This post is dedicated to Aman Jha as he requested me to post this in the “discussion” section than letting it to be read as a mere reply to his previous post.
To begin with, read these two articles: https://articles.economictimes.indiatimes.com/2012-06-15/news/322548…
https://www.livemint.com/Companies/R1dLv7AnHZpc8IOtLfUo6J/Organised-…
Well almost everyone who wants to venture out on its own wants to get into food industry with a basic mindset of presuming that human will never stop eating food. That makes this industry very attractive and to top it up the margins enjoyed over the sales makes this industry more seductive but only the one who gets into it understands the pain to get it successfully operated. Around 8 start-ups (food space) in India are funded and even to start small a threshold level of investment is required: a part goes into assets and a part of it in working capital. Not forgetting to mention the gestation period is also high as compared to other industry (for the investor) and breaking even and turning it profitable would come with 10x amount of patience!
And the industry demands too many aspects to handle at the same time (esp for co-founders during the start-up stage): food concept, quality, hygiene, service, vendors, employees, fluctuating raw material prices, wastage, costs, operations, standards, marketing and the list is endless. At a point being the one man army may get you more tiresome than a coal miner slogging for 18 hrs a day.
After a particular point from starting up you need to draw lines for responsibilities taken care by you as a founder and delegating the same to employees (or out-sourcing that bit). But the game doesn’t end here with mere delegation. You hire an employee to say prepare juices everyday, for a week he is regular and for some reasons he quits. There you are.. back to square one making juices on your own. Important tip here: whenever possible have back-ups; right from employees to the number of spoons to serve to the no of vendors you work with! Thats what will get you confident for scaling up. Except for the founder of the company, every aspect of food biz need to have an arrangement of back-up!
Start by “doing everything on your own” but try to move out of the operations (food preparation, services etc) as soon as possible as it may take up your entire 24 hrs of the day leaving you no time to focus on key aspects of the business where you are required the most.
McDonalds, Burger King have become big due to their ages of experience in the industry, Agreed. But what makes international brands expand at much a lightening speed as compared to Indian brand is they (international brands) invest in the back-end (read processes and standardization) whereas we are more front-end oriented (read consumer concentric) Take McDonalds in this case. Right from its burger patty to the bread; everything is outsourced and standardized hence you enjoy the same MC Aloo tikki taste everywhere. Not a single Mc Donalds outlet uses a knife in their food preparation area! MC Donalds rarely changes its menu but still almost all its outlets are flooded always. Value meals and combo meals does wonders in ensuring higher ticket price and operational efficiency. Goli-Vada Pav has done this by standardizing its vada-pav production adopting similar practices and processes.
For Indian palette taste comes first rest everything is secondary. But that secondary aspect might be a key differentiation for your start-up. Find out what it is. Let it be mere service or the way you present your noodles, the way you pack your sandwich or the way you communicate your concept. Yogurt Bay is the only India based fro-yo brand rest all being internationally adopted yet its yogurt is most preferred one. Yogurt Bay plays around pretty well with the toppings and gets the idea of consuming fro-yo more seducing than any other brand. That’s their key differentiation. Rest, all yogurts of all brands tastes (and are priced) the same.
Where you serve and whom you serve is as important as the food itself. Do not land up selling Viagra in front of an Old-Age Home. A Mexican restaurant will never be successful in Kalyan. Or even a Chinese restaurant restaurant serving its noodles at 300Rs will never work in Kurla. Markets and place decide your price point too. You cant serve Rs.400 Domino’s pizza EVERYDAY by stalling up at the corporate cafeteria which is the most price sensitive food market of all. Understand the key of channelizing your products and not just focus on making your products tastier everyday.
You cant be a miser to spend a stipulated amount of money on some aspects for your business. If you are a juice company, spending on commercial juicer is inevitable or else you may land up being at the electrician every day with the ‘made for home’ juicer for repair. Moreover, scaling up may require 10 times more the money you actually earned in the first year of your start-up.
These are my value add to the post shared by Aman, learned from my one year old start-up: Just Unjunk!
Regards,
Divyesh Panchal. +91 9619 32 33 34
OBO JGD.