Financial Daily from THE HINDU group of publications
Tuesday, May 25, 2004
Variety - Entrepreneurship
Then marketing professor, now markets food
Mr M. Mahadevan
Chennai , May 24
FORTYNINE-YEAR-OLD Mr M. Mahadevan greets you warmly as you enter his small yet functional office on the third floor of a complex on busy Cathedral Road that houses three restaurants, a bar and a hotel run by him. The restaurants have closed after lunch and it is still a couple of hours for them to open again for dinner.
Mr Mahadevan, who started his life in Chennai as an assistant professor of marketing at Madras University, now runs a chain of restaurants that serve Thai, Chinese, Mexican cuisines among others.
It was by chance that Mr Mahadevan, 49, who hails from Udumalpet and is now a non-resident Indian, quit the teaching profession and became a restaurateur in the 1980s. Since then, he has expanded his business, taking them overseas too. He has 3,800 employees in all his restaurants and 62 partners in his ventures, in India and abroad.
Why did he get into this business? The margins are high, provided you maintain quality in both the food you serve and the service, he says. Quality has to be established in the first few days of starting the restaurant. If it does not break even within the first few months, the chances that it will are remote. He also keeps his overheads low. For instance, in one of the two restaurants he runs in Paris, he employs only two chefs and one waiter. And, he adds, the secret of success is local partners, especially in overseas ventures. "Any food unit to succeed needs a local partner. Production, marketing and service are important," says Mr Mahadevan.
The restaurant brands run by him include Hot Breads, Benjarong, Planet Yumm, China Town, Copper Chimney, Noodle House, Zara, Madeleine, Wang's Kitchen, Don Pepe and Oriental Inn, a 45-bed hotel. Their turnover is about Rs 2.80 crore a month.
He started Oriental Inn on Cathedral Road mainly to get a licence to run a bar, Zara. Now, Mr Mahadevan says he will open a lounge bar named Ole in the same place, with 65 seats. This will serve mocktails, cocktails, wine and cheese. During the day, only women will be admitted and after 6 p.m., men have to be accompanied by women to gain entry. Zara, according to him, plays loud music and is targeted at the youth, whereas Ole will cater to the older age group and hence will play soft music.
There are hardly any walk-in customers at Oriental Inn. Instead, it sells rooms to companies like Procter & Gamble, EDS and GE Countrywide.
It is more a corporate hotel and rooms are priced Rs 1,100, including breakfast. Oriental Inn has a 65 per cent to 80 per cent occupancy. Mr Mahadevan says he will shortly start work on a 30-bed service apartment, quite close to where Oriental Inn is located.
According to him, the food courts run by Planet Yumm at Chennai Central and Madurai railway stations are doing good business.
He won these contracts in a bidding process. Planet Yumm at Central clocks almost Rs 80 lakh in turnover a month while that at Madurai Rs 16.68 lakh.
Planet Yumm is like a landlord at these places - it has to pay the Indian Railway Catering and Tourism Corporation Ltd, a Government of India enterprise, a fixed rent and 4 per cent of turnover.
For a food court to be successful, you need brands, says Mr Mahadevan, explaining why he got the likes of Saravana Bhavan and Adayar Ananda Bhavan at Planet Yumm.
There are Planet Yumm outlets at Spencer Plaza, Besant Nagar, Anna Nagar and Spencer Plaza, all of which are owned by him, and one at Koyambedu, near the mofussil bus terminus, which is run by a franchisee.
Apart from Hot Breads outlets in Chennai, Pondicherry and Bangalore, there are nine outlets in the US with two more to be opened shortly, 20 in the Middle East and one in Paris. The ones in the US and the Middle East are run jointly with local partners.
Mr Mahadevan says he also took the Saravana Bhavan chain abroad, jointly with Mr Shivakumar, a son of the hotel's promoter.
Mr Mahadevan and Mr Shivakumar together own about 26 per cent of the equity in each of the Saravana Bhavan outlets abroad with the balance owned by local partners.
The Saravana Bhavan outlet in San Jose, California, is such a hit that it is being expanded from a capacity of 68 seats to 280 seats.
More Saravana Bhavan outlets will be opened in other countries like the UK.
Interestingly, the Saravana Bhavan hotels abroad pay a 4 per cent royalty to the Saravana Bhavan group headquartered in Chennai.
Mr Mahadevan has also helped open the Chennai-based Anjappar restaurant abroad. He will hold a stake in these ventures.
The restaurants have been opened in Kuala Lumpur and Dubai and will open shortly in Toronto, Canada.
Food business is good business, provided the recipe is right, says Mr Mahadevan.
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