By focusing on a single product, Dheeraj Gupta is confident that vada pavs can become popular pan India. He is now targeting 200 Jumbo King outlets by 2015 and hopes to replicate McDonald’s success with the desi burger
MAHATHI R. ARJUN
Dheeraj Gupta wants to accomplish with vada pavs what Ray Kroc did with burgers through McDonald’s. Set up in 2001, according to Gupta, Jumbo King Foods Pvt. Ltd. (Jumbo King) now sells 20,000 units of the desi burger in a year, of which 16,000 are sold in its headquartered city of Mumbai. By focusing on a single product, Gupta is able to bring about a differentiation and centralised approach to push the vada pav across various cities. “When I read many books on big brands, I realised that all large brands are single product focused – whether it’s McDonald’s, Pizza Hut, Subway or Starbucks – and built offerings around it. Most Indian brands were going wrong by concentrating on too many things under one brand,” says Gupta, founder and managing director of Jumbo King. The company is soon opening its 50th store with 36 of them in Mumbai, six in Bengaluru, four each in Aurangabad and cities in Gujarat such as Ahmedabad, Baroda etc. This fiscal, Jumbo King will close at revenues of Rs. 20 – 24 crore from Rs. 13 crore last year with an average growth of 50 to 60 per cent.
While 80 per cent of Jumbo King’s customers are in the age group of 16 – 25, they weren’t the initial target Gupta had in mind. “We thought our product will be consumed by people who don’t have too much money but we soon realised it was consumed by those who were pressed for time and preferred it as food on-the-go,” says Gupta. Taking advantage of this, many of its outlets are located in and around metro stations. Hence, Gupta’s biggest challenge and expenditure (10 – 15 per cent of revenue) today is on real estate. “I spend 50 per cent of my time on real estate and the remaining on other areas. But if you choose a location carefully, it would solve 90 per cent of other problems that would crop up due to a bad location,” he adds. Gupta is also in the process of setting up a real estate team with a senior manager, whose sole task would be to focus on acquiring more locations.
Another challenge for Jumbo King’s expansion plans is to find the right franchises. With 70:30 ratio that leans towards franchises, Gupta hopes to rapidly move towards a 100 per cent franchise model over the next six months. To do so, Gupta meets up to 10 franchises before signing up one that will help tap different markets. The company raised funds from investors about three years ago that was used mostly to fund scaling and to partly retire debt.
Though Gupta is a third generation to enter the food business from his family, vada pavs weren’t his initial choice. A graduate in hotel management from the Symbiosis Centre of Management and Human Resources Development in Pune, he first ventured into selling Indian sweets through Manali Foods. But inspired after reading a book on the rise of McDonald’s, Gupta realised the striking similarity between a burger and a vada pav, and the huge opportunity that lay untapped. “Vada pav is an extremely popular street food eaten by the masses and something around which I could build a business,” he shares. So, along with his wife Reeta Gupta, he decided to start a national chain. With an initial investment of Rs. 2 lakh, they set up the first outlet in a railway station in Malad before opening more centres. At the time, Gupta was making use of his family’s central commissary for three years. Now, Jumbo King has a centralised kitchen of 5,000 sq. ft. in Mumbai, from where all the patties and sauces are prepared and sent to all its outlets with only the bread sourced locally. Though this model is more expensive as it requires a robust frozen food supply chain, Gupta believes the additional cost, spread out over a volume, justifies the quality of the product.
Jumbo King Foods Pvt. Ltd.
Founders: Dheeraj Gupta and Reeta Gupta
Target: Rs. 20 – 24 crore this fiscal
According to Gupta, Jumbo King has the largest market share in Mumbai. But as he looks to expand to more cities through the franchise route, ensuring quality and hygiene standards is critical. The company has audit teams that visit the stores once a week and it also gives out awards for the best store of the month. All stores are also connected on the Internet, which makes it easier to track them. “There are always about 20 per cent of the stores that don’t often comply, so we either pay extra attention to them or phase them out,” says Gupta. As he looks to multiply to more number of stores, he has also brought in a COO to manage day-to-day operations. With team strength of 15 at its headquarters, Gupta is keen to maintain a lean organisation even as he expands.
Though vada pavs are well-loved in Mumbai, Gupta is aware that he might not always expect the same response from other cities. “Vada pavs are not universally liked but in any city where people are always on the move, vada pavs help save time for them. While Mumbai can support up to 150 stores, Delhi will possibly hold only 50 stores since fewer number of people will consume it. However, over the next 10 years, as our marketing and branding grows, people will have a Jumbo King on the go similarly to how everyone now orders Dominos when they want to have pizzas at home.” Gupta’s marketing strategy to glamorise the product has been to rope in celebrities such as Sachin Tendulkar, Preity Zinta and R. Madhavan for its promotional events. Due to Jumbo King’s relation with Pepsi, it has been easy to bring these stars onboard. It also celebrates August 23rd (day it was founded) as Vada Pav Day and recently offered its 90 millionth vada pav to M.S. Dhoni.
Achieving a goal
By the end of fiscal 2015, Gupta wants to reach the target of 200 stores he has set. He will be closing this financial year with 70 stores and expand to 125 outlets by end of next fiscal. In the coming year, he is targeting Pune, Nagpur, Goa, Hyderabad, Indore, Bhopal, Surat, Baroda, Ahmedabad and Rajkot, by focusing on a 1000km radius from Mumbai as his supply chain can operate within this range. Gupta will then scale up his supply chain when he targets southern and northern states in his next round of expansion. For now, Jumbo King is comfortable funding its operations through internal accruals.
Gupta is unfazed by competition and believes it will help expand the category. “As long as Jumbo King continues to have a minimum of 50 per cent market share, we’re doing well. We’re operating in a virgin territory that is not even one hundredth of what it will become,” he shares. The feedback he has received from cities such as Aurangabad and Bengaluru makes him optimistic about Jumbo King’s growth and to replicate that success in other places. “When a consumer need is fulfilled, people will reach out and make it a part of the city’s culture,” he concludes.
Concept in brief:
Dheeraj Gupta wants to accomplish with vada pavs what Ray Kroc did with burgers through McDonald’s. Set up in 2001, according to Gupta, Jumbo King Foods now sells 20,000 units of the desi burger in a year, of which 16,000 are sold in its headquartered city of Mumbai. The company is soon opening its 50th store with 36 of them in Mumbai, six in Bengaluru, four each in Aurangabad and cities in Gujarat such as Ahmedabad, Baroda etc. This fiscal, Jumbo King will close at revenues of Rs. 20 – 24 crore from Rs. 13 crore last year with an average growth of 50 to 60 per cent. A challenge for Jumbo King’s expansion plans is to find the right franchises as Gupta hopes to rapidly move towards a 100 per cent franchise model over the next six months. The company raised funds from investors about three years ago that was used mostly to fund scaling and to partly retire debt. By the end of fiscal 2015, Gupta wants to reach the target of 200 stores he has set by targeting states bordering Maharashtra.