As margins drop at home, ‘desi’ restaurant expands overseas

Lal Qila plans to establish franchises all over the world.

KARACHI: While Lal Qila’s profit margins decrease at home because of rising costs of ingredients, the Karachi-based gourmet restaurant offering a variety of ‘desi’ food in a 17th century, exquisite setting is heading for rapid expansion in many parts of the world in coming months.

Having entertained a president, several prime ministers, politicians, former judges, European and US diplomats and famous sportsmen, the one-of-its-kind restaurant in Karachi is now aiming to capture the international market by establishing franchises all over the world, Lal Qila Director Abid Siddiq told The Express Tribune.

The first foreign franchise of Lal Qila was established in Dubai a year ago. “It’s doing excellent business. It’s doing really good compared to other businesses,” Siddiq says, adding standard operating procedures (SOPs) have been documented carefully to make future franchise operations easy. Its franchise in Faisalabad has also been operational for the past six months.

In addition to the forthcoming Hyderabad franchise, memoranda of understanding (MoU) have been signed with franchisees in Abu Dhabi and Bangladesh. “These franchises will become operational soon. Besides, we’re in talks with potential franchisees in New York City and Chicago and expect to sign the MoU very soon,” Siddiq says.

He is upbeat about entering the Chinese market as well. “Pakistanis are everywhere. You can take this business anywhere, and it’ll be successful.”

He says the Lal Qila management is trying to open at least three franchises annually for the next many years.  “We’re heavily relying on the multimedia to expand globally,” he says, adding procedures, services and practices are being recorded digitally. “Who knows where we go next and what language our franchisees speak. Getting it all on camera will save us a lot of hassle.”

About 15 management professionals with MBA degrees and hands-on experience in restaurant business are taking care of the franchising arm of Lal Qila, says Siddiq.

Claiming that it was one of the first restaurants in the region to get the ISO 9001 certification, he says the eatery maintains a quality-control laboratory that examines each and every bit of vegetable, meat, fruit, spices and dairy product before it enters the restaurant’s kitchen.

Unlike most restaurants in Pakistan, he says, Lal Qila uses controlled recipes or premixes to ensure that its taste is consistent.

Rising costs

Although the Lal Qila management refused to share the profit margin on the record, it says it has shrunk considerably in the last four years. The increase in the per-person rate for a buffet dinner has not been in proportion to food inflation, according to General Manager Azher Shafi.

As an example, Shafi cites the price of chicken – a main ingredient in many of the 90 dishes offered every night at the Karachi restaurant – which was Rs60 per kilogramme in 2007. It has increased to Rs165 per kilogramme in 2012, a hike of 175%.

However, he says, the per-person rate Lal Qila charged in 2007 was Rs490, which has now been raised to Rs950 – an increase of 94%. “We’ve been bearing the difference ourselves without passing it on to the customer. The customer can’t afford it,” Shafi says.

Food diplomacy

Siddiq believes the government should use food outlets like Lal Qila, which offer Pakistani cuisine to foreign customers in a cultural and historical ambiance, to advance Pakistan’s interests globally. “Food should be a foreign policy arm of our government.”

“Just look at McDonald’s. When it decides to establish its first franchise in a country, it’s the US consulate in that city that facilitates its meetings with potential franchisees. That’s because McDonald’s represents not just the economic interest of Americans, but it also helps promote a certain image of the United States globally,” Siddiq says, adding the foreign missions of Pakistan should be tasked with helping Pakistani businesses expand globally.

Published in The Express Tribune, February 13^th, 2012.