Business Segment: Organised

Interviewer (D): Devashish Lodha – student of IIM Ahmedabad

Interviewee(I): South Indian restaurant chain owner from Kolkata

Date: 20/09/2021

Interview Transcript

Initial Pleasantries

D: Thank you for jumping on the call. My group mates and I are conducting interviews for our
marketing project. It is centred around payment mechanisms during pre-covid and post-covid era. So
I wanted some insights from you regarding the restaurant business.

I: Yes, I understand go ahead.

D: First off, I wanted to understand a few things about your business. Can you give details about a
few basic metrics like how many customers do you serve each day? - If you could split the number of
customers between weekdays and weekends that would be great. I would also like to know what
the average order size.

I: During a typical weekday we serve about 40 to 50 orders and during weekends we serve about 60-
70 orders. Average order size is generally around ₹ 500.

D: Have you experienced any dip in sales when compared to pre covid period?

I: There was a dip during the initial months of lockdown. However, the sales have reached the pre
covid levels. The only change has been the increase in delivery mix. Pre-covid, we hardly had any
delivery sales. But now almost 60 to 70% of our sales is delivery based.

D: For delivery sales which app do you use? Are you listed on Zomato and Swiggy? Or do you have
your own delivery system?

I: We don't have our own delivery system. We are listed on both Zomato and Swiggy.

D: How much commission do these apps charge for the delivery.

I: The commission rate is generally 20-25%.

D: That is a substantial chunk.

I: Yes, but the commission is offset by the lower staffing and overhead costs; but we have
experienced a slight dip in our margins. Our gross margin has reduced by around 2 to 3% due to this.

D: Ok, coming to the payment modes, what payment methods does your restaurant accept?

I: We have cash, credit/debit card and all major payment wallets – Paytm, Google Pay, Phone Pay

D: Did you have these payment modes before COVID as well?

I: Yes, we were accepting cash and card since a decade. We installed the interface for payment
wallets after demonetisation.

D: Ok. Can you give an estimate share of each payment method at your restaurant?
I: Yes. Cash is nearly 40%, card transactions are close to 25% rest are payment through online
wallets.

D: Within online wallets, can you give an estimate of which is the most popular one?

I: Paytm is by far the most popular wallet at our restaurants and Google pay is second. The share of
other wallets is almost negligible.

D: What was the breakup of these payment methods before COVID?

I: Cash was used predominantly. It accounted for almost 70%, card transactions were close to 15%
and rest were online wallet payments.

D: In your opinion what has been the reason for this shift to online wallets and cards post COVID.

I: This again ties back to the increase in delivery mix. When ordering through Swiggy and Zomato
people generally use online wallets since there are some additional discounts and cashbacks. Also, to
facilitate contactless deliveries they were using online wallets.

D: Thanks for those insights. I was wondering whether use of card and online wallets lead to any
processing charges or any operational difficulties at your end?

I: Credit card payment typically takes 48 hours to settle. The processing charges for credit card
transactions are generally 1-2%. When ordering through Swiggy and Zomato the payment usually
arrives within a week.

D: Since, delivery sales has increased, has this caused some issues in your working capital
management? Since transactions were earlier in cash, so you would have got the amount
immediately but now it takes almost a week for payment of your delivery sales.

I: Yes, initially there was some strain in the working capital. But we managed to extend our credit
periods with the vegetable and fresh produce vendors as well. So, we were able to balance out the
cycle.

D: In your opinion what will be the trend in payment methods given that we are heading towards
normalcy.

I: I think consumer behaviour has changed. I expect the delivery mix to be high, but not as high as
the current levels. I suspect it will be closer to 30-40%.

Also as walk in customers increase cash payment will also increase. The reason being my restaurant
typically hosts middle class families and the head of these families – fathers aged 40 and above - are
still not very comfortable with cashless systems. They prefer cash over online payment.

D: I would now like to understand a little more about the payments your business makes for
procuring the fresh produce, utilities , labour payments, etc.

I: Sure go ahead

D: So what is the approximate expense per month that you would be incurring for these
transactions?

I: It would be close to ₹ 5,00,000 per month

D: Ok, and what payment methods do you use? I would like to understand the payment methods
that you used before the pandemic and post pandemic.
I: Before the pandemic, to procure fresh produce, we use cash. We buy it directly for vegetable
vendors. They use only cash; for expenses like utilities, rent, etc. we use NEFT or cheques. We hire
labour through contractors. So, we pay the contractors in cheques.

Post pandemic, the only change has been for payment to vegetable vendors. We are using
UPI/online wallets to pay them.

D: Did you face any difficulties to procure items, during the pandemic?

I: Yes. Initially the vegetable vendors did not have the system to accept payments through online
modes. Due to the pandemic, no one was willing to go to a crowded mandi to buy produce in cash.
So along with other restaurants we helped them setup bank accounts and UPI payment systems.
During that one-to-two-month period our business was severely affected. Due to lockdown, there
were no walk-in customers. Also, for delivery orders, we did not have raw materials to make many
items. We were practically operating at 20-30% of our capacity during that period.

D: That period must have been really challenging. Thank you for taking out time and answering my
questions. I have one final request. We are trying to understand which features of a payment system
is preferred by business. We are analysing three main features: Safety, Convenience, and cost of the
system. To gain some insights I will be sending out a google form after the interview. Request you to
fill that form.

I: Sure, I will fill that up.

D: Thank you once again for your time. I gained some valuable insights.

I: Welcome!