Mumbai:, the operator of restaurants in west and south India, is looking at sourcing some of its kitchen equipment locally to cut costs. The move comes as sales at stores that were open for more than a year have been declining. Moreover, operating costs have been increasing because of rising raw material prices and rental costs.

Comparable-store sales shrunk by 9% in the quarter ended 30 June. That compares with a 0.5% gain in the same quarter a year-ago,, the parent of, said in a statement while announcing its earnings for the quarter-ended 30 June on 1 August. Hardcastle Restaurants reported a net loss of ₹ 1.34 crore in the first quarter of FY15 as compared to a net profit of ₹ 1.82 crore in the year-ago period.

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OSI Group is an American privately owned holding company of meat processors that service. When Cryogenic food processing, a method of preserving fresh food through. In 1995, OSI entered the India market with the creation of its subsidiary, Vista. Broiler Farms of OSI Group (Weihai) Poultry Development Co., Ltd'. Vista Food Exchange Inc., founded in 1979, is a multifaceted international organization that provides impeccable service and delivers quality products including chicken, turkey, pork, beef, lamb, produce, commodities, provisions and seafood.

Net sales grew 1.2% to ₹ 200.86 crore. Operating profit margin, a measure of a company’s operating efficiency, has also been on the decline. It has narrowed from 8.5% in fiscal 2013 to 7.2% in 2014, said an April report by India Ratings and Research (Ind-Ra). “In this weak macroeconomic scenario, the company went back to the drawing board and asked tough questions like what is nice to have and what is a must have,' said, managing director, Hardcastle Restaurants. “Among the decisions that came out of that review was a decision to source the core kitchen equipment from India to save costs,' said Jatia. Manufacturing the kitchen equipment and our lightings and fixtures locally can save us at least 10% on the cost of setting up a restaurant, said Jatia, who plans to invest ₹ 800-1,000 crore in opening new restaurants in the next five years.

The company was operating 161 restaurants as of 31 March 2013. In the past year, global vendors of McDonald’s including Australia-based Coates Signco, which provide signages, menu-boards, merchandising systems and other related products, set up shop in India. According to Jatia, this will help the company save on paying import duties. “Some of the specific benefits include the elimination of high import duties and a considerable reduction in logistics costs,' said, India account manager,, explaining that the company is looking at additional ways to localize and optimize their products and services for the Indian market. Since 2001-2002, vendors such as and, which supply buns, lettuce leaves and other condiments to have invested ₹ 800-1,000 crore to set up supply chain infrastructure, said Jatia.

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Such localization of food products has helped the company absorb some of the cost inflation on raw materials. On an average, the company has been taking a price increase of 4-6% per year whereas inflation has been at 8-9%.

“We pass on 4-6% of the rise in input costs and manage the rest through our supply chain,' said Jatia. For instance,, a unit of US-based OSI, has invested in infrastructure, manpower, resources to support strong growth projections of McDonald’s in India for the next 5-7 years,, chief executive officer, Vista Processed Foods, told Mint in an email interview. India’s organized food services markets, which includes cafes, fast-food restaurants such as and and fine dining restaurant chains such as Indigo and Olive, is ₹ 14,000 crore as of 2012. The market was growing at an average rate of 30% till about three years ago and has now slowed to 15-20% as people cut back on discretionary spending, said, practice head-consumer and retail, Tata Strategic Management Group. Gupta expects growth in the second half of the fiscal year to be better than the first half as consumer sentiment is improving and inflation is showing signs of cooling off. After five quarters, India once again topped the list of most optimistic nations, overtaking Indonesia, according to Nielsen’s Global consumer confidence survey released in July. Earlier in June, Nielsen, a global information and insights company, had said that growth in the consumer sector had bottomed out in India.