Quick-service restaurants attract VC attention
Mast Kalandar, Kaati Zone, Nirula's, Yo! China — these quick service restaurants (QSRs) are among the few that have been creating a buzz by attracting investments from venture capital (VC) firms. Until a few years ago, there were hardly any VCs which would take the risk of entering this space, with Cafe Coffee Day (CCD) being the lone exception. But it seems that they have found an appetite for these ventures. Take Mast Kalandar. In 2008, Footprint Ventures invested $1 million in parent company Spring Leaf Retail. Last week, the restaurant chain got a series B funding, this time from Footprint, Helion Ventures and the Salarpuria Group. And though co-promoter Gaurav Jain won't reveal the amount, he admits that this time the funding is significantly higher and will enable the company to go from 18 outlets to 100 by 2012. This was Helion's second investment in this space. In 2009, the VC firm invested $1.9 million in Bangalore-based Brand . And Ashish Gupta, one of the firm's managing directors, invested in a personal capacity in East West Ethnic Foods' brand Kaati Zone. "The boom in QSR is a reflection of the economic growth and can be linked to the retail boom, more disposable income, more malls, more eating out," says Kanwaljit Singh, MD of Helion. He believes that the QSR space is buzzing with interesting formats that can be easily replicated in various cities. "Typically, an entrepreneur approaches a VC when he realises that if he needs to grow from being local to regional or even national," he says. Kaati Zone, for instance, had just five outlets in Bangalore from their inception in 2004. In 2007, CEO Kiran Nadkarni received funding from Draper Investment Company, Accel India and Helion's Gupta. There are now 15 KZ outlets in Bangalore and Chennai and Nadkarni is looking to add another 30 in cities. VC firms admit that they are meeting far more QSR players today than they did five years ago and while some, like Brand Calculus are planning to bring in international brands, there are many coming up with indigenous formats.