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November 12, 2012

QSR or Fine Dining: The Dynamics

Extracts From Business Today:

...the fine and casual dining sector - currently estimated to be around Rs 3,000 crore - has customers eating out of its hands.... With all the big players gung-ho on expansion, fine and casual dining is expected to touch Rs 10,000 crore by 2015.   
 ...Restaurants come in two broad formats - the fine or casual dining chains, and the quick service ones. The fine and casual dining formats are essentially the same, varying only in prices charged: thus restaurants such as those which are part of the Taj Hotels would be classified as 'fine dining' ones, while the likes of Mainland China and Spaghetti Kitchen fall in the casual dining category.

The economics of the quick service restaurants (QSRS) are very different. The success of the latter - such as McDonald's, Domino's or Pizza Hut - is apparent; indeed, Jubilant FoodWorks, which holds the franchise for Domino's, also listed successfully on the stock market in 2010. QSRS have a central kitchen and standardised fare, operate on lower margins but make up on scale, since the cost of setting up outlets is comparatively low. Fine and casual dining restaurants are the ones which have elaborate menus and take pains over garnishing and quality of service, usually serving liquor as well. They are much more capital intensive, with each new restaurant costing between Rs 1 crore and Rs 3 crore..."Typically operating profit margin in the fine dining space range between 25 and 40 per cent, while in the quick service category it is between 15 and 25 per cent," says Lite Bite Foods's Burman.

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