Re: [silk] One for the chef
-BEGIN PGP SIGNED MESSAGE- Hash: SHA256 Madhu Menon said the following on 11/10/2007 12:13: > So that 1465% "profit margin" in Cheeni's calculation... really isn't. > The profit margins on liqour are definitely more than on food but not as > much as you think. Comparative numbers for the UAE. The UAE has no _direct_ taxes on alcohol. Upmarket restaurants in Dubai pay a 10% luxury tax on food and beverages. Cops don't need to be bribed. Alcohol licences are available only to restaurants in 3-star (and above) hotels. However, overheads are high (imported labour, high real estate costs, and so on). A bottle of Casillero del Diablo that costs AED 30 in a shop, was AED 280 in an upmarket Italian restaurant two years ago - the last time I ordered a bottle of wine that I had recently bought outside. Should we should start an restaurant alcohol premium index on the lines on the Big Mac Index? Ram -BEGIN PGP SIGNATURE- Version: GnuPG v1.4.6 (MingW32) iD8DBQFHDfb+RQoToz9njMgRCFobAKDxFJACspQuJPOsUaNYn6+b231zWwCbBeug jR+QKdj/OPwoB9aFaDW315U= =JL93 -END PGP SIGNATURE-
Re: [silk] One for the chef
Udhay Shankar N wrote: Venkat Mangudi wrote [at 01:10 PM 10/11/2007] : Sure. However, amortization schedules for setup costs in a restaurant would tend to be in the 5+ year range (I'm sure Madhu can add to that, I'm just making a WAG). Well, I am still trying to make my setup costs, so... :) (The perils of not starting a mass market restaurant.) It varies a bit depending on the kind of place (obviously) and a small joint in a less than posh part of town might make its money back in just 12 months, but most mid-range restaurants are looking at around 2-3 years to do the same thing. More expensive or niche restaurants may be in the 4-5 year range. Simple - the restaurant is charging for teh use of its premises and facilities, to the optimum extent that (they think) the market will bear. Indeed. There is always the option of sitting at home and drinking cheaper booze and eating much cheaper food. ;) -- <<< * >>> Madhu Menon Shiok Far-eastern Cuisine Indiranagar, Bangalore Visit us @ http://www.shiokfood.com Phone: (080) 4116 1800 My food photos: http://flickr.com/photos/themadman
Re: [silk] One for the chef
Venkat Mangudi wrote: Madhu Menon wrote: Srini Ramakrishnan wrote: We were charged Rs. 150 per 30ml, i.e. $93.75 for 750ml. A bottle of 750ml costs $6. A profit margin of 1465% Because, of course, a restaurant has zero setup and operational costs, and import duties on liquor are nil too. Nice counter-argument. You forgot the cost of liquor license and the occasional "baksheesh", recently legalised. I didn't. It's there in the operational costs. I was feeling lethargic when Aditya asked me about a restaurant's business figures, so I shelved it as "something to respond to later". But let me just take the example of Cinzano that Cheeni quoted. A bottle of Cinzano may cost $6 in the US, but here, it's closer to Rs. 900-1000 per bottle if you buy it wholesale legally. That brings it to about Rs. 40 per 30 ml shot as the basic cost. So Rs. 150 per shot is less than 4x the cost of the raw material. In Andhra Pradesh (since Cheeni gave a Hyderabad example), if I remember correctly, the annual cost of a liquor licence is around Rs. 1.3 million. So that's more than 100,000 per month in just licence costs. And as you point out, there is a "monthly" and a "yearly" payable to corrupt excise officials too (in Bangalore, they have "outsourced" some of the excise work to the local police, so now we have to pay those b*ds every month as well.) This is in addition to a whole lot of other licences and "incidental expenses" we have to pay for. (It could be worse; Maharashtra has even more licencing requirements.) In Kerala, the annual licence cost for bars is Rs. 2.2 million. In Singapore, it's the equivalent of Rs. 22000 per year. In New York, it's ~ $4000 ( http://abc.state.ny.us/JSP/content/feeSchedule.jsp ) In Bangalore, the Karnataka government stopped issuing fresh bar licences back in 1993 (something to do with a government-decided maximum number of bars as per the population blah blah blah). So any restaurant wanting to add a bar has to buy a licence from someone who is closing an existing bar. With the large increase in the number of restaurants, that figure is now around the 2.5 million mark. After that, you have to grease palms and pay one year's licence fee to transfer it to your name. All this now costs an extra Rs. 1 million. The cost of setting up a mid-sized restaurant + bar in Bangalore is now around the 10 million mark, if not more. Annual liquor licence costs in Karnataka were Rs. 345,000 per year till this year, and then the government *doubled* it. Why? Because they banned sales of arrack, and apparently that caused a huge shortage in revenue, so of course we get to bear the cost of it. If your booze is expensive, blame the 180% duty (it was lowered by a bit recently to comply with WTO rules; I think it's 150% now) on imported spirits, and the very high licencing costs imposed by the government. So that 1465% "profit margin" in Cheeni's calculation... really isn't. The profit margins on liqour are definitely more than on food but not as much as you think. -- <<< * >>> Madhu Menon Shiok Far-eastern Cuisine Indiranagar, Bangalore Visit us @ http://www.shiokfood.com Phone: (080) 4116 1800 My food photos: http://flickr.com/photos/themadman
Re: [silk] One for the chef
Venkat Mangudi wrote [at 01:10 PM 10/11/2007] : If you were to distribute those costs to your sales, how would you do it? You cannot, hence the term break-even. At some point in time, every business breaks even. After that, the setup cost cannot be included in calculating profit. Sure. However, amortization schedules for setup costs in a restaurant would tend to be in the 5+ year range (I'm sure Madhu can add to that, I'm just making a WAG). Secondly, even with operational costs and import duties, most (if not all) restaurants have high rates for drinks (not just the alcoholic kind). Try to BYOB, and the restaurant charges corkage. So what is really the operating model here? Wish I knew, or could find out... Simple - the restaurant is charging for teh use of its premises and facilities, to the optimum extent that (they think) the market will bear. Udhay -- ((Udhay Shankar N)) ((udhay @ pobox.com)) ((www.digeratus.com))
Re: [silk] One for the chef
Madhu Menon wrote: > Srini Ramakrishnan wrote: >> We were charged Rs. 150 per 30ml, i.e. $93.75 for 750ml. A bottle of >> 750ml >> costs $6. A profit margin of 1465% > > Because, of course, a restaurant has zero setup and operational costs, > and import duties on liquor are nil too. Nice counter-argument. You forgot the cost of liquor license and the occasional "baksheesh", recently legalised. If you were to distribute those costs to your sales, how would you do it? You cannot, hence the term break-even. At some point in time, every business breaks even. After that, the setup cost cannot be included in calculating profit. Secondly, even with operational costs and import duties, most (if not all) restaurants have high rates for drinks (not just the alcoholic kind). Try to BYOB, and the restaurant charges corkage. So what is really the operating model here? Wish I knew, or could find out...
Re: [silk] One for the chef
Srini Ramakrishnan wrote: So I am not saying that this is your average restaurant profit margin, but the drinks menu is really the killer. Here's a bottle of Cinzano vermouth we had at Barbeque Nation, Hyderabad a couple of nights ago. Cinzano Bianco http://www.bevmo.com/productinfo.asp?area=home&seref=froogle&pf_id=0019816 We were charged Rs. 150 per 30ml, i.e. $93.75 for 750ml. A bottle of 750ml costs $6. A profit margin of 1465% Because, of course, a restaurant has zero setup and operational costs, and import duties on liquor are nil too. -- <<< * >>> Madhu Menon Shiok Far-eastern Cuisine Indiranagar, Bangalore Visit us @ http://www.shiokfood.com Phone: (080) 4116 1800 My food photos: http://flickr.com/photos/themadman
Re: [silk] One for the chef
On 10/11/07, Srini Ramakrishnan wrote: > Cinzano Bianco > http://www.bevmo.com/productinfo.asp?area=home&seref=froogle&pf_id=0019816 > > We were charged Rs. 150 per 30ml, i.e. $93.75 for 750ml. A bottle of 750ml > costs $6. A profit margin of 1465% > Except in a military CSD canteen and on onboard on a naval ship, i have never seen Cinzano for sale anywhere in India... Is it possible to buy it using regular channels now ?
Re: [silk] One for the chef
So I am not saying that this is your average restaurant profit margin, but the drinks menu is really the killer. Here's a bottle of Cinzano vermouth we had at Barbeque Nation, Hyderabad a couple of nights ago. Cinzano Bianco http://www.bevmo.com/productinfo.asp?area=home&seref=froogle&pf_id=0019816 We were charged Rs. 150 per 30ml, i.e. $93.75 for 750ml. A bottle of 750ml costs $6. A profit margin of 1465% Cheeni On 10/4/07, Aditya Kapil <[EMAIL PROTECTED]> wrote: > > Madhu, > Interesting. Would you care to share basic P&L breakdown of restaurant > financials? I am curious about the main patterns in the biz? > Adit. > > On 10/4/07, Madhu Menon <[EMAIL PROTECTED]> wrote: > > > > > > > > and that would mean I need to do business of about 30,00,000 per month > > for the > > numbers to make sense, > > > > > > >
Re: [silk] One for the chef
Wow this mail came in dangerously close to the one I sent :-) Adit. On 10/4/07, Suresh Ramasubramanian <[EMAIL PROTECTED]> wrote: > > > > Find a VC . >
Re: [silk] One for the chef
> would mean I need to do business of about 30,00,000 per month for the > numbers to make sense, which is practically impossible. I'm wondering > what the way out is. Find a VC similar to that guy in Dilbert, the "Take my money! Take it!!!" guy Then syndicate a bunch of your stuff - recipes, prepackaged thai food etc.
Re: [silk] One for the chef
Madhu, Interesting. Would you care to share basic P&L breakdown of restaurant financials? I am curious about the main patterns in the biz? Adit. On 10/4/07, Madhu Menon <[EMAIL PROTECTED]> wrote: > > > > and that would mean I need to do business of about 30,00,000 per month > for the > numbers to make sense, > > >
Re: [silk] One for the chef
Suresh Ramasubramanian wrote: Nobody's closed down CMH Road yet, eh Madhu? Hehe. Actually, Nam Prik Pao can be made in varying degrees of hotness. We make our own paste as well at about medium strength, and I don't like burning the chillies because of the bitter taste it impartes, and of course the smoke. Alas, the Bangalore Metro project is making its way towards CMH Road, so it will only be a matter of time before I need to move. The hard part is finding another location. Rents in the area are apparently touching Rs. 200 per square foot, which makes it difficult to set up shop. A 3000 sq. ft. restaurant would have to pay Rs. 600,000 as rent per month, and that would mean I need to do business of about 30,00,000 per month for the numbers to make sense, which is practically impossible. I'm wondering what the way out is. -- <<< * >>> Madhu Menon Shiok Far-eastern Cuisine Indiranagar, Bangalore Visit us @ http://www.shiokfood.com Phone: (080) 4116 1800 My food photos: http://flickr.com/photos/themadman
[silk] One for the chef
Nobody's closed down CMH Road yet, eh Madhu? http://news.bbc.co.uk/2/hi/uk_news/england/london/7025782.stm Burning chilli sparks terror fear A pot of burning chilli sparked fears of a biological terror attack in central London. Firefighters wearing protective breathing apparatus were called to D'Arblay Street, Soho, after reports of noxious smoke filling the air. Police closed off three roads and evacuated homes following the alert. Specialist crews broke down the door to the Thai Cottage restaurant at 1900 BST on Monday where they discovered the source - a 9lb pot of chillies. The restaurant had been preparing Nam Prik Pao, a red-hot Thai dip which uses extra-hot chillies which are deliberately burnt. Nam Prik Pao recipe Heat garlic and shallots in oil and remove to a bowl Place red chillies in the pan with some oil and fry until they go dark in colour. Then set aside Mix shrimp paste with the rest of the ingredients and pound in a mortar and pestle Return the mixture to the heat until it becomes a thick dark coloured paste But the smell prompted several members of the public to call the emergency services. Alpaslan Duven, a Turkish journalist based in the restaurant's building, said: "I was sitting in the office when me and my chief start coughing and I said this was something really dodgy. "I looked out of the window and saw people rushing and then we heard the sirens." Supranee Yodmuang, the restaurant supervisor, was above the restaurant when she received a phone call from her boss. "It was about 4pm when I saw the police who were closing off the roads but I didn't know why. "My boss rang me and said I had to get out of the building because of a chemical attack." She added: "Because we're Thai, we're used to the smell of chillies." A Scotland Yard spokesman said: "The street was closed off for three hours while we were trying to discover the source of the odour."
