The technology in brick and mortar

The technology in brick and mortar

Helion Ventures-backed Mast Kalandar restricts the adoption of technology to improve backend operations and improving delivery mechanism. In the coming months it plans to expand its presence in the global markets and increase its domestic presence to 300 outlets in 10 cities in the next three years

In the past decade, smartphone prices have dropped drastically and a larger share of the population has taken to internet data. Added to this, in the last two years, ecommerce players and cab service aggregators have habituated the consumers to on-demand service through mobile applications. This trend has spilled over into the food sector as well, opines Gaurav Jain, the founder of Mast Kalandar. In his words, there is an Uber-isation of the food business in India. “Unlike Zomato and Foodpanda, which were just enablers, the online food businesses coming up now are responsible for the entire value chain,” he states. But, while he agrees that the food technology business is attracting a lot of interest from venture capital firms, he remains bullish about the success of brick and mortar stores. “While this is an interesting model, the founders have to understand that food is very personal. Hence, the ability of the business to manage supply chain is very important,” he says, and adds, “Moreover, unlike an Uber, online food businesses cannot deliver food to customers in 15 minutes, whereas a brick and mortar business can achieve the same in 30 minutes,” he explains.

So, how have brick and mortar stores, specifically Mast Kalandar, taken to technology in food? In 2006, when he and Pallavi Gupta founded Mast Kalandar, their unique value proposition was very clear – to offer a healthy meal at an affordable price for one individual.  Ask Jain if the positioning has been impacted by technology and the industry shaping up and pat comes the reply, “No, in fact, our positioning continues to remain this. We have restricted use of technology to improve backend operations – order management, lead management and improving delivery mechanism.” An extension to this will be the Android application that Mast Kalandar plans to launch soon. “We plan to market the app in a big way and ensure that at least 40 per cent of the traction will come through this route in a year,” he states.

Stepping on growth

The founders made the right moves on the financial front to ensure that, despite being a brick and mortar format, Mast Kalandar witnessed a good growth rate. “When you say that your proposition is to serve every day food, there are certain key parameters to keep in mind. One, the food has to be healthy, tasty and hygienic. Two, it has to be affordable. A customer can’t spend Rs. 1,000 on a meal every day,” says Jain. So how did they achieve this? Firstly, they set the ideal spending limit per customer to Rs. 50 to Rs. 150. Then, they adopted a real estate strategy where they built restaurants on the first floor of buildings, where the cost is lesser. Thirdly, they removed one layer of order taking at restaurants, thus eliminating the need for more employees at each restaurant. Fourthly, they ensured that all restaurants have the same menu, thus balancing economies of scale.

Today, Mast Kalandar has setup 71 branches across four cities.

A constant challenge it faces today is the availability of skilled labour. “It’s hard to find people who are trained to manage customers,” states Jain. Mast Kalandar has an in-house recruitment and training team which offers frontend and backend training to employees. “In fact, we also have a buddy program where we encourage employees to adopt peer learning,” he says. A second challenge of course is high real estate costs. Though inflation is now under control, Jain believes that maintaining quality at the existing price points is still a challenge.

Looking ahead

Jain and Gupta have laid out a clear scaling up plan for Mast Kalandar in the coming months. They will be focussing on three aspects; corporate catering, merchandising and foraying into global markets. On the corporate training front, the company plans to focus on high end catering (for events, conferences and annual days), operating on a price point of Rs. 200 to Rs. 400 per person.

Merchandising is an idea that was born out of popular customer demand for the snacks and pickles served at the restaurant, with individual meals. “We used to source the pickles and savouries from local regions and serve at our restaurants. Eventually, customers wanted to buy pickles from us. We realised that there is a huge demand for this and took the plunge,” he recalls. Today, the company sources the ancillary products in batches and stocks it at shelves. By April, Jain plans to create a constant supply to meet customer demands. “Today, customers pre-order for these products. So, even before we place it in our shelves, it gets sold.”

A third, bigger focus area for Mast Kalandar is going to be on foraying into global markets. It plans to enter into markets which have a significantly large Indian population, like the U.S., Middle East, Kuala Lumpur and Hong Kong. “Our differentiator in these markets will remain the same as in India. Every day Indian food that is easier on your pocket and is healthy. We will target it at customers who want food that is closer to home,” shares Jain. In three years, he plans to open 250 to 300 outlets in 10 cities. To fuel this growth, Jain has additional funding on the cards but further details about this remain undisclosed for now.

Food Technology Helion Ventures Mast Kalandar QSR

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