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Thriving food business in Karachi takes new heights

Published on 21st July, Edition 29, 2014

 

Pakistan is a land, which is having rugged terrain and mountains in the north, plains and fields in the South. Pakistan is considered an agricultural community, which keeps the country self-sufficient with its food requirement. Since there have hardly been any investments to promote recreational activities such as water parks, amusement parks, Safari’s, water sports, race tracks, gymnastics etc the only source of entertainment for the people is food. With population of over 180 million people, the food business is considered one of the most lucrative. The food business is also a high risk high return game. If the business grows, there is no turning back. However, if food quality and taste does not appeal to the people, the business will see demise at an early stage. Looking at the opportunities in Pakistan, investors have brought in many international food chains to Pakistan, more recently Johnny Rockets, Burger King, TCBY, Fat Burger, TGIF. Burger King and Pizza Hut have opened first ever chains in Quetta, which are the first international chains having presence in the province. There are many more international chains in the pipeline.

Whenever people plan to go out, the plan usually revolves around eating out with multitude of restaurants and growing. With inflation, food prices have risen significantly. Today, price of meal at a good restaurant is equivalent to price of a buffet some 3 years ago. Bundo Khan, Students Biryani and BBQ Tonight are just few examples of businesses, which started with one shop and have expanded exponentially. Students Biryani sells 70,000 plates of Biryani a day whereas BBQ Tonight has an estimated sale of 1.5 million per day. I. I. Chundrigar Road, Khadda Market, Highway, Burns Road, Boat Basin and more recently the restaurant chains in Phase 8 are extremely popular. One of the reasons why the restaurant business has thrived is because this is primarily the only entertainment for Karachiites. When people come from abroad or simply visit Karachi, plans almost always end with lunch or dinner outside.

With population of Karachi among the highest in the world, the food demand can never subside. Major restaurant strips are found selling every menu item one can think of for lunch and dinner. International restaurant chains are finding their niche in Karachi. The food business starts early in the morning from breakfast, onward lunch and then tea. Few restaurants have found their niche and capitalize on breakfast whereas others capitalize on lunch or dinner. There are not as many restaurants as there are Hawker’s (thela’s) selling almost every homemade or fast food dish that other mainstream restaurants sell. If we talk about the structure, food is either sold through restaurants (owned or rented space), Hawkers (thela’s) and Dhaba’s (makeshift restaurants at the side of the pavement) and mobile restaurants mostly found in business districts e.g. I. I. Chundrigar Road and Shahrah-e-Faisal.

 

An emerging trend in Karachi is increased focus on breakfast. The breakfast menu at local restaurants generally includes tea, coffee, omelet, eggs, halwa and puri, kababs and the paratha and targets those who reach work without breakfast. Other mainstream restaurants e.g. McDonalds and Dunkin Donuts have created a comprehensive breakfast menu which is popular now. In most cases, the non-management staff are found having breakfast at the roadside before reporting to office. Hawkers generally sell burgers, French fries, fried fish, fresh juices, tea along with homemade food and are found all over Karachi whether it be business centers, schools, universities, colleges or shopping districts. The hawkers are generally not open for breakfast and would only operate during lunch hours with the exception of these hawkers selling tea who are open through the day. Hawkers offer inexpensive food is a popular choice for non-management and clerical staff. The same could be said for Dhaba’s, however, offer a much wider choice of food as compared hawkers. Another new concept gradually emerging are mobile restaurants. Vans carrying homemade food are parked at various locations on I. I. Chundrigar exclusively for lunch. The parked vans carry chairs and tables which are setup around the van. Once the lunch hour is off, these vans pack up for the day. According to estimates, mobile restaurants as estimated to earn about Rs40,000 to Rs80,000 a month based on high employee traffic location, Dhabas earn between Rs100,000 to Rs150,000 a month, again based on location.

Looking at the food business all over Karachi, one must wonder how do these makeshift Dhabas, hawkers and restaurants are able to swiftly operate talking over sidewalks with chairs and tables. All of them are bound to pay a monthly negotiable charge to law enforcement agencies and city development and management authorities. Hawkers and Dhaba’s pay between Rs2,000 to Rs4,000 per month which allows them to operate swiftly. In addition, they are also required to pay an allowance ‘bhatta’ on a monthly basis, which could be anywhere between Rs500 to Rs2,000 a month. For such allowances and add on charges as mentioned above, no action is taken against the illicit food business. The same goes for restaurants who occupy sidewalks with chairs and tables. In addition to a monthly charge, food is also given on demand. BBQ Tonight in agreement to law enforcing agencies gives Dal and Roti for lunch and dinner on demand. On Fridays, BBQ Tonight offers Biryani to the same. According to a hawkers and restaurant owners approached, they believed that it’s a win-win situation where all are allowed to operate for charge, which helps not only them but also those who protect and help them carry on their business. This goes under the phrase “help them to help yourself”. New entrants can easily find a selling spot provided they are willing to pay as others do. The restaurant owners, hawkers and others have all explicitly mentioned that alongside monetary payments, food is also demanded upon request by the same ‘authorities’ as mentioned earlier. Those who do not comply with these demands are eventually forced to exit the road, therefore, in order to keep the business alive and earn a healthy return, no one minds paying extra as the earning is far greater than the costs associated.

Restaurants are looking to promote the brand through viral marketing over Facebook as seen with 14 Street Pizza as a success story. Food Panda, a global online food ordering portal in Pakistan has also commenced business. Though there remains more room for players, the demand for food does not fade. The challenge is to find vacant shops in high traffic areas from where food business can commence. Those who also bring food from home at offices at times are also caught in this bandwagon and find themselves ordering lunch just as everyone else. More and more malls are being constructed which will give the food business another lift. The food business through risky can be started with low investment with returns more than 100 percent if success if found. More mainstream restaurants are competing for space in new and upcoming malls. No matter what the price point maybe, there is a customer available at each price to keep the business alive.

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