Tiffinbites: Jamal Hirani
The story behind Hirani's assault on the restaurant market
You'd be pushed to find anyone as well-versed on growth strategy as Jamal Hirani, whether it's franchising, acquisitions, raising debt and equity finance, or expanding nationally and overseas. The business he set up five years ago, Tiffinbites, now encompasses four casual dining Indian restaurants, concessions in Harrods, Selfridges and Westfield, a successful takeaway business and a booming wholesale arm, after originally tapping into a lucrative lunchtime market in the City. The self-coined ‘Indian Wagamama' is now on the brink of nationwide expansion through a band of franchise partners.
Hirani recently added Gordon Ramsay's favourite takeaway, the Bombay Bicycle Club, and the Vama Group (a fine-dining restaurant and extensive airline catering firm) to the business. Now unified under the Gourmet Restaurant Group, Hirani's collection of companies is by far the largest Indian restaurant group in Europe. The newly formed group has 34 locations across the UK, which should rise to around 80 by 2009. After buying up his two biggest rivals, no other Indian restaurant chain comes close.
Both recent acquisitions were facilitated by a credit-crunch defying £5m bank loan, secured earlier this year. But Hirani believes that, with the right business and approach, it's possible to secure funding in even the most turbulent of times. “Yes the banks have tightened their criteria, but banks are in the business of lending money. As long as you can produce a sound argument in the busines plan, and a structure, the investment is always going to be out there,” he says. Crucially, the acquisitions add strings to an already healthy looking bow.
Five years ago, Hirani saw a gap in the market that even seasoned investor and Dragon James Caan, who turned down the chance to invest in Tiffinbites after Hirani approached him privately, didn't believe was there. The idea of having a curry at lunchtime was unheard of, particularly for time-poor workers in the Square Mile. But a City worker himself, Hirani found himself craving the food his mother used to make. “Indian food, the home-cooked style, is very healthy,” insists Hirani. “It's a balanced meal.”
Confident that a more traditional style of Indian cooking would be a big hit with an increasingly health conscious British public, he bought a list from the profile database at Pricerunner.com, the shopping comparison site where he was UK managing director at the time, and canvassed 1,000 of his peers. He asked if they would opt for this type of meal at lunchtime if it was made available to them within five minutes. After receiving an unusually high response rate of 48% within 24 hours, he immediately quit to start work on the business plan.
While it may be hard to believe for those of us used to takeaways swimming in grease, by adhering to a strict no ghee policy, using less oil and fresh ingredients and spices, Tiffinbites' meals are less than 10% fat. Despite a 70 to 30 male to female ratio of City workers, around 60% of Tiffinbites' customers are women.
The Tiffinbites name derives from Mumbai's tiffin wallahs, who deliver home-cooked food in stainless steel containers to office workers at lunchtime. Hirani's dishes are served in similar containers, paying homage to this tradition, while offering “a novel, funky way of presenting the food”.
Scaling it up
Hirani always had big plans for Tiffinbites. While there were more than 10,000 Indian restaurants and takeaways in the UK, he saw that this market was highly fragmented, with no major national brand. He wanted to do for Indian food what Harry Ramsden's had done for fish and chips. He started with a test site in Wardour Street in January 2003, funded by a £400,000 investment of which around half was personal and half came from friends and family. A second test site launched in the City in April, and the first ‘proper' site opened in Moorgate in October. By the end of that year, Hirani had raised around £1.5m and to date, he's taken on around £5m of equity investment, although he says that raising it has been tough, and before launching another business he'd ensure it was sufficiently capitalised. “I've probably spent most of the last six years fundraising and managing investors,” he says. “That can be challenging. You end up not being focused on your business all the time.”
Hirani admits that he didn't get the format quite right at first. “It was about learning from what worked and what didn't,” he says. “In Soho, we didn't have an alcohol licence; in the City we needed more seats. Consumers were packing the place out, and we could only serve so many.”
But by the time a CanaryWharf branch opened, the kinks had largely been ironed out. Now Tiffinbites' busiest venue, it can do as many as 1,000 covers a day. And unlike most Indian restaurants, Indian people actually eat there, making up 40% of the clientele.
Hirani feels there has never been a better time to go on the acquisition trail. “The markets are tough, businesses are suffering, but there are great opportunities,” he says. Take the Bombay Bicycle Club. At £4.4m, Hirani believes it was a steal. “A year ago it would have raised three times as much,” he says, believing its real growth story is still to come. The business made a loss of £484,000 in the year to March 2008, which may have contributed to its bargain price tag, but with the right marketing Hirani feels it's well-positioned to triumph. “It's a fantastic brand,” he says. “Particularly when there is a recession, people stay in more. We've seen a growth in Tiffinbites' delivery business and it was a great opportunity to buy a business and build its value up over the next few years. It's an arm we aim to grow very quickly.”
So confident is he of this growth that he's just done a 3.2 million menu door drop, with offers to entice people to stay in, and there are 10 new units in the pipeline. “Times are tough out there yet we've increased our marketing spend,” he says. ”This is the nation's favourite food and we feel there's a real opportunity to spread a bit of good news to the consumers.”
While parts of his retail business have been hit by the credit crisis (sales have dipped by 10% year-on-year at the newly acquired fine-dining restaurant), the acquisitions have brought in economies of scale, which have helped offset this. They have also helped the business absorb the inflationary price rises on raw materials facing the industry.
“We've ensured consistency, so our recruitment team recruits everyone, and whether you use onions for Tiffinbites or Vama or wholesale, it's the same onions, which creates economies of scale,” Hirani explains. “So there's more efficiency in the business.”
The wholesale arm is also thriving. Tiffinbites delivers around 250,000 meals a week to corporate clients, such as the BBC and Barclays, taking over their canteens every Wednesday. “People still have to eat,” he says. “There may be a decline in dining out, but more people eat in their canteens. So demand has gone up in all those sites.”
Another reason for Tiffinbites' success, and something that's made it an attractive prospect to investors, is its focus on looking after its people. Hirani applied many of the skills he mastered while working as a lingerie buyer at M&S (where he was later headhunted to lead Swedish dot-com Pricerunner's expansion into the UK) when setting up Tiffinbites. “My business was actually developed around the M&S model,” he says. “Your customers, staff and your suppliers are your biggest stakeholders, and it's ensuring that you treat them in that way.”
Customers are involved in the brand and are invited to monthly supper clubs where their input is used to perfect the recipes, menus, even the prices. Similarly, staff are looked after well and given the opportunity to grow and develop. “Having good people to work with has been fundamental,” he says.
Such rapid expansion has been made possible by the appointment of key members of the team, including the executive chef from the third-party supplier who originally made the food to Tiffinbites' specification. All the food is now created in-house, and the chef still spends time with Hirani's mum.
Like M&S, Hirani has brought in quality controls to ensure the food meets the highest standards, while being mindful of the environment, including the use of organic rice and free-range chicken, sourcing locally where possible and using recyclable delivery boxes.
He took the people-first approach when devising his franchising model for Tiffinbites, too. He prefers to call his franchisees ‘partners', and aims to ensure they share his passion for growing the business.
“It's about joint investment and partnership,” Hirani says. “We're not into selling franchises. Sometimes one of the most difficult things in this business is finding really good managers. I was after young entrepreneurial talent who wanted to invest some of their own money, then we'd invest alongside them, and they would build a chain of Tiffinbites restaurants around themselves, with our infrastructure.”
Hirani's standards are characteristically high. The business receives around 10-15 franchise enquiries a week, and rejects around 99%. Restaurants will soon be opening in Leeds, Birmingham and Oxford, and he's targeting every major city.
The brand is also on the brink of international expansion, again through joint ventures. The first Tiffinbites restaurant will open in Dubai in December, and three more are due to open next year. Hirani is also finalising talks with a large retail partner in India.
The pursuit of all these growth avenues should see the business' £24m turnover catapult to £60m over the next five years. After sampling the Tiffinbites menu, it's easy to see why this business is creating such a stir.