Tandoori chicken from Ganga, an Indian restaurant chain in Korea.

High-end Indian food chain transforms restaurant game in Seoul

By Samar K. Mukhopadhyay

Ganga is an Indian restaurant chain in Korea with seven locations in Seoul and one each in Daegu, Busan and Bundang. The first operation opened in 2000 in Apgujeong-dong, Seoul, and it quickly attracted a band of loyal customers. While Seoul alone has more than 50 Indian restaurants, Ganga has created a niche for itself.

Challenge

In late 2008, Anjan Mitra, managing partner and the brain behind Ganga, faced several challenges. An acute shortage of experienced cooks to provide his regular customers the taste they have come to expect, compounded by immigration restrictions, was one. Constant threat of “me-too” restaurants cropping up to emulate Ganga’s success was another. The third was the periodic shortage of special ingredients and continual increase of their prices.

Strategy

After the phenomenal success of the restaurants he managed in Tokyo over a period of 19 years, Mitra was persuaded by a group of three successful entrepreneurs from Korea — who were also his admiring customers — to start a unique (read, not “run-of-the-mill”) Indian restaurant in Seoul.

As someone who does not believe in half-measures, Mitra left Tokyo altogether and started in Seoul from scratch. He followed the “differentiation” strategy, his mantra being authentic. His dishes are authentic Indian (not the fusion version) made from authentic ingredients and not substitutes, made by authentic Indian chefs with experience from well-known restaurants in India, and with authentic decor.

His location strategy was two-pronged: open in prime locations, and have a multiple presence. His marketing strategy is simple. He provides no discounts, no coupons, and no promotions of any kind. His emphasis on quality speaks for itself and word-of-mouth takes care of the rest.

His HR strategy recently is dictated by immigration requirements which he has to follow meticulously. This meant recruiting cooks who are not only up to his own high standard, but also have at least 10 years of relevant well-documented experience.

In earlier days, this would be impossible because few in India kept documented record to prove their years of experience as a cook. But, currently, India has advanced in this field by starting many accredited culinary schools and cooks having formal appointment letters creating an acceptable pool.



Result

Mitra’s strategy obviously paid off as his restaurants received the coveted Zagat rating of “most popular restaurant” (among all restaurants) in Seoul two years in a row.

Mitra conjectures that his customers have negative price elasticity and estimates that a 20 percent discount of his prices (promotions like these are normally used to eliminate customer erosion problems) will decrease his clientele by 30 percent. This is because his customers have been accustomed to pay a certain price so as to anticipate the high level of quality and service. This enviable business positioning has eliminated the “me-too” threat.

He solved his cook shortage and visa problems by making a number of trips to various regions in India, hand-picking cooks from the pool described above - thus meeting the immigration requirement - and offering them a lucrative compensation package. This HR strategy ensures that he enjoys maximum loyalty, which translates into high quality products with amazing consistency.

Increase in the price of the ingredients is beyond his control. Rather than compromising on quality, his strategy is to absorb part of the increase and pass the rest to the customers — who do not seem to mind.

Lessons

If you are in a mature business with a number of competitors who are virtually indistinguishable from each other, follow a “differentiation” strategy. Your product must have something unique that nobody else has.

Ganga delivered authenticity and Seoul loved it. Negative price elasticity does not happen automatically — you have to create it. Once you have it, beware of changes in your business environment and adapt dynamically.

Anticipate and stay ahead of your competition. Be proactive to solve your input shortage problems. As the recent Japanese disaster has highlighted, multiple sourcing is not a bad idea.

Once the strategy is in place, implement your tactics quickly. Finally, do not neglect your day-to-day operational control. That is the key to maintaining the lead.

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Samar K. Mukhopadhyay is a professor of decision sciences at SKK GMBA.