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After Mumbai, Bangalore and Kolkata, the restaurant boom has spread to Delhi and smaller cities.
In July alone, 15 restaurants opened in the National Capital Region -- Delhi and its suburbs -- taking the area's tally of new outlets to around 170 in the past two years. Earlier, not more than 30-35 restaurants would come up in Delhi and its suburbs in a year.
While the excise department in Gurgaon has 80 pending applications for liquor licences, the figure is over 100 for Delhi. This is despite the fact that Rs 500,000 is charged every year from liquor licensees to operate till 11 pm. If a restaurant owner wants to extend his hours till midnight, he has to fork out another Rs 250,000.
The boom has been fuelled by the shopping malls coming up in large numbers in and around Delhi, with each boasting of around 10 restaurants.
Industry estimates peg the growth of the restaurant business in the country from the current Rs 900 crore (Rs 9 billion) to Rs 5,000 crore (Rs 50 billion) in the next five years.
Smaller cities are also contributing to this growth. Food chains like Pizza Hut, McDonalds and Pizza Corner are aggressively targeting smaller cities, including Ludhiana, Indore, Pune, Lucknow, Jalandhar and Amritsar.
Pizza Hut plans to take the number of its restaurants from 50 to 100 by 2004, targeting 22 cities with population in excess of 1 million. These cities will include Lucknow, Meerut, Kochi, Mysore, Nashik and Amritsar.
Even the home-grown Pizza Corner is planning to open six of its proposed eight restaurants in these locations. This was stated by Anoop Sequeira, CEO of Pizza Corner.
McDonalds is also following a similar strategy by opening more outlets in Chandigarh, Ludhiana, Jalandhar and possibly Agra, because spending power in these cities has gone up and people want to try new concepts.
From its current 48 outlets, McDonalds wants to expand to 100 by 2005, with a major portion of them coming up on highways and in smaller towns.
As visits to such outlets have gone up dramatically, the time required to achieve break-even has come down from two years to less than a year in some cases, says Anil Baveja, director of the new Indi-Spice restaurant in Delhi.
He adds that this fact influenced his choice from among three major investment categories: namely hospitals, hospitality and education.
Vishal Chaudhry, former owner of Delhi's Suede, said the returns from a restaurant today were about 20 per cent a year, fairly decent against other investment avenues. An average restaurant requires investments of Rs 100,000-150,000 a seat.