For Kiran Nadkarni, the food retail industry has always held great interest. The venture capitalist turned entrepreneur came up with an idea to establish a dosa brand in the U.S. when he lived there in the mid-90s. Even though that idea did not pan out, his persistence ultimately saw him introduce the kaati roll to a mainstream audience, only this time, his trial market was in India. In 2004, Nadkarni established Bengaluru-based East West Ehtnic Foods Pvt. Ltd., the holding company of Kaati Zone. Today, the QSR brand has close to 15 outlets spread across the cities of Bengaluru, Chennai, Hyderabad and has made a recent entry into Mumbai. “There have been considerable changes in Indian eating habits as the emergence of two-income families has led to a lot more eating out,” says Nadkarni. And Nadkarni was convinced that for factors of convenience and health, the kaati roll would find several takers.
“At our kiosks, our offering is priced at a small premium over street food and this premium accounts for cold-storage and other supply chain management costs.”
While discussing his business model, Nadkarni stresses on the importance of establishing the back-end first. “As an early player in the Indian QSR segment, we learnt the hard way that there are no shortcuts to getting the product right, establishing a loyal customer base and creating a sound back-end,” he says. Elaborating on Kaati Zone’s supply chain management, Nadkarni says, “The supplies of frozen materials are made by us either from our commissary or from the manufacturing sites of our partners. The frozen materials are transported to each city and held in a central cold storage there. The supplies are made from the cold storage to the concerned outlet based on indents from the franchisee – once or twice a week depending upon volume of business. Each outlet holds stocks of frozen materials equivalent to four to seven days’ consumption.”
While Nadkarni is still looking for ways to tighten back-end, another focus point is pricing. “At our kiosks, our offering is priced at a small premium over street food and this premium accounts for cold-storage and other supply chain management costs,” he says. Also, Nadkarni and his team have ensured that the peripherals such as air-conditioning and food trays have been cut out leading to higher returns. Nadkarni can afford to present a bare product as he is one of those entrepreneurs who is moving towards the kiosk format from the restaurant format. “The kiosk format has eliminated most of my real estate costs and it allows us to be present in high footfall environments such as malls, airports, universities and even hospitals,” shares Nadkarni. Additionally, over head costs are kept to a minimum as a kiosk can be managed by two individuals. At present, of Kaati Zone’s 15 outlets, six are restaurants while the rest are kiosks. “I believe for us, the growth story lies in the kiosk format. In the next two years, I want to grow our numbers to a 100 outlets,” adds Nadkarni. He believes that this is certainly possible given that the kiosk format is a ‘cookie cutter’ format which takes only close to three weeks to replicate. Nadkarni explains, “Each kiosk outlet has the same design, layout and equipment. There are minimal or no changes at all based on site specifics. The kiosk structure and equipment are manufactured as per our specifications, shipped to the outlet site and assembled within three to four weeks of placement of order.
His franchisees too are happy with the format and the business model as they see profitability from the start. On its part, Kaati Zone has a standard operating procedure (SOP) for operation of an outlet and it trains the franchisee and his staff to adhere to the SOPs.
Nadkarni is very aware of the limitations of being a startup especially when it comes to hiring. “We know that it is difficult for us to attract the best talent and that is why we look for passion as a substitute for experience. As we grow, we will definitely consider roping in senior management to help us better manage our expansion plans,” he says. Nadkarni and his team are constantly on the lookout for two things that will further business – the right franchise partners and the right locations. If Kaati Zone manages to achieve its ambitious plans of a 100 outlets, Nadkarni could well claim to have found the right match between Indian food and the QSR format.