Featured Business: South Indies (Billion Smiles Hospitality)

Posted by fshsfhsfh on Friday, September 2, 2011

 Billion Smiles Hospitality, Bangalore (www.billionsmiles.in) is the company behind “South Indies”, “Bon South” & “Up South” (earlier Daskhinadin).
The information below is based on my research and analysis alongwith excerpts from an Interview with Venkatesh Bhat, CEO, Billion Smiles Hospitality Bangalore.
About Billion Smiles:
·         A company with a mission to create iconic brands in “South Indian” cuisine across categories – Casual/Fine Dining, Quick Service Restaurant (QSR) and Catering
·         Founded by the younger generation of a family which owns and operates “Arya Bhavan” restaurants across South India.
·         Backed by a successful entrepreneur with the financial capability to support the business for several years till it takes off.
·         Currently operates “South Indies”, “Bon South” and “Up South” in Bangalore and Pune. Soon to be launched in Hyderabad
The Billion Smiles Story:
A young 19 year old, Vijay Abhimanyu, from a family which owned and operated several budget south Indian restaurants “Arya Bhavan”, wanted to be an entrepreneur and take south Indian cuisine to the next level and create an iconic brand like “McDonalds” for South Indian cuisine. He also saw a huge business opportunity to create a casual dining south Indian restaurant. The only options in the market were the local budget south Indian joints (like the Sagars, Saravana Bhavan etc.) or the premium south Indian restaurants within 5 star hotels like “Dakshin” at ITC.
To fulfill his dream, Vijay managed to convince Venkatesh Bhat, the South Indian Corporate Chef at the Leela Hotels, to join him as the CEO of the company with a market salary and stock options, and attempt to build a large company with strong restaurant brands focused on South Indian cuisine. They partnered with a marketing agency “White Canvas” to define and design the brand identity.  Critical to this dream was a hitherto not so well known fact that Vijay’s dad was super rich (he had started a technology company and sold it to a MNC for a lot of money) and was willing to virtually write a blank check to Vijay for his dream.  But it still takes guts for a 19 year old to do something like this – Bravo Vijay!!
In March 2007, Vijay & Venkatesh, launched their first restaurant “South Indies”, a pure Veg Casual/fine dining restaurant offering south Indian cuisine from the 4 southern states, in a great location on the Indira Nagar 100 Feet road. South Indies was an instant hit and operationally broke even in the 2nd month. My estimate of the investment made in the first unit is upwards of 4 Crores.
In the next 4 years, they have managed to add 2 South Indies restaurants (1 in Bangalore and the other in Pune), 1 Bon South restaurant (a South Indian Casual/Fine dine restaurant that also served non vegetarian food) and 2 Up South Restaurants (their QSR brand).
Vijay and Venkatesh were very clear that their vision is to create a large company and an iconic brand and all decisions they made were based on this long term vision and not in chasing short-term profits. There were pluses and minuses to this approach. They did not compromise of the quality of the staff they hired & offered them market leading employee benefits, they procured the finest quality supplies and prepared great quality food. In hindsight, they feel that they may have gone over-board with a few things – e.g. buying very heavy guage steel utensils that would last several decades rather than good quality utensils that would have more than done the job. The problem: The utensils they bought were almost 3 times as expensive as the ones that would have more than served their purpose.
 According to Venkatesh, having a long term vision and the financial backing to experiment, learn and innovate were the only reasons they were able to do what they did. If this were a business with a motive to make profits quickly, things would have been different. They kept aggressive but easy to understand targets – food costs below 30% and sales of INR 30 lakhs per month.
Vijay and Venkatesh run Billion Smiles like a professional corporate entity – no operational short-cuts. Everything they do is based on a well thought out and documented process – right from the recipe used to prepare a dish, to doing home delivery to distributing flyers.
With all the knowledge they had gained with South Indies, they invested in creating their second brand “Bon South” – a casual/fine dine south Indian restaurant that also serves non vegetarian food options and served alcohol. They leased an old corner house in Koramangala (on the 80 feet main road), pretty much tore down the house and built it to suit their concept and launched Bon South. Again, Bon South gained popularity quickly, though in our assessment, this venture was not as successful as expected. Add to this “Not-so-great” performance, a huge water logging issue with the building, they decided to shut down Bon South at that location and move it to Mantri Mall in Malleswaram. 
They then launched a QSR concept “Dakshin-a-Din” at the Mantri Mall. The idea was to use the same kitchen and back-end facilities for both their QSR brand and Bon South at Mantri Mall. Daskhin-a-Din was rebranded as “Up South” and is currently doing quite well at Mantri Mall and probably subsidizes “Bon South” to some extent.
Following this, they launched a second South Indies in Infantry Road – infact, this opportunity came to them. The owner of Hotel Chevron on Infantry Road, and a South Indies fan, approached them to use his terrace area to launch South Indies there. The terrace area was designed for an Italian restaurant initially. This unit is now their best performing unit both from a revenue and profitability perspective.
They have now managed to launch South Indies in Pune – in partnership with a local Pune resource. They have also launched their first stand-alone “Up South” in Jayanagar.
Key Challenges:
1)      Bangalore Metro: With the Bangalore Metro taking off, their location was impacted heavily. Sales dropped heavily by about 60% and after intense debates on whether to move or not, they took a decision to hang in there and support the business through the difficult times, till the construction work was done and revenues would perk up again.
2)       The Location Issue with Bon South: They learnt it the hard way that what looks good initially may come with a lot of problems later. The building they had leased for “Bon South” in Koramangala, had huge water logging problems and they were pretty much forced to move out of that place and take a loss on the investments they had made there.
3)      Procurement Issues: Even with extensive checks and balances, they have had issues with suppliers submitting wrong bills and have incurred losses because of this. With 4 years of experience in their bag now, they have refined their processes to make it as error-free as possible.
Vision and Future Plans:
Their vision is still intact. They believe that they have created the building blocks to rapidly create a large and robust business. Their specific objective is to create a large Rs. 200 Crore company which can do an IPO in the next several years.
Key Lessons for Readers:
·         Having a big vision and plan is fine, but you better have the financial muscle to support your vision and plans.
·         Building a brand and creating a large company is a painstaking process, especially in an operations intensive business like the “Restaurant” business. So you will need to be very sure that you are in this for the long run. Success will take a long time to come and the work will be very hard.

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