Chennai pubs see fall in business, owners focus on food to generate revenue

Chennai may be consuming more alcohol than ever before but increased demand hasn’t exactly heralded a spike in business at the city’s pubs. In FY21, the Tamil Nadu Sales and Marketing Company (TASMAC), which holds the monopoly over alcohol retail in Tamil Nadu, registered its highest-ever revenue: Rs 33,811 crore, which is a 2 percent year-on-year spike over FY20 revenue of Rs 33,133 crore.

In stark contrast, almost all pubs in Chennai have begun witnessing a 20 to 25 percent drop in revenues when compared to pre-COVID earnings. These establishments believe that increased sales at TASMAC outlets, is a result of pubs being shut for a relatively long time.

"When consumers don’t have the option of a bar or resto-bar in the city, they’d have to go visit a TASMAC outlet, buy alcohol and have a house party," said Shiburaj SJ, co-founder of Dank, one of Chennai's relatively newer pubs. "That’s one of the reasons TASMAC probably saw their sales go up," he adds.

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Shiburaj’s contention is indeed relevant. With pubs in Chennai forced to stay shut for the most part of last year, and from April 2021 up until a month ago, these establishments saw business take a beating.

"Before the pandemic started, we were doing over Rs 80 lakh (per month) in business," says Sanjeev Varma, managing partner at Black Orchid, another recently opened pub in Chennai. "Business came down to Rs 50 lakh per month after reopening," he says, "But we have now improved to between Rs 50 and 60 lakh per month because a lot of food is contributing (to business)."

The story is similar across pubs in the city. At least five pubs in Chennai that were doing business of close to Rs 80 to Rs 1 crore per month have seen earnings hit, and have turned to food as a means to boost earnings. Good food, they say, could be a great differentiator, adding value to a pub’s F&B offerings.

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Today, 30 percent of most Chennai-based pubs’ revenues are accounted for by food. However, this is a number they are keen on increasing. "We want our food-to-alcohol revenue share to go up to 45-55 in the medium term," says Shiburaj. Irrespective of whether revenues come from food or alcohol, pub-owners say they expect overall revenues to reach pre-COVID levels only by the end of December or mid-January.

Meanwhile, TASMAC stores continue to see cash registers ring. As of July, just four months into the current fiscal year, alcohol sales at TASMAC outlets have already crossed Rs 7,900 crore.