fast food outlets like Mc D, Dominos, Mad over Donuts, pizza hut etc 7Ps Product: They serve food and dining It includes 10 brands Mainland china Chinese cuisine Oh! Calcutta Bengali cuisine Sigree ancient Indian Machaan jungle recipes from Rajasthan Sweet Bengal Bengal sweets Flame & grill kebab Kibbeh middle Eastern cuisine

Haka Chinese Fast food Price: Not able to get the price list for each of the 10 brands under speciality restaurants. However according to internet reviews and their guest reviews its value for money. It is a normal upper class hotel pricing list. Its main dish ranges from 190 to 370 thus a decent pricing list According to websites it is considered expensive Place: They have opened outlets in the prominent place in the metros And one international spot Dhaka in Bangladesh

However they try to cover the Indian continent They start of opening their outlet in Calcutta primarily and later expand to other cities in the country. Process: Waiters serve There is also home delivery form the restaurant or a online order can also be done Birthday parties can be organized Physical Evidence: The logo is simple, mild and sophisticated there by showing that it had good food and down to earth service and elegant ambiance. Each brand brings out its color and flavor in the name and logo The interior of each brand is linked to the cuisine and brings out the beauty of the culture the recipes are from. People: Employee trained on international levels of hygiene and cleanliness Waiters behave like friends Motivation and personal growth is emphasized More than 300 employee are employed by this chain Promotions: The TVC includes http://www.youtube.com/watch?v=P2R9ZIW845Q http://www.youtube.com/watch?v=PrdeDd-Ti4g http://www.youtube.com/watch?v=XdujN3Oh6qY The posters includes For sweet Bengal the Diwali advertisement http://www.flickr.com/photos/45627331@N06/4189761090/lightbox/

Industry Analysis: Economic Factor: Original sauces, ingredients, spices are all flown in from Guangdong, Hunan and the fresh markets of Beijing. One of the chief factors that work in favour of Speciality Restaurants is its flagship brand Mainland China. Mainland China forms 60% of the company's revenues. Besides this, the company's another brand Oh! Calcutta attracts second largest eaters. It contributes 12% to the top line. For nine-month period ending FY12, the company's flagship restaurant Mainland China sees 5196 people per day. The brand has a turnaround of 1.65 per day. Also Oh! Calcutta sees 701 per day with a turnaround of 1.09 times per day. In the last five years ending FY11, the company's net sales and net profits have grown at a compounded annual growth rate of 23% and 34% respectively. On the valuation front, fully diluted equity (FY12E), the company is quoting a price to earnings ratio of 33-35 times. Supply and Demand: The supplies of raw material are from original markets from Bengal, China etc. thus there is originality in the flavor of the recipes. There is a great demand for Chinese food as its the second cuisine preferred by Indians. Other delicacies like sweet Bengal as the sweets from Bengal are considered taste, hard to make and not easily available in market in other cities of the country. Tie ups with local suppliers is needed for regular ingredients as transporting them will be costlier and also as a substitute when there are problems in ingredients that are transported. New recipes flown in from their original culture brings more demand for the food lovers and people who loves change. Competition: All muti cuisine hotels like Oberoi, Taj, Ohris, badae mia kebabs, clubs etc Local vendors and street side vendor, though taste is a plus there is not good ambience Chinese or other take away Fast food outlets like dominos, Mc D, pizza hut, sub way, KFC, etc Future Conditions: Planning to go international More outlets in Indian across the metros, tier I, tier II cities

The IPO proceeds would be mainly used for new restaurants, repayment of term loan and general corporate purposes. Risk Matrix MARKET RISK Credit Risk Frequency Impact Cost of mitigating risk High Strategy to mitigate risk Benefit of mitigating risk This will improve the good reputation of the company and customers will have good service from the company employees will give customer delight.

Low

High

Credit risk will include

Employee Supplier(multiple) Customer

Interest Rate Risk

Low

Moderate High

Currency Risk

Low

Medium

High

Employee training cost is bearded and this risk contributed to the reputation of the restaurant and is a major parameter of measuring performance. Suppliers are multiple in numbers as there are many materials needed like, liquor, towel, raw material, breads, etc. Thus risk of taste and quality is involved her which is high. Customer are the young crowd who wants to hangout, however this TG are people who like change and experience something new always so either keep changing to be in trend or lose customers The amount of loan for the year 20010-11 is 19.76 Crores. The risk is low as they have issued equity thus interest neednt be paid. They have their outlet only in Dhaka Bangladesh. Thus there is not much of a risk.

They can be make more profit than paying interest regularly This will make more profit. It can be used

Also another advantage is that Bangladesh currency is cheaper than Indian money. However the speciality restaurant chain are planning to expand.

Equity Risk

Low

Moderate Low

Commodity Risk

High

Extreme

Low

Refinancing Risk

Low

Moderate Low

advantages too like if raw material and transportation cost is less in one country then they can be transported to the other country. Also setting up supply chain to reduce exchange rates will prove costlier than the import/export duties A share capital of 34.94 If this risk is crores. Each share is mitigated then Rs.155. This share is to be there will be a invested to open static market for restaurants and cover most the company of the country. and thus more share holders and more money to invest. As there are multiple If the risk is suppliers even if one mitigated then commodity price increases there will be not there will be a reflection in much of a price the price of the product. fluctuation and the price sensitive customer will remain loyal. As they have competition Better financial their growth may be status slower than the earlier trend. There is a risk of the interest rates being increased. However they can repay their debts and loans due to the growth. The point to be noted is

Liquidity Risk

Low

Low

Low

Legal Risk

Medium

Extreme

Low

Political Risk

Moderate

Extreme

Low

Reputation Risk

High

Extreme

High

Volatility Risk

Moderate

Extreme

High

there is fewer loans and more of equity thus refinancing risk is lower. On liquidity their biggest assets land can be sold with profit and also the ingredients and furniture and equipment can be sold in the market, so there are less chances for liquidation. There counterparty exists in the supplier end, also there will be multiple suppliers thus the contract and credit period will differ and has to be organized perfectly. The other counterparty is the customer end which will be taken care by bills after the purchase As of now there is only Tax risk for the company. The government of India laws will not be changing for another few years however there is a risk of change in tax. They have to take care of the license and the different tax and hygiene test etc. Customers are in direct contact with the company and co-customers of the product, thus reputation has to be maintained. The TG has to be pushed to the repetitive buying bucket in this tough competition As they pay interest to loans and also their source of fund is through equity

Thus the liabilities can be paid and a handsome profit also can be made on liquidity As there is not much of a legal risk.

If the tax changes there will be a change in value of money so there will be no much benefit as the value will be the same. Customer base will increase there by more revenue and more reputation and more customer satisfaction. If mitigated the assets are safe and not much of

shares there is a risk involved in the market portfolio.

Settlement Risk

Low

Moderate High

Profit Risk

Low

Low

Low

The risk of the suppliers not delivery is high, so alternatives have to be maintained always and the cost f maintaining it is high. Customer transaction is through cash/credit card. Online ordering also is there. They make a net income of 19.26 Crores in the year 2010-11. The profit is distributed from 10 brands. Thus profit is not concentrated into one product/service

a fluctuation in the market price so more share holders will be willing to invest The operating cash cycle will be minimum an thus more profit.

Systemic Risk

Moderate

Medium

High

Operational Risk

Low

Moderate Low

As the source of funds include equity and interest payment. There is always a risk of financial market collapse. The service and ambience can go wrong but that can be improved with constant supervision and motivation programs and incentives. New menu to keep the change in trend.

As there are more products/service to sell there is profit diversification, thus profit doesnt depend solely on one products life cycle or one customer base or particular delivery model. The company value wont fluctuate with the market fluctuations Bring in more satisfied customers.

Source : http://economictimes.indiatimes.com/speciality-restaurants-ltd/balancesheet/companyid39674.cms

Frequency: Low 1% (1% to 33%) Medium 50% (33% to 66%) High 99% (66% to 99%) Impact: All impacts are financial risks Low Negligible Medium Moderate High Extreme

Questionnaire for the customer 1. 2. 3. 4. How often you visit this restaurant? Daily Weekly Monthly Once in three months First time Other How was the ambience (music, lighting, spacing, color)? Excellent Good Average Below average Poor Taste of the good (include presentation, quality, temperature)? Excellent Good Average Below average Poor How was the service (presentable, language, knowledge, behavior)?

 5. 6. 7.

Excellent Good Average Below average Poor Did you have varieties in food and beverages? Yes No N/A Why visit again? Ambience Service Food Value for money Have you visited? Mainland china Oh! Calcutta Sigree Machaan Sweet Bengal Flame & grill Kibbeh Haka

Questionnaire for the management 1. As ingredients are flown in will it be fresh? 2. Its easier to buy from the local market as its fresher and cheaper? 3. 10 brands in different locations, wont that hinder the variety in food for an individual customer? 4. What do you think is your competitive advantage? 5. How do manage the local Chinese vendors, take away? 6. Your strategy to pull youth from the junk food section? 7. What are the departments you have out sourced? 8. Why lesser franchise and more corporate hotel openings?

9. With a price list like this do you think you will be able to attract tier II city customers? 10. Other than expanding, do you have plans for diversification? 11. How do you recruit chef and waiter and how to bare their loss especially chef?