Private equity firm CX Partners has invested Rs 260 crore in restaurant food chain Dindigul Thalappakatti Hotels – this will be one of the largest investments in a local restaurant.
CX Partners hold half majority in the business, with promoters holding the remaining half. Nagasamy Dhanabalan, Managing Director of Dindigul Thalappakatti, will continue running the business. The funds have been raised to fuel expansion of the business across India and globally, hire more professional members to the team, and invest in technology operations.
The capital will be used to expand in metros across India and also overseas. The investment by CX Partners, which has also invested in chains like Barbeque Nation , will also help it professionalize the management.
M Vinod Kumar, MD, Advay Capital Advisors was the investment banker to the deal and the adviser from promoter’s end. While, Balachandar R of Bluekoi Ventures was the adviser to the MD for the deal.
The chain is now being run by 37-year-old D Nagasamy, whose grandfather started the chain, and who will continue to run the operations. After returning from his MBA in hospitality management from London in 2009, he started expanding the popular but still one outlet chain. Over the last 10 years, it has opened 64 outlets, including 7 overseas in France, Singapore, US, Dubai, and Sri Lanka.
“We are not attracting only Tamil Nadu, but all South Indians. The US is the biggest market because our only restaurant in Milipitas in California generates over Rs 2 crore in monthly revenues,” said Nagasamy.
Dindigul Thalapakkati is profitable and had revenues of Rs 250 crore in the financial year ending March 2019, and expects to cross Rs 350 crore in the current financial year. Overseas outlets contributed to over Rs 60 crore in revenues last year. About 50% of the revenues come from biryani items on the menu.
“We spent time with them and saw that they have a strong and differentiated brand recall in core markets, especially in Tamil Nadu and now in Karnataka with Bengaluru,” said Jayanta Basu, managing partner at CX Partners.
With the funding and rich data of customers, the business will further invest funds in its technology functions of quality control, CRM, and ERP to target consumers better. It is also looking to scale its direct food delivery fleet in areas where its partners have low penetration.
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