The FINANCIAL — GMC Group will be opening its new restaurant Slavianka on December 10 of this year. This will be the seventh one owned by the Group. Two popular restaurants Shemoikhede Genatsvale also use the franchise of GMC.
“We will have seven restaurants in total by the end of 2011,” Tamuna Lomtatidze, General Director of GMC, told The FINANCIAL. “We plan to double our business activities in 2012. In regards to this we plan to have about fifteen restaurants. The purchase of seven more restaurants is already planned. After that we will expand our business to the regions including Achara and Svaneti.”
Q. The restaurants that GMC Group owns have various different formats. Please could you describe each of them for us and tell us which is the most popular?
A. We are trying to add as many cultural details to our restaurants as possible. We don’t want for them to be like every other restaurant on the market; we want to offer individual dining experiences. This is the main trait by which the restaurants of GMC distinguish themselves from others.
Our first restaurant, Dzveli Sakhli, was founded ten years ago. It looks slightly like a museum. The decor and menu are very traditional and unique to Georgian culture.
Kalakuri comprises a restaurant, club and lounge in one building. Therefore its client base is very diverse. The restaurant is more oriented at corporate evenings. The lounge has a more European style and its menu is European as well. The club is aimed at the young generation and the majority of its customers are from the ages of 18-25. I can proudly say that Kalakuri saw significant financial growth in 2011 of 70 percent.
Shemoikhede Genatsvale offers a kind of fast food service, of national Georgian dishes though. It was the first fast food service chain of Georgian traditional cuisine. These restaurants are aimed at all types of clients. We added a children’s corner and special children’s menu in 2010. We are trying to instil a sense of loyalty towards the brand in the country’s youngest generation from childhood.
We have the grill house Bohema as well. This isn’t operating currently as the restaurant is located entirely on a terrace. Bohema was working very successfully during the summer and therefore we have decided to reinvest in it and turn it into an indoor restaurant with a large terrace. Many exciting dishes will soon be available at Bohema.
Q. Matrioshka was a very famous restaurant in the GMC network, but now the restaurant is closed. What were the reasons for closing the restaurant and did its location play any role in this as Hero Square has been under reconstruction for so long?
A. Matrioshka was working very successfully over the years, however the strained relations between Russia and Georgia, in particular the war in 2008, influenced the business very negatively. The number of clients significantly decreased at that time. Hence we closed the restaurant in May 2010. The long reconstruction process of Hero Square did play a role in making this decision, but not the deciding one. The main reason was that there was no longer adequate demand for a Russian restaurant in the market.
Despite this we haven’t lost the format at all, because people do love Russian cuisine and entertainment. Slavianka, a new Slavic style restaurant, will be opened on December 10 as a replacement of Matrioshka. The location is the same as before but now the restaurant will be more noticeable in the newly rehabilitated Hero Square than it used to be before. We will be offering various services including the cuisine of eight Slavic countries, Slavic music and special events dedicated to Slavic holidays. The design is of a Slavic style as well. The restaurant will be oriented at business delegations and people from official and state organizations, embassies in particular.
Q. You used to own the Japanese restaurant Tokyo, however it is now closed. Do you think that Georgians simply aren’t attracted to such cuisine, even though eastern food is very popular everywhere else in the world? Do you plan to expand your network in the direction of eastern cuisine such as Japanese and Chinese food at all?
A. I wouldn’t say that it a case of Georgians not liking the taste. Sushi, the world popular Japanese food, is very popular in Tbilisi as well. Given the specificity of the market though, too many niche restaurants can’t work successfully here. The population of Tbilisi isn’t big enough for it and at the same time such food is not affordable for everyone. For example two Japanese restaurants and four Chinese restaurants are enough for the Tbilisi market until the average salary of the typical Georgian becomes at least 700 GEL. It would be profitable if eastern restaurants were to open in the regions in the future as well.
Tokyo was the first Japanese restaurant in Georgia. It was very popular during its two years of operations. However recently Perovskaia Street (where it was situated) has become a place for pubs, not for serious restaurants. In general a different type of person visits the street now. So the clients of Tokyo weren’t satisfied with the place any more. In 2010 we closed and sold the building. GMC Group was experiencing some financial problems at the time and we had totally different aims. That’s why we couldn’t afford a new building. We will definitely open a Japanese restaurant in 2012 though. This has already been planned and arranged.
As for a Chinese restaurant, we don’t plan to expand our chain in this direction. Chinese restaurants definitely need Chinese cooks. I’ve had quite a lot of experience working with them and I don’t like the attitude they have towards their work. Chinese people in general don’t uphold hygiene norms at all. It’s almost impossible to get them to agree to a certain level of hygiene in the kitchen. That’s why I don’t want to open a Chinese restaurant.
Eastern cuisine will be an important part of our network in the future.
Q. You mentioned that Japanese restaurants are barely affordable for the average Georgian. On the other hand, fast food is a very popular and cheap way of eating worldwide. Do you plan to expand the GMC network in this direction?
A. We are holding negotiations with already existing fast food chains and we will probably buy some of them by 2012. We aren’t planning to buy the franchise of any international fast food chain or found any kind of local one offering burgers. A new local brand would require very expensive technology, which we can’t currently afford. But I don’t exclude the possibility of such development in the future.
Q. Can you tell us what the whole amount of investment is that GMC Group has put in over the years? How much was it in 2011? And what are your plans for 2012?
A. It’s difficult to provide the exact number for the whole amount of investments. It is a very large amount, as for example the starting investment amount of Kalakuri was 5 million GEL. It was renovated in 2010 which cost 100,000 GEL. The initial investment in Slavianka amounts to 90,000 GEL. The starting capital of Bohema was just 15,000 GEL by comparison, but 500,000 USD will be spent on reinvesting in it in 2012. The whole amount of investments to be spent in 2012 is 250,000 GEL.
We had serious financial problems in 2008-2010. That’s why we couldn’t reinvest in Tokyo. It was the period when we renovated Kalakuri. Since 2010 however, we have been strong financially and are strengthening our positions in the market.
Q. What kind of price policy do you have? How often do you change the prices in the restaurants?
A. The prices of products have increased by 100 percent compared to last year. For example whereas meat used to be 6-7 GEL, now it can go up to 15 GEL in the market. GMC Group, however, as a huge and stable buyer has its own sellers, providing products for less. That’s why the prices in our network haven’t increased according to product prices on the market. The price increase at our chain is about 10 percent. Product prices change very frequently but our prices don’t follow them. I keep more stable ones. Just as the costs of products are increasing quickly, they may decrease very soon as well. If I were to change prices so frequently, I would lose a lot of clients. Therefore I prefer to have more stable prices than lose clients because of too frequent price changes. As a result I may have less revenue for a short period of time, but then work successfully during the rest of the year.
Q. In spite of this restaurant prices are quite high for the average Georgian. Do you think that they are fair?
A. Yes, they really are the minimum. Our restaurants aren’t known as the most expensive ones in Tbilisi any more though. Kalakuri had such a reputation for a long time and as a result people were reluctant to visit the restaurant. But now this has changed. The restaurant is oriented at middle and high social classes. And I can confidently say that the prices aren’t high for people with mid level incomes. They are actually very competitive in their segment of the market.
Gigi Ugulava has announced that farms will soon start operating in Georgia. That will positively influence our prices. We will therefore be able to buy meat directly from the farmer with significantly lower prices and this will cause a decrease of our prices as well.
Q. Do you plan to expand your network around Georgia or even abroad?
A. We will probably finish expanding the chain in Tbilisi by having 15 restaurants in 2012. After this, we’ll expand the network throughout the regions. We’ll start in Achara and Svaneti. But we may already be present in Gudauri as soon as this winter.
We have had some offers from Azerbaijan and Armenia. But GMC Group is abstaining from expanding the network abroad yet. We want to become the strongest players in the Georgia market and only after that will we start negotiations abroad. This isn’t planned exactly for the beginning of 2012, but I can’t say for sure what will happen by the end of next year.
The owner of GMC Group has a Georgian restaurant in Moscow but we aren’t managing that one. The restaurant offers Georgian national cuisine. The idea of founding Shemoikhede Genatsvale was developed as a result of the huge success of the restaurant in Moscow.
Q. How much are you oriented at tourists? How often do foreigners visit your restaurants?
A. Of course we cater to tourists. The market trends have resulted in that. There is demand for a format which is convenient for tourists. Therefore we have created a special service for tourists at Dzveli Sakhli. Fusion is the preferable serving style in Europe unlike in Georgia. So we offer traditional Georgian meals in individual portions as is acceptable in Europe and which foreigners are used to. Everything is Georgian, just the style of serving is foreign. This service is very popular.
There are often tourists at Dzveli Sakhli. The vast majority of them are Ukrainians, Russians, Poles, Azerbaijanis and Armenians. People from Western Europe or America who have come to Georgia for official visits come to our restaurants in delegations as well.
It’s an interesting fact that tourists spend more than local people.
As the number of tourists is increasing, we try to have more servers who know English. This remains a problem still, but we have some English speaking waiters/waitresses at all our restaurants.
Q. You have said that tourists are spending more. How much does the average client spend in your restaurants?
A. The average expenditure of our clients per sitting is 12-15 GEL for Shemoikhede Genatsvale; 35 GEL for premium class restaurants.
Q. How many meals do you offer in total in the GMC network? Which one is the most popular with tourists?
A. In total the number of different meals available throughout our network is about 300. We offer about 70 meals at Dzveli Sakhli, 80 at Slavianka, and 100 at Kalakhuri.
Individual meals are very much in demand at Dzveli Sakhli. Kababi with cheese is the most popular dish with tourists. Apart from that, foreigners often order Khinkali and Kachapuri as well.
Q. Are you promoting Georgian wine in your restaurants? Do you offer European wine as well?
A. We offer French and Spanish wines at Kalakuri, but demand is very low. Georgians tend to drink Georgian wine and foreigners want to taste local wines as well.
Our main partners are Telavis Marani, Teliani Vino, Tbilvino and Shato Mukhrani. Their wines are sold throughout our network.
Q. How many customers does the whole network serve in a year?
A. Annually we serve about 257 600 people. 26 400 out of the whole amount visited to Kalakuri, 24 400 – to Dzveli Sakhli, 10 800 – to pub Dzveli Sakhli, 196 000 –to the three restaurants of Shemoikhede Genatsvale.
Q. Do GMC restaurants have any international certificates?
A. We don’t yet have any certificates, but GMC restaurants already meet international standards. As we are selling our franchise, we have created a document about our standards and the two restaurants using our name have to meet them. They are very close to international ones.
We are currently preparing to get an ISO certificate. Hopefully some of our restaurants will have it soon.
Q. A list of top world restaurants is created annually. This year a Swedish restaurant holds first place. Last year it was a Spanish one. Do your restaurants participate in the creation of such ratings?
A. we have never taken part in such ratings. The offer has to come from the organizers. We’ve never received one. If we were to be invited, we would participate in such a rating. But our production director is the winner of many international culinary competitions. We offer three special meals created by our production director, which are the winners of competitions.
Q. How popular is Georgian cuisine as a brand internationally? What are the state and private sectors doing in regards to this?
A. Georgian cuisine as a brand is less famous. But it really deserves high levels of awareness. The state is doing a great deal to achieve this. Tourism is one main sector that the Government is oriented at. Increasing the popularity of Georgian cuisine is involved in the project of tourism development. Georgian Days are often arranged abroad. Last time we were in Warsaw and we were managing two Polish restaurants as Georgians for a few days. They were a complete success. People came to us following the event and asked us to open a Georgian restaurant there.
Such days are essential for increasing awareness. Advertisements or flyers alone can’t attract people. The meals have to actually be tasted. Otherwise people won’t feel strongly about them at all.
Implementing such activities by the private sector is quite difficult and hardly affordable.
Q. What would you name the main challenges of the restaurant sector to be in Georgia?
A. Finding good staff is the main problem and challenge for restaurants. There are too few good professional cooks. Almost all Georgian women are good cooks at home but they aren’t professional cooks for restaurants. There is only one culinary college Ikaros, which has courses for cooks. Being a cook must become as prestigious a profession in Georgia as it is abroad. Beginner cooks have to have the ambition to become professional chefs and later found their own restaurants. This is the way cooks develop abroad. People have to believe that they can become rich if they study cookery.
Finding waiters/waitresses is difficult as well. We have to employ people who don’t know how to serve and then teach them. The problem with finding good servers however isn’t as hard as it used to be about five years ago. The mentality of Georgian people has changed and working as a waiter/waitress isn’t shameful for them anymore. I’m very proud of some my employees who are students and are working to fund their studies themselves.
The restaurant business is a sector which depends on people’s wants and not needs. That’s why too many factors have an effect on the way they run. First of all the political and economic situation within the country, then weather, people’s moods, and periods of religious fasting all play a significant role on a restaurant’s income. We have to be ready for everything. I have to constantly be ready for periods of snowy weather and fasting. All these things influence how we work.
Another problem is having too many restaurants and cafes that do not meet adequate standards of hygiene. Permanent monitoring of quality by other organization is mandatory. As I know soon random inspections of all eating places several times per year will be mandatory by law. That will result in the closure of many restaurants and thereafter competition will be healthier.
Another of our problems is the high taxes we have to pay. It would be good if the Government cut some taxes.
But still, overall the main problem remains problems finding good staff.