Around 95% of the Indian fast-food industry is based on foreign food items, is there an opportunity in going Indian?
How many times have you held yourself back from going for a quick bite from the road-side stall? In today’s fast-paced world, for many, skipping meals is the rule rather than the exception.
But when it comes to getting a quick snack while waiting for the bus or train, there are not many options for the health-conscious.
“The Indian food palate has lots of snacks—samosas, pakora, vada-pav, paratha, rolls, etc, but if we go to a branded fast food outlet, how many of these would you find?” asks Akbar Khwaja, one of the earliest entrepreneurs to enter the Indian branded restaurant market. Akbar, with some help from Swedish-Iranian restaurateur Vahid Berinjian, pioneered the chain food joint model in India, establishing US Pizza in Bangalore in 1995. Thirteen years, 60 outlets and 25 cities later, Akbar is planning another attack at the branded restaurant business in India, this time from a more ‘Indian’ angle.
“The international fast-food chains in India are expanding at the rate of around 40 outlets per year. But in a country as large as India, how much visibility can you have at that rate?” he asks.
While international brands like McDonald’s and Pizza Hut aim at India’s suave, westernized middle-class out to dine, Akbar and a few others like him are aiming another market—the average Indian trying to fit 36 hours of life into 24. “Indian companies are under-funded, the economy is under-funded. Yet, the design of outlets being put up by the top brands is such that they cost around Rs 3-7 crore each to put up.”
Akbar therefore plans to set up 1,000 outlets, at a cost of around Rs 5 lakh each, starting with 50 in the next six months. The strategy is to go micro, with just the stall and the food—no chairs, no jokers and certainly no ACs. “The ‘Satvik’ brand will serve Indian fast-food items at all locations where we can find enough space to put up a small stall - malls, outside theatres, even bus stops,” he says.
Akbar’s is certainly a brave move, but not a novel one. Being based in the commuter capital of India, Mumbai, Dheeraj Gupta saw the opportunity early, in 2001. “We figured out that we have to cater to a particular need, which was to emerge as a very good snacking option. Ours is finger food for the person in a hurry. No plates, no cutlery, fast and on the move,” says the entrepreneur who has so far stuck to Mumbai and Gujarat.
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Dheeraj’s Jumbo King is the pioneer in trying to cater to the hunger of the average person on the street and in a hurry. However, unlike Akbar, who plans to open 50 stalls in 6 months and 1000 over the next five years, Dheeraj’s has been relatively slow going. Despite starting off in 2001, Jumbo King is still only 45 outlets strong. However, like Akbar, Dheeraj Gupta is planning a mega expansion over the next one year.
“Putting up stores is easy,” says Dheeraj, who works on a franchisee model, unlike what Akbar plans for his ‘Satvik’ Indian fast food brand. “What is important is to build the brand and make it relevant to the customer and make money. The challenge is to give a uniform product across all your stores, 365 days a year,” he says. In short, against just 45 outlets in last seven years, Jumbo King will open another 250 stores, across the country, in the next 12 months.
Dheeraj points out that investing in stalls or finding franchisees is not the challenge in this business. “The biggest challenge is in getting your supply chain in place, in this case, having a cold chain.” Indeed, every player with designs on the market, from Bangalore’s Kaati Zone to Delhi’s Nirula’s to Dheeraj and Akbar, has a centralized production model. While Dheeraj plans to supply markets as distant as Delhi and Bangalore from his central kitchen in Mumbai, Bangalore-based Indian snack specialist Kaati Zone will use their kitchen in Bangalore to supply to other cities as they expand later this year.
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“Without a central kitchen, at least in the early days, it is difficult to ensure consistency, and consistency is very important,” says the 56-year-old investor-turned-entrepreneur Kiran Nadkarni. Kiran’s Kaati Zone, deriving its name from kaathi or roll, has the distinction of being the only one of the four or five players in this space to get funding. Starting off in late 2004, Kiran’s is also a younger enterprise compared to others like Jumbo Pav or Goli Vadapav, started in 2003.
Besides consistency, another factor prompting fast food makers to ship rather than cook is the economies of scale. “Over time, our Delhi kitchen has turned into a 40,000 square feet factory supplying UP, Haryana, Punjab and Rajasthan also,” says Sudipta Sengupta, head of sales and marketing for the Delhi-based restaurant chain Nirula’s. Though not strictly a fast-food brand, the restaurant group has come out with 16 fuel station or ‘Express’ fast-food counters for malls, airports and food courts. “These places have little or no seating and the investment too is in the range of only Rs 8 to 10 lakhs,” Sengupta points out. All of Nirula’s ready-to-eat items, including its heat-and-eat meal-boxes are made in the central kitchen and shipped out to outstation outlets once a fortnight.
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