Serving desi delights
Dheeraj Gupta overcame the failure
of his first venture to launch a successful vada pav chain Jumbo King. The desi
fast-food chain recently crossed revenues of `25 crore.
After I completed my MBA in hotel
management in 1998, I decided to start my own venture. The idea was to
establish a sweets manufacturing and distribution business. My parents were
very supportive and offered to fund it, but I opted to take a bank loan
instead.
I was looking to model my business
on the lines of chocolate companies in terms of manufacturing, packaging and
distribution. I leased space, purchased equipment and moulds, and employed 10
people to kick-start the business. It didn't take off.
The market, it seemed, was not ready
to entertain such a concept. But I was not willing to give up. I borrowed more
money to invest in the venture. Still, it continued to bleed. Within two years,
I lost around `50 lakh. In addition to bank loans, I owed money to friends and
relatives. It was time to do a rethink.
When I was doing research for my
sweets business, I learnt a lot of interesting things.
What caught my attention, in particular, was how successful food chains such as McDonalds, Dominos and Subway primarily focused on one product -burger, pizza, sandwiches -and, yet, had a huge customer base. I decided to do something similar.
What caught my attention, in particular, was how successful food chains such as McDonalds, Dominos and Subway primarily focused on one product -burger, pizza, sandwiches -and, yet, had a huge customer base. I decided to do something similar.
Vada pav is a spicy Maharashtrian
snack.
It is quite popular in Mumbai. I found that there were hundreds of vendors selling the snack on the city streets. The market was huge but unorganised. I decided to get into the vada pav snacks business.
It is quite popular in Mumbai. I found that there were hundreds of vendors selling the snack on the city streets. The market was huge but unorganised. I decided to get into the vada pav snacks business.
I somehow managed to raise around `2
lakh to start the business. I leased space for an outlet just outside Malad
railway station, north Mumbai, and employed four people. The idea was to
outsource the manufacturing of the patties to a vendor for a small fee. We
would fry them in the store and concentrate on sales.
There was a lot of wastage in the vada pav business. By cutting wastage and, thus, cutting costs, I had the option of reducing selling prices. Or, I could offer a large-sized vada pav and keep the prices intact. I decided to go for the second option. We began offering vada pavs 20% larger than those being sold in the market. Appropriately, we decided to name them Jumbo King.
It clicked. We started making money from day one.
Opening day -August 23, 2001 -saw sales worth `5,000.
There was a lot of wastage in the vada pav business. By cutting wastage and, thus, cutting costs, I had the option of reducing selling prices. Or, I could offer a large-sized vada pav and keep the prices intact. I decided to go for the second option. We began offering vada pavs 20% larger than those being sold in the market. Appropriately, we decided to name them Jumbo King.
It clicked. We started making money from day one.
Opening day -August 23, 2001 -saw sales worth `5,000.
We did a lot of innovation with our
product and its presentation. Hygiene was a priority. The staff wore kitchen
gloves and sold the vada pav properly wrapped -just like a McDonalds burger.
The customers loved this. We made it a point to thank every customer for
providing us the business. Soon, through word of mouth publicity, our business
began to grow. We concentrated on selling just one kind of vada pavs. In the
first year, our turnover touched `40 lakh. I repaid the debt from my earlier
venture.
In 2003, we launched our second
outlet at Kandivili -another north Mumbai suburb. By 2005, we had five outlets
in Mumbai. Around that time, we started receiving franchise-related queries. In
2006, we decided to set up our presence in Surat, Gujarat. But, we lacked a
sound supply chain and had to shut down the outlet. Our manufacturing base was
in Mumbai. This meant either starting a new manufacturing base at Surat, or
transporting patties from Mumbai. From a cost and quality perspective, neither
was feasible.
I started looking at options to help
sort out this problem. In 2007, I met a manufacturer who was providing
ready-to-fry food options to a leading multinational food brand. They would
manufacture the patty and freeze it at sub -18° C. The patties would then be
transported by a freezer van to various outlets.
This sorted out our biggest problem.
This sorted out our biggest problem.
We started expanding our presence
via franchises and, by 2009, had 38 outlets.
Meanwhile, we closed down most of the company managed outlets to concentrate on expansion via franchises. In the same year, we introduced several Jumbo King vada pav variants. Today, we are present in 12 cities and have 65 outlets. We have a staff of 15 that manage operations across the country. We recently sold our 100 millionth Jumbo King vada pav. We aim to set up at least 500 outlets in the next five years. But there are several issues that need to be resolved. We have a centralised kitchen in Pune from which frozen patties are transported to outlets across the country.
Meanwhile, we closed down most of the company managed outlets to concentrate on expansion via franchises. In the same year, we introduced several Jumbo King vada pav variants. Today, we are present in 12 cities and have 65 outlets. We have a staff of 15 that manage operations across the country. We recently sold our 100 millionth Jumbo King vada pav. We aim to set up at least 500 outlets in the next five years. But there are several issues that need to be resolved. We have a centralised kitchen in Pune from which frozen patties are transported to outlets across the country.
We cannot set up centres where the
cold storage facility is not present. We have around 200-250 franchise-related
queries with us, but we are very cautious in handing them out. It is a question
of brand image.
We are hoping that
infrastructure-related problems will be resolved in the next five years. Last
year, we crossed a turnover of `25 crore and are hopeful of revenues of `45
crore in 2014-15.
(As told to Amit Shanbaug) Dheeraj
Gupta 39 years Company Jumbo King Headquarters Pune Seed capital `2 lakh (2001)
Age at starting business 26 years Source of funds Loan from friends Turnover in
the first year `40 lakhs Present turnover `25 crore My first venture was an
Indian sweets manufacturing and distribution enterprise modelled arround the
the lines of chocolate companies. It failed to take off.
I started with just a single vada pav outlet in Malad, Mumbai. The business boomed and now the company has 65 outlets. I hope to expand this to 500 in the next five years.
By cutting on wastage and, thus, costs, I was able to introduce vada pavs 20% larger in size than what the competition was offering for the same price.
I started with just a single vada pav outlet in Malad, Mumbai. The business boomed and now the company has 65 outlets. I hope to expand this to 500 in the next five years.
By cutting on wastage and, thus, costs, I was able to introduce vada pavs 20% larger in size than what the competition was offering for the same price.
ETW140623
