Shutting down Cocoguru Adigemane restaurant for now

I started a Mangalorean-style vegetarian restaurant at Nehru Nagara, Puttur on 15th January 2023. A little over 2 years later, it will close down at the end of 27th January 2025. It is painful to shut a business after putting heart, soul, capital, physical and mental energy, and time into it. I am announcing this officially so that no rumours spread the news. Just as I announced its opening, I feel responsible to announce its closure as well.

Success and failure take equal space in me as an entrepreneur. I have no shame in accepting defeat in pursuit of a lofty goal. After giving everything I could, I am surrendering to failure. Tears roll down my eyes as I write this. I feel low, helpless, and devastated. The heart wants to continue, but the head has decided to close.

Why close it now, what led to this?

I take full responsibility. I am not blaming anyone else, as the outcomes came from my choices. The key reasons are:

Financial loss

The business has been running at losses for 2 years. We tolerated them hoping for a turnaround. Last season looked promising with profits in April and May, but it was not sustainable. My coconut oil business too had accumulated losses for the first 5 years, but the difference is — I stuck with it then, while I am giving up on the restaurant now.

Sewage water discharge issues

It took a year of effort to get the sewage treatment system working. Though it has been smooth in the last year, the only safe drainage was blocked by a neighbour. With no official drainage in the layout and little support from building owners, we were left without a solution.

Inventory management

Our ingredient and gas usage remained the same as in May, even when sales dropped nearly by half. Ideally, ingredient costs should vary with sales. We struggled to track wastage of raw material and cooked food. Supervisors and cooks resisted measurement systems, as they hadn’t done such practices before. With over 300 menu items across cuisines, wastage and complexity grew uncontrollably.

Employee cost

The building was not designed for a restaurant. Because it could not be rented out, the owner decided to run one. This inconvenient layout required extra manpower. We also lacked proper allocation of work, and staff often avoided tasks outside their perceived role. This left us with 28 employees costing 4.5 lakhs per month, far too high to sustain.

Ambience did not match premium positioning

We maintained hygiene and used high-quality, freshly prepared ingredients, making food costlier. Prices were set slightly premium compared to other local restaurants. But a premium offering also needs matching ambience. Since we took over a setup built for the masses, it didn’t provide customers the premium feel they expected.

Trying to give everything to everybody

We started with traditional Mangalorean dishes, but on advice, expanded to ,North Indian, Chinese, chaats, juices and more. This diluted our core, increased costs and complexity, and dine-in numbers were never enough to cover it.

Mismatch between customer expectations and our offer

We focused on quality, hygiene, and freshly prepared healthy food. But most customers wanted stronger taste and lower prices. That mismatch limited our customer base. People often said we were expensive and not worth dining at. Dishes like tambuli, kosambari, and many local delicacies went unsold and wasted.

Swimming against the current with compliance

I take compliance seriously. But when no other restaurant bothers, it becomes difficult to stand alone against the tide.

• Most businesses pay salaries in cash. When we paid PF and ESI, the in-hand salary looked lower, making it harder to retain staff.
• Restaurants are taxed 5% output with no input credit. Effectively, we paid 10% while others didn’t.
• Plastic straws are banned, but others still used them. Customers doubted the hygiene of our steel straws despite being sterilised.
• We used food-grade reusable containers for parcels, but when we charged for them, customers felt we were expensive.

Slowing down advertising

We advertised moderately but consistently through hoardings, social media, and local papers. To cut costs, I slowed it down, which hurt us badly. Dining out is often an impulse, and a new brand must keep advertising to stay relevant.

Big competitor

A major restaurant, Shree Mahesh Prasad, opened 500 metres away in September and reduced our sales by about 20% or 3 lakhs a month. In fact, retaining 80% of business against such an established competitor was itself an achievement, but still it added to our struggles.

Catering

Catering could have supported the restaurant, but orders did not come naturally. A few large catering attempts, like with Vivekananda College, didn’t go well. Without aggressive marketing, this channel couldn’t sustain.

Local customers vs tourist customers

I intended to target locals, but the location along the highway, 3 km from town, suited tourists better. Tourists were willing to pay a premium and enjoyed local dishes. Locals, being price-conscious and already eating such food at home, didn’t find enough value in dining with us.

Coconut oil business restructuring

The coconut oil business was stable but stagnant. Out of ideas, I entered the restaurant space. Now I realise our weak link is sales and marketing, so I need to lead a major restructuring myself. Handling two different businesses without strong second-line leadership pulled me apart, and I sank.

Massive requirement of capital

Copra and coconut oil costs have risen by 70% in 2 years. Our working capital needs shot up. We were debt-free two years ago, but now are burdened with debt from restaurant investment, operating losses, and raw material hikes.

Employee image problem

Some coconut oil mill workers helped at the restaurant willingly, but others resisted. In our culture, working in industry or office is seen as respectable, but restaurant or sales jobs are considered inferior. This lack of support added to our challenges.

Personal challenges

My wife supported me throughout, but the stress took a toll on our mental health. With children in 1st and 2nd standard needing attention, balancing personal life with two demanding businesses became too difficult, especially now being 15 years older than when I began my first venture.

Will I open a restaurant again?

Restaurant is a great business — low capital, high value addition, direct customer interaction. A respected doctor customer once told me that if a restaurant has good sales and low wastage, it will always be profitable. I do not hate this business, nor do I find it impossible. I simply didn’t understand it well enough, didn’t prepare properly, and made wrong choices. For now, I lack the resources to turn it around. But with these learnings, I will certainly open one again in a couple of years.

What about the employees?

Half the team has been with us throughout and stayed loyal. We will help place them in nearby restaurants and assist them with claiming their PF. We gave 15 days’ notice of closure, and when we start again, we may call many of them back.

Learnings and benefits

• Fortunes can change quickly. From being debt-free, I now carry heavy debt. So, building wealth beyond business is important.
• We focus a lot on physical health, but mental health, sleep, concentration, and positivity are equally vital.
• The idea of packed fried snacks came while running the restaurant. This has grown into a standalone business that can scale like coconut oil.
• Food posts on social media gained far more traction than coconut oil. This brought brand visibility and repeat coconut oil customers from tourists who dined with us.
• When not an expert, hiring consultants can be expensive but invaluable for guidance.
• I learned the importance of focus and execution after trying to balance two ventures.
• Have a vision and stick to it, even when the market pulls you elsewhere.
• Hire capable managers before hiring large numbers of workers.
• Start small. I began with modest investment, but expenses were too high. This pressure led to wrong decisions.

What now?

I will focus on sales and marketing of coconut oil, committing to spend 100 days a year directly in the market. I will prioritise fitness, discipline, personal learning, and family. Alongside, I will quietly work on the next restaurant concept.

Thanks to everyone who supported me through this difficult time. Cheers.