We Would Expect Some Tax Relief Until A Certain Revenue Hits Sheets: Manjari Singh, The Chhaunk
The pandemic came as a bane for many and boom for some. Some sectors bloomed beneath the virus, and many succumbed for survival. The hospitality sector is one of the worst-hit sectors. The virus dashed all hope of survival for the sectors when it approached India in 2020. However, in 2021, the hospitality sector started to regain all the lost fame when the government allowed them to open with a 50 per cent dining capacity. Many food ventures under the structure of cloud-kitchen flourished and served community-based food. The Chaunk based on the same model serves all homemade Bihari delicacies. In an interview with BW Businessworld, Manjari Singh, Co-founder, The Chhaunk, Gurgaon-based cloud Kitchen, spoke about the covid-19 impact, protocol, competition and more.
Covid-19 had a huge impact on the restaurant and cloud kitchen industry. Amidst this what inspired you to start your venture in the cloud kitchen industry?
It goes without saying, the restaurant and cloud kitchen industries have undergone great suffering due to Covid-19 now it's the omicron that is lurking around. Setting up this business was not something we had planned at the time, but during the lockdown, my mother-in-law, Hiranyamayi Shivani, was unable to return to her hometown, Bihar. Similarly, many immigrants were unable to visit their hometown for months and must have missed out on an amicable dinner. Because she enjoyed cooking, an idea occurred to her that why not supply food to individuals who live outside of their hometown and provide them with a home-like feeling, and in the end, we assisted each other and we 'Saas-Bahu' founded 'The Chhaunk' that brings homemade Bihari Cuisines at the doorstep. Bihari cuisine is rarely found in every restaurant. So many people from Bihar live all around the country and hardly get enough to eat.
Another motivation for launching this enterprise is to address this issue. We also want to reach out to non-Bihari foodies who are eager to try new cuisine. As Indians, we've all grown up listening to stories about food. For years, delicious food has brought us together to build memories and bond with our peers. With the intention of bringing street stories to life via food and the distinctive flavors of Bihar, we hope that our stories will satisfy the palates of the masses.
Keeping the Covid Protocols in mind. What sort of packaging will be used by The Chhaunk? How is it different from that of the competitors?
Nowadays, everyone is concerned about their safety. While delivering our food, we have kept all of the Covid-19 protocols in mind as a company. There is no commercialisation of the meal preparation, and everything is kept exactly the same as it would be if you visit any Bihar home. For food packaging materials, we've partnered with the Favola brand. We are 100 per cent devoted to being a green company, and we do not use any materials in the restaurant that are harmful to the environment. Plastic is not used in any way, and the packaging is fully biodegradable. Furthermore, we use glass packaging to give lead-free, freeze-safe, and leak-proof food. The containers are also completely airtight for the customer's convenience.
Describe a time you had to deal with a difficult customer, co-worker, or person. How did you deal with that situation?
As aforementioned, Bihar culinary is not widely distributed in an organised fashion, which is a challenging condition to be in because consumers are still unfamiliar with the true style of food preparation and may be disappointed when it differs from their preconceptions. Another problem is maintaining a home-cooked culinary style rather than a commercially posh restaurant approach. We're working hard to keep this uniqueness.
Why only Bihari-Food? How will you expand the demand for the same?
Bihar cuisine is one of the most diverse cuisines. From the chowks of Bihari, we have exclusively brought you this venture which has Bihari food. Since we have observed the unavailability of Bihari food in most of the restaurants, that’s why we bring you the tastiest Bihari food which includes Litti Chokha, Bhat, Dal, Roti, Tarkari, and a lot more. It is one of the most loved foods by Indians. Bihari’s are spread all over India and they definitely miss their mother’s home-cooked food. We bring them not only the food but an experience that takes them back. We present you with one of the most diverse cuisines in the world which was always underestimated because of no focused approach by any brand which it always deserved. The demand for any food item grows by its taste.
How is the saas-bahu duo helping each other to grow this venture even further in the coming years?
When it comes to running a business, it's important about having a great collaboration. As a saas-bahu couple, we are tremendously supportive of one another. We've been able to overcome all of the hurdles together that have come our way. We are currently based in Gurgaon, with plans to expand across Delhi-NCR, Mumbai, Pune, Goa, Bangalore, and Jaipur within the next year. Also, early this year, we have launched 2 outlets in Manesar (Sector 52) and Gurgaon (Sector 85). In the next 2-3 years, we are looking to open at least 50+ outlets with the goal of delivering Bihari Authentic food.
What are you expecting from FM as relaxations or policies or taxation relief from Union Budget 2022?
With many of these cloud kitchen companies coming under the ambit of GST due to an explosion in popularity. The GST council has clarified in its circular that cloud kitchens provide the same services that a restaurant does, and as such, they would be covered under the definition of a restaurant under the act. cloud kitchen firms charge GST at the rate of 5%, without taking any input tax credit (ITC), under the GST composition scheme. Alternatively, they can charge GST at the rate of 18% if they want to claim the input tax credit. This makes taxation complicated for cloud kitchen owners. In addition, Due to such tax aversions, the small players in the sector might end up paying taxes irrespective of the revenue slab caps.
We would expect some tax relief until a certain revenue hits the sheets so that as business owners, we can show growth reflecting on the performance of the overall industry.
Secondly, any cloud kitchen operation requires a purchase of machines & appliances which can be subject to machinery endowment schemes under manufacturing assistance from the government which is not reflected yet. There also needs to be a defined definition of qualification & definition of cloud kitchen which is currently defined under “e-commerce food business operator” making even last-mile delivery operators run as cloud kitchens which is not the exact case.
The scrutiny of the restaurants is not as per any predefined standard or guideline, which we seek from the officials so that substandard operations in the name of cloud kitchen can be scrapped.
To bring to notice, According to a report by RedSeer Management Consulting, cloud kitchens are set to be a $2 billion industry in India by 2024. Another report stated that the food ordering market of India is expanding at a CAGR of 16 per cent to reach $17 billion by 2023. The projected market size of cloud kitchens is expected to reach $1.05 billion by 2023. Such numbers seem to be important for the government to bring positive reforms.
On a positive note, cloud kitchens being able to get an MSME certificate brings an advantage of taking the benefits under the scheme.
Overall, we propose a better formal structure on the investment subsidiary, tax reforms & operations for the cloud kitchen owners.
