K Hospitality’s Karan Kapur on why QSRs are India’s next big thing
In an exclusive interview with YourStory, K Hospitality’s Karan Kapur traces the journey of one of the country’s largest hospitality groups and reveals what it takes to succeed in India’s hyper competitive F&B industry.
If you visit the new plush 080 Lounge at the Bengaluru airport or the Bikanervala or the KFC outlet on your way to Haridwar, you probably wouldn’t think that these places are related. However, they happen to have one thing in common. They are all managed byCorp.
Founded in 1972, K Hospitality operates 500-plus outlets in the hospitality, food services, and travel retail industry across the country. It is one of the leading players in the hospitality industry today and its operations are spread across bars, QSRs, cafes, food courts, banqueting, corporate food services, outdoor catering, and travel F&B outlets, among others.
In an exclusive interview, YourStory caught up with Karan Kapur, Executive Director of K Hospitality Corp, to trace the company’s journey, understand its business, and explore its recent foray into Africa.
Claiming to be one of India’s largest homegrown hospitality and food services corporations today, K Hospitality started its journey in a rather humble manner. JK Kapur, popularly known as JK, migrated from modern-day Pakistan to open India’s first live open-kitchen Indian restaurant – Copper Chimney in Mumbai’s Worli area.
Copper Chimney went on to become the first restaurant to hire a woman head chef in the country.
Almost half a century later, the hospitality company continues to lead the industry. Its popular brands include Copper Chimney, Bombay Brasserie, The Irish House, Cafeccino, Joshh, Curry Kitchen, and Blue Seas Banquets and Caterers, among others.
Its travel retail vertical Travel Food Services (TFS) operates high-end luxury lounges, reaching over 150 million travellers annually.
Today, JK’s grandsons Karan and Varun Kapur are leading K Hospitality from the forefront.
Both Karan and Varun joined the company in 2008. Initially, Karan was overseeing the banqueting and travel retail business. At present, he heads the restaurants, banqueting, and QSR business. At a group level, Karan is responsible for managing the supply chain and human resources departments while Varun oversees the travel retail business.
Evolution of the company
Once the Indian market started opening up in the 90s, more policies were introduced in the consumer space. “From a single brand, we started exploring and expanding to newer opportunities in the food and beverage (F&B) industry,” says Karan.
Later, that same decade, K Hospitality also entered the catering business. The banqueting and catering vertical, KAPCO, has its footprints across major Indian cities and abroad. Currently, it caters to over 3,500 functions annually across the wedding, corporate, and sports catering sectors. Additionally, it also launched another brand serving modern interpretations of Indian cuisine Bombay Brasserie in the 90s.
In the 2000s, with the evolution of shopping malls, K Hospitality entered the food court space with multiple brands. Its vertical Global Kitchens operates as the exclusive F&B partner for large-scale real estate assets, like malls, to set up and manage F&B offerings across local, national, and global brands.
Towards the end of the last decade, with the privatisation of airports, the company entered the space with QSRs in airports, later expanding the business to airport lounges and highways. Finally, the last leg of growth included setting up cafeterias at corporate offices.
Summing up, Karan says, “As India grew, we grew with it — in the F&B space.”
Today, K Hospitality has a workforce of over 6,000.
The food business
According to Tecnova Global, the Indian F&B industry accounts for around three percent of the country’s GDP. In fact, the industry is emerging as a high-profit sector, estimating a CAGR of 14.2 percent between 2020 and 2024, and is expected to reach $346.9 million by 2025.
K Hospitality has six major verticals — travel retail (consisting of food courts, cafes, QSRs across airports, railway stations, and highways), Joshh (QSRs), banqueting and catering, pubs (Irish House), malls (food courts, restaurants, cafes, etc.), and joint ventures for QSRs, among others. It has 20-plus in-house brands and franchises of multiple national and international brands.
Besides this, the company is heavily involved in the sports catering industry, having served the likes of the Indian Premier League, Indian Super League, and Pro Kabaddi League, among others.
“Currently we are the largest privately held F&B company in the country. Pre-COVID-19, we served 35 million customers…With markets reopening, business is bouncing back,” Karan says, adding, “Some businesses are going higher, in terms of sales numbers, from their pre-COVID-19 levels.”
He claims that the overall banqueting business has surpassed pre-pandemic numbers by 15 percent. Similarly, high-street brands (Bombay Brasserie, Copper Chimney, and Irish House) have seen a surge owing to frequent delivery and dining-in coming back.
“The Irish House saw an increase of 11 to 15 percent across different outlets from pre-pandemic sales numbers,” reveals Karan.
Speaking of brand placement, he adds that K Hospitality follows a blended strategy, based on city dynamics and rent while balancing a mix of malls and high-street locations. “When launching in a new city, we go for malls as they tend to be safer and a good location to start with,” he explains. The group operates each vertical as a separate business, managed by separate teams.
Majority of K Hospitality’s revenue comes from its travel F&B business, while revenue from the other verticals are evenly distributed. “We expect that mix to change dramatically in the next two years,” says Karan.
It is not surprising when he reveals that Mumbai and Delhi spend the most on eating out. Next comes Bengaluru, Hyderabad, Chennai, Kolkata, and Ahmedabad. He also notes that their brands have been performing well in Pune as well.
Under its new business vertical, Fire Foods Africa, K Hospitality has also forayed into Africa in mid-2021 with exclusive franchise rights for Domino’s Pizza in Ghana.
Betting on QSRs
According to Karan, while the last 10 years has been about the travel F&B space for K Hospitality, the next decade will see the company focusing on its recently launched QSR brand Joshh.
Karan mentioned that India is lining up for a huge growth in the QSR space and summed up the trends that he believes will be responsible for this massive growth:
- Consumers' dependency on convenience. “QSRs provide high-quality food quickly and at a value for money,” he explains.
- As the GDP per capita increases, a larger base of consumers will come out and eat budget food.
- Development of backend and supply chain. He adds that a lot of investment in the supply chain and distribution front is enabling F&B companies to further grow.
- New catchments in the cities are providing more opportunities for the setting up of QSR outlets.
“In the last 20-years, MNC brands have scaled and grown — that has been the India story. We believe the next 20 years will be about Indian brands producing Indian products, for Indians,” says Karan. “With Joshh, we want to build that brand, not just with delivery but also with dine-in and cloud kitchens,” he adds.
Going forward, K Hospitality plans to take the number of brand outlets to 1,000 from the existing 500 outlets in the next five years. With respect to Joshh, Karan dreams of making it one of the country’s top five QSR brands.
Additionally, he reveals that K Hospitality is seeing great opportunities in growing F&B stops on highways and has been heavily investing in the same. “We have already got six highway stops (consisting of multiple domestic and international brands), and have another six lined up,” he adds.
Reports suggest that around 60 percent of new restaurants fail within the very first year of operations. In fact, around 80 percent shut shop before completing their fifth anniversary. The restaurant business is no way an easy business. So how can one ensure that they survive?
Karan says, “We have made enough mistakes to learn from them and implement those learnings into our business.” He says that in order to survive the ever-growing F&B industry, companies and brands should focus on consistency and their consumers. They should get as much feedback as possible, and keep working on them.
“Before you step into the F&B space, meet as many entrepreneurs as possible from the industry, it can be as challenging as it is exciting,” Karan says.
He adds that an entrepreneur in the F&B industry should focus on one format or cuisine and move to the next only after excelling at the first.
Last but not least, F&B entrepreneurs should invest enough time and energy in market research. “Oftentimes people create formats of what they as a consumer would like or enjoy, or what the media calls a trend. But it is only after visiting several restaurants, talking to enough chefs about what sells best, and speaking to consumers will one put one on the right foot to start,” says Karan.
Edited by Saheli Sen Gupta