Facing the heat: Why do some restaurants in Bengaluru struggle to stay afloat?

A recent post on Reddit has highlighted the high failure rate of the restaurant business in the city. A Bengaluru man posted his experience of opening a restaurant in May and having to shut it down within a month. The 22-year-old spent Rs 6 lakh to set it up, paying a rent of Rs 30,000 with an initial income of Rs 2,000 to Rs 2,500 a day. However, “physical, mental, and financial challenges” of keeping it going took a toll. 

Metrolife spoke to restaurateurs and chefs about the challenges they face running a successful business. 

“There are a hundred variables. Every day is different and comes with new challenges. The number one problem is people management. The attrition rate is very high. And the industry is dynamic, so adaptability is important. Also the clients change every day, so we are catering to different tastes and preferences daily,” says Kavan Kuttappa, who runs a popular ramen restaurant in the heart of the city. His second venture, a cocktail bar, is expected to open in the next few weeks. 

The competition is high and there is less margin for error, explains Kuttappa, who previously worked as the head chef at one of the city’s most popular restobars, The Permit Room, which shut down in 2021. 

Not pandemic-proof

Anirudh Kheny shut his restaurant, 1Q1, after the pandemic. The Asian restaurant, which introduced Bengaluru to Nikkei cuisine (a fusion of Peruvian and Japanese cuisine), was running successfully until its last day. “For us, the unpredictability and uncertainty were major factors that contributed to the decision of shutting it down. The government rules were changing every other week. We started delivery but could not serve alcohol. We were not sure when we could open for good,” he recalls.  

After the shutdown, the team spent another year creating a new space —  one with more outdoor seating to create Covid-proof seating, and a more casual vibe that catered to a wider audience. “It was an instant hit,” says Kheny. Since then, he has opened five other restaurants across the city. However, he notes that the restaurant business has taken a hit across the country. But Bengaluru has it the worst. “There have been mass layoffs in the corporate world and things have become more expensive,” he explains.

Focus and reinvention

Platforms like Investorant are attempting to simplify the process of setting up a successful food and beverage (F&B) venture. Guru Shivaram, one of its co-founders, points out that in his experience, the failure rate in the industry is 80% (within a certain category of restaurants). Started in 2022, they handle the business plan, conceptualisation, investments, real estate identification, human resources, and liaison. “We break ownership into fractional units, opening access to a wider pool of investors to lower risk. This way, the talent can dedicate all their time to focus on the product” Shivaram says. They currently have two F&B ventures on Lavelle Road, and one in Hyderabad. Three more are in development and will be launched in Bengaluru over the next three months.

Chethan Hegde, who until recently was the chapter head of National Restaurant Association of India, Bengaluru, estimates that over 20% of restaurants shut down within the first three years of opening. He runs 13 restaurants across the city. “When we were younger, we would frequent places like Pub World, Caesar’s, Tiffany’s and Black Cadillac. But they have all shut down over the years,” he says, adding, “Whereas in cities like Mumbai, many restaurants that opened 60-70 years ago are still going strong. I think the key is reinvention. It is important to keep up with the times.”