Lockdown Economy Nepal in a Restaurant Chain with Paras Shrestha
The interview was transcribed and adapted into an article by Sujan Lal Manandhar.
Lockdown Economy: Interviews by think tank AlterContacts.org with real entrepreneurs sharing insights, challenges and successes during the COVID19 global pandemic to inspire, motivate and encourage other entrepreneurs around the world.
In this interview, we meet Paras Shrestha the Co-Founder of Sinka which is a restaurant chain in Nepal. They serve an innovative fusion of multiple varieties of momo dumplings and other food and beverages. Paras talked about how the lockdown impacted Sinka. He believes restaurants are not just about food but it’s an experience where friends and families spend some quality time together. But due to the pandemic people had to practice social distancing. Sinka had to close their restaurants which reduced their sales by about 70%. This meant they had to reduce their costs. They had to lay off 25 of their staff members. The other biggest challenge was rent which was due even when they were closed. They adopted a few strategies. They tied up with food delivery companies to stimulate their business online. This also provided them online visibility which resulted in new customers. They also did backward integration and started selling frozen momo. Going forward, they want to practice optimum usage of the resources at their disposal. They will come up with more exciting menus for the customers. They will also implement a new franchising model in the next few months.
Could you introduce us to Sinka?
Paras: I am one of the Co-founders of Sinka. It is a restaurant chain where we sell varieties of momo dumplings. We bring innovation to our menu and we are known for fusion in food. We are operating from three locations. We started our entrepreneurial journey in Kumaripati, Lalitpur. The other outlets are in Durbarmarg and Baneshwor(all locations are in Kathmandu valley). We will be completing our fourth year of operation in February 2021.
What are the problems your company faced during the lockdown?
Paras: Restaurant is not just about food. It’s people getting together having a conversation and a good time. The pandemic brought the era of social distancing. People were staying home and having their food there only taking all safety precautions. This is against what a restaurant stands for. The first problem we faced was that the tables were empty and our restaurants were shut down. We faced 65% to 70% decline in sales which was a big loss. Secondly, this impact on sales forced us to reduce our operating cost. A majority of our operating costs are two things; rent and staff salary. We had to lay off some of our staff members which was the last thing I wanted to do. We had a total of 45 staff members. Currently, we are operating with around 20 staff members. That’s a 55% reduction. Thirdly, almost 90% of restaurants operate in rented premises. We were obliged to pay rent even when our restaurants were closed since we did not get proper policies from the government. These were the three prominent effects we faced.
What strategies did you put in place to solve these problems?
Paras: Basically, the whole thing depends on sales. To talk a little about what was happening during the pandemic, no one was providing any food. Only groceries were being supplied. People were slowly starting to demand food from restaurants because they were fed up with having food at their home. But there were not enough restaurants that were coming up to fulfil the demand. We saw this as an opportunity and we wanted to capitalize on it. So we started providing our services with around 6 to 7 staff members. Our goal was to acquire new customers. We were not allowed to deliver food by ourselves because we did not have the passes from the traffic police to travel on the road. We used the services of delivery apps like Foodmandu, Bhojdeals and Pathao. More than 60,000 people use the Pathao app. We got a lot of visibility in their marketplace as well. We acquired plenty of new customers. That was a major achievement for us. Secondly, in order to recover our sales dip, we did backward integration and started selling frozen momos. It helped us gain some revenue and minimize our losses. They were the two strategies that we adopted.
Were there any strategies that you tried that did not work for you?
Paras: I do not think there were any strategies that did not work. But the intensity of how well the strategies worked might have been higher or lower. At that moment, something was better than nothing.
What were your clients doing during the lockdown?
Paras: We got multiple phone calls and messages on our social media pages. We were trying to convey our messages about when we would reopen. We sent them to push notifications about our online food delivery partnerships.
How were your strategies different from your competitors?
Paras: Basically everyone was online. You could only deliver through third-party delivery apps. We came up with a few schemes that were different from others. Some of our competitors were involved in charitable activities. For example, Dalle restaurant was feeding street dogs. There were some restaurants that were open (even though it was not permitted). To be honest, we were also operating without the consent of the government because you still have to pay your rent and other dues in order to survive.
Now that the lockdown has been eased, how is your business doing?
Paras: Currently, I would say we are recovering and sales are spiking up. That is why we are hiring. I get a lot of phone calls from the staff we laid off. I just got a message earlier where one of them stated that he just wanted to pay his school fees which were Rs. 4000 and his rent which was Rs. 5000 and he was ready to receive even Rs. 1000 only. There is a desperate atmosphere in the job market.
What is the outlook for your organization for the coming three months?
Paras: Firstly, we are pretty tight in terms of our expenses right now. When you have ample resources, you tend to use it improperly. There is one lesson COVID has taught us and that is the optimum utilization of resources. We realized we were overstaffing. Secondly, we would like to recover the losses we faced due to COVID. Thirdly, we are coming up with new food fusions in our menu to excite existing and new customers. Finally, we are planning to come up with a franchising model which we will release soon to increase our revenue and brand presence.
What are the things you need help within your organization?
Paras: I would like to sum up by saying that at this point in time it is very essential for each of us to realize the importance of supporting our local businesses. I urge all the viewers to support them by following their social media handles or by purchasing from them. We should support each other and travel around the country.
About the guest
Paras Shrestha is one of the Co-Founders of Sinka. It is a chain restaurant brand which serves an innovative fusion of multiple varieties of momo dumplings and other food and beverages. They are currently located in 3 places in Kathmandu Valley; Kumatipati, Durbarmarg and Baneshwor.