By IANS
Chennai : The Rs.440-million ($1.1 million) Sayaji Hotels Ltd has decided to hive off its Barbeque Nation restaurant chain for more focussed and accelerated growth, the hotel group’s top officials have said.
“As per our plans the restaurant business would require around Rs.2.5 billion by the end of the financial year 2008-09. We are looking out for private equity to the tune of Rs.500 million,” Sajid Dhanani, managing director of the hotel group, told IANS.
Dhanani, who was here to open the Barbeque Nation restaurant Wednesday, did not specify the timeframe by which the hive-off would happen.
According to him, the restaurant business will have a minimum value of Rs.2.5 billion.
While that is for the future, opening five Barbeque Nation restaurants till date – two in Bangalore and one each in Mumbai, Gurgaon and Chennai – Sayaji Hotels has plans to grow the business to 100 restaurants by the end of fiscal 2009-10, Dhanani said.
“We will have a pan India presence. We also have enquiries for opening outlets in Singapore, Britain and Dubai,” said Prosenjit Roy Choudhury, CEO Barbeque Nation, who was present at the function.
He said that each outlet would require an investment of around Rs.35 million and can generate revenue of Rs.50 million.
The Bombay Stock Exchange (BSE)-listed hotels group has also tied up with the State Bank of India for funds to open 27 restaurants.
As per plans, there will be 13 restaurants this financial year and another 32 by the next financial year, Roy Choudhury said.
He also said that after establishing 20 outlets in major Indian cities, the company would go for the franchisee model to grow the business.
“We will take care of the operations and the property owner would be paid a fixed fee or a mix of minimum guarantee and a share in the profits,” he added.
Speaking about the revenue mix, he said 75 percent of the revenue would be from food while the balance would be contributed by liquor.
“Barbecued food and liquor go well together. Every Barbeque Nation outlet will have a bar. In states like Gujarat where there is prohibition the bar will serve non alcoholic drinks,” Roy Choudhury said.
In Chennai where private bars are not allowed, Sayaji Hotels has circumvented the problem by housing the restaurant in the Sri Devi Hotel, he said and added that as per regulations hotels with more than 20 rooms can have a bar.
Meanwhile, Sayaji Hotel’s over-200-room hotel project in Pune is progressing smoothly and expected to be ready by this December.
“We may go in for a budget hotel later. Our first priority is to expand the restaurant business and hive it off,” Dhanani said.
According to him, compared to hotels, growing the restaurant business is relatively easy.
As a test case Sayaji Hotel has agreed to run the Buffet Junction restaurant at the Ginger Hotel in Vadodara.
“Depending on our experience we will look at expanding this line of business.”
Recently Clearwater Capital Partners (Cyprus) Ltd acquired around 8 percent stake in Sayaji Hotels.
“Clearwater’s stakes would go up to 28 percent when the company converts its foreign currency convertible bonds (FCCB),” Dhanani said.
He expressed the hope that the company will close this fiscal with revenue of Rs.680 million.