Jumbo King Vada Pav Would you be able to resist delicious roadside food - if it were hygienic? Dheeraj Gupta, the Jumbo Vada Pav King, bet you couldn't. Now every day, at least 40,000 people prove him right. Quick Facts Entrepre :Dheeraj Gupta neur Age :33 Jumbo King Foods Pvt. Company : Ltd. Based in :Mumbai Founded :2001 in Hospitality/ Service / Industry : Travel Business Summary Retail chain/ quick-service restaurants branding roadside food The Idea Ironically, it wasn't the Mumbai-ite's love of the vada pav that initially inspired Dheeraj Gupta. Though biting into one of the piping-hot treats, consisting of deep fried potato dumpling served in a lightly-buttered bun, may be elevating, Dheeraj's original inspiration for Jumbo King Vada Pav was much more prosaic. While visiting London, Dheeraj stayed with a friend who owned a Burger King franchise. "That's when I saw how their business worked," he says. Dheeraj was fascinated by the fast food franchise business. "Back in India, I happened to come across a book about the person who set up McDonald's. It inspired me tremendously and I decided to follow the same model." But he wanted to give the business an Indian flavor. "Vada pav was the obvious food choice because Mumbai-ites love it," he says. Vada pavs are one of Mumbai's favorite roadside fast foods. Dheeraj took his idea further - he was willing to bet that, for snacks they knew were hygienic, people would pay him more than twice the price than they would pay for a vada pav from a traditional street stall. So in August 2001, Dheeraj set up an outlet called Chaat Factory close to Malad station, a suburb in Mumbai. "I wanted to sell hygienic chaats in the market. But I started with vada pavs only." His success selling this one snack focused his attention, and he renamed the company Jumbo King Vada Pav. The Opportunity It turns out that vada pavs are a young person's food. In fact, a feasibility study performed by Jumbo King showed that 75% of vada pav purchasers are 16 to 25 years old. Also, surprisingly, the majority of people purchasing the snack hail from the higher income brackets. At Jumbo King, Dheeraj and his team are therefore playing into some important trends: more young people today have money to spend; and at the same time, they are increasingly health- and hygiene-conscious, wanting to know that they are receiving good quality food. Jumbo King, explains Dheeraj, "is riding on this generation." Thousands of street-side vendors still dominate the quick food market, and placed among these, Jumbo King is distinctly different. "Right from deciding to use paper to wrap the product in, having processes and systems in place, branding a common Mumbai-ite's food, to running the business like the Western style fast-food giants, we have constantly innovated, dared and gone against the tide." In one area, Jumbo King maintains a more traditional outlook - like all retailers, they focus on location, location, location. Today, all Jumbo outlets are located near railway stations. By combining the elements above, Jumbo King seems to have come up with a successful "secret sauce". Today the company has 30 outlets in Mumbai, two in Surat, one in Ahmedabad, one in Baroda and one in Pune. The Money A loan of Rs. 2 lakhs kick-started the business. Growth has been helped by the fact that the business can generate quick cash flow: the first Jumbo King outlet at Malad made money from day one. "All the money from the business was ploughed back into buying the second store," says Dheeraj, who used to take back home a salary of only Rs. 5,000 a month. Dheeraj has been creative in funding additional growth, tapping different sources. He took a bank loan to open the third store at Andheri (W). The fourth store became the first franchised store of Jumbo King. Since then Jumbo King has followed the franchise model. How will Jumbo King fuel future growth? Dheeraj and his team feel they would like to bring in investors, but only after they reach the 100 store mark. "The money from this investment will take the product to a completely different league," says Dheeraj passionately. The Team Initially there were a lot of objections. "Everyone told me I was mad to waste my hotel management degree by selling vada pavs. But I was determined to make it a success," explains Dheeraj. Dheeraj started Jumbo King along with his wife and four employees, who helped with cleaning, packing and maintenance. "We did all the accounts ourselves at the end of the day at the store. There was no office." Gradually, he integrated franchisees into the system. With the support of his wife Reeta, also an MBA, Dheeraj has managed to expand the Jumbo King team to a total of 35 employees, with an increasingly professional set up. In fact, they have brought in a CEO, and are looking for senior people to join the team. Dheeraj puts forward a mature perspective, "The idea was to get in people who have seen larger businesses, and who can anticipate issues of scaling better than I can." The Company - today and tomorrow What started off as a tiny experiment in 2001 has expanded to 35 outlets in five cities, catering to about 40,000 people every day. This translates into some solid financials. This year, Jumbo King is looking at a turnover of Rs. 18 crores (almost $5 million) and with rapid growth to a projected turnover of Rs. 60 crores in 2008-09. Dheeraj anticipates continued growth in the fast food Indian market for Jumbo King. He believes "the Indian market can easily accommodate 5000 stores in 8-10 years time. We are looking at Jumbo King doing a billion dollars worth of revenue by then," he says. Looking beyond India, he adds, "With such a huge local population and such a huge expat population, I don't see why there can't be 12-15,000 Jumbo King stores all over the world." And, it's not just independent vada pav stores that he's considering. Dheeraj wants to expand into food courts and malls. "Vada pavs have the potential of becoming a big category by itself, with many brands competing in this category. And we have an early mover advantage" says Dheeraj What keeps you awake at night? That we are far from reaching an absolute comfort zone, where our company has become anti-gravity, says Dheeraj. He explains that even with 35 outlets today, he's still plagued with the same fears that he had when he started. "Now with new outlets in other cities we are playing the wait and watch game again. We are relearning all over again. We need to see the sustainability of the model. And we feel the same fear of what happens if it doesn't work. After all, it's not daily food for people outside," signs out a nervous Dheeraj. Points to consider for case analysis 1. What would you say is the ‘triggering event’ that helped Dheeraj take the plunge? 2. What insights did Dheeraj have into customers’ minds? 3. What are the entrepreneurial characteristics that you see in Dheeraj? 4. What risks do you think Dheeraj took when he started his business? Do you think he took a gamble? 5. Trace Jumbo King’s journey, mapping it to the four stages of the entrepreneurial process 6. What are the advantages and disadvantages of a franchisee model for growth? 7. Why do you think Dheeraj wants to wait till 100 outlet mark before taking further investments? 8. What can you say about the growth strategy adopted by Jumbo King? If you were a consultant to Jumbo King, what advice would you give for further growth? 9. What are the uncertainties that Dheeraj is going through?