The Fresh Fruit Juice Business

I recently received an email question - am posting the question and my response as it may benefit a large section of readers:

Email Question: 

Myself and my wife are planning to start a fresh fruit juice centers in and around Bangalore & Mysore..Since you are into restaurant business, can you please throw some light on this area? Need some ideas on locations and general people buying behaviour for fruit juices etc. Also if you can help me in sharing few ideas regarding the finance part too, so that first time entrepreneurs like us would be grateful.

Response:

Do check my post on Juice Junction - http://restobizindia.blogspot.com/2011/03/featured-business-juice-junction.html. I do believe they have got their basics right.

You need a high footfall location - ideally a small unit in a busy pedestrian road, better still - a corner building in that area. You can check the kind of areas Juice Junctions are located. That will give you a great sense of the kind of places that this business will work in. 

This is also a very price sensitive business - again check the Juice Junction pricing. There are folks who have tried more expensive variants in fancy locations / malls - e.g. Booster Juice, Acidic in Bangalore. My assessment is that they are not doing well as a business. In Bangalore, Juice Junction is the benchmark. Ganesha Juice Center is a lower cost variant of Juice Junction. 

For first time entrepreneurs, getting financing / loans is difficult, unless you have some collateral - e.g. property. So you will have to arrange for your own financing

Marketing Option Assessment - Websites offering customers Online Ordering mechanisms

Here I am referring to websites such as www.Justeat.in, www.delyver.in, www.bookmytakeout.com etc. Justeat is clearly the most popular of the lot and I am going to talk about how their model works.

FYI: Justeat is a UK company which acquired Bangalore’s own startup in this space hungryzone.com, started by a few IIT guys.

1. Restaurants can list themselves on Justeat and their menu will be uploaded on the Justeat website. Justeat also actively solicits restaurants to list for free on their website. Justeat works on a commission model - i.e. the restaurant pays Justeat 10% of the order value for all order generated through Justeat. 
2. Customers visiting the website can choose from the various restaurants listed on the website, place an order online. Since they have their profile stored on Justeat, they do not need to enter their address everytime they order. For select restaurants, Justeat also allows payments to be made online (This is a very small percentage currently though I expect this number to increase in the future)
3. Upon receiving the order, a Justeat representative calls the restaurant and places the order. They have recently introduced a device that is distributed to the restaurants, which can communicate the orders automatically to the restaurants.
4. The restaurant then fulfills the Justeat order, like they would do for a normal delivery order. They deliver the food, collect the cash. 
5. At the end of the month, Justeat sends an invoice to the restaurant listing all the orders placed by them with the 10% commission that needs to be paid to Justeat. They send a guy with a hard copy of the invoice and collect the money/check from the restaurant. 

Their business model is quite nice - easily scalable online model with a 10% commission on the order value. They know that restaurants will start complaining about the 15% commission being high. To circumvent this problem, they are trying to market their website very hard to customers hoping that restaurants won't have a choice but to list to Justeat and cough up the commissions. They may well succeed as they do not have any serious competitors in sight - atleast in India. Zomato seems to trying to replicate the Justeat model, in addition to their restaurant review focus. 

Value Adds provided by Justeat:

Justeat, after the acquisition by the UK company, has become very aggressive with their marketing and is also using creative ways to add value to the restaurants. 

1. They offer billboards to restaurants for a discounted fee, but include their logo in the billboard generating a very low cost way to market their brand.
2. They offer carry bags (used for delivery) with the Justeat logo prominently marked on them. They offer these bags at a discount of 20% to the restaurant owner. Again a very creative and low cost way to increase awareness of their brand.
3. They also partner with the restaurants and share the costs of printing flyers - again the Justeat logo is prominently displayed on the flyer alongwith their number. In some ways, customers may call Justeat for the order since their number is the one visible on the flyer. Again they subsidize the cost to the restaurant owner by about 20%. 
4. They are also starting to provide restaurants with napkins, napkin holders, standees for the table and everything else a restaurant needs at a discounted price, but with the Justeat logo on them. 

I must say that I am impressed with the aggressiveness with which they are trying to build their brand. 

Delyver.in, on the other hand is trying to provide genuine value to the restaurants by trying to manage the delivery logistics (i.e. they operate bikes with a delivery box and are trying to get restaurants to outsource their delivery service to them). While this is more value adding and restaurants won't have a problem paying 10% or even higher as commissions to delyver.in for doing this, managing the logistics of their operation is a challenge. If they can get their execution right and figure out a way to monetize their service, then delyver.in would be more useful to restaurant business owners than Justeat. Delyver also supports other establishments (not only restaurants) with their delivery services. 

It will be interesting to see in a few years what happens to both of them. My guess: Justeat with their new investor, cash on hand and some real aggressive marketing will end up dominating this space. Zomato is attempting to catch up with Justeat, but will need to be even more aggressive than Justeat with their marketing and brand building - maybe they can start with the cities not currently supported by Justeat. 

Featured Business - The Sukh Sagar Story

This post is based on an interview with Siddarth Poojari, a second generation member of the Sukh Sagar family.

The Sukh Sagar Story:

In 1962, a young man, Suresh Poojari from Kundapura (a town near Mangalore), went to Mumbai (the City of Dreams at that time for a lot of Indians from the smaller towns). He worked in the docks, local restaurants for a few years. Suresh started his own business by selling fresh fruit juices on a cart in the Chowpatty area. This cart model became famous and thus was born Sukh Sagar – a small joint serving fresh a variety of Vegetarian snacks (Pav Bhaji, Sandwiches, Idly, Chinese fried rice etc.) and fresh fruit juices.

With a successful business under his belt, Suresh’s family urged him to do something in the south – thus was born the first Sukh Sagar in Bangalore – in the Gandhinagar area with a 1000 sft space serving the same cuisine as in Mumbai, with the addition of a variety of Chaats. The proposition was the same – reasonably priced Vegetarian snacks and fresh juices. In the meantime, business in Mumbai expanded with “Sukh Sagar Welcome”, a place which had an AC section and a non-AC section.

Today, Sukh Sagar has 22 units – 8 in Mumbai, 7 in Bangalore, 1 in Mysore, 1 in Chennai, 2 in Dubai, 1 in Saudi Arabia and 2 in Qatar, with a few more already planned (4 in Chennai, 1 in Dubai). A North American foray in the works (based out of Toronto). All these units are company owned and operated.

The company is now managed by Suresh Poojary's three sons. They believe in controlled/conservative growth and have shied away from Venture Capital investments to fuel growth. The company is working on a franchise model though to drive future growth. The first franchise is expected to be operational in Bangalore very soon. The plan is to create a model unit in each city, set-up centralized procurement and support systems and then expand in the city through the franchise model. Their business model is very flexible and depending on the space and the investment the franchisee brings in, they will create a suitable format – QSR, Sit-down restaurant etc. The typical investment range is 30 lakhs to 2 Crores depending on the format.

According to Siddarth Poojari, who also operates City Bar (in UB City), Kobe Sizzlers (Koramangala) and Zafran (St.Mark’s Road), restauranteurs will need to line up enough investment to sustain about 7 months of operations (3-4 months of pre-operating expenses and 3 months for the restaurant to establish and break-even).

What exactly happens when you order something in a restaurant?

Though I have written a post on this earlier, there were a few readers who wanted me to elaborate the process a little more. I am doing this now.

Once again, I am going to talk about the old style Pen and Paper approach – not the fancy electronic touch pad systems that are now available. Having said this, you will notice that most restaurants in India (including the fine dining ones) still use the “Paper & Pen” approach.

• The Waiter notes down the items that you want to order – usually most restaurants will have their own short name for each item that all the staff understand. E.g. Gobi Manchurian could be G.Manch.
• The pad/paper on which the waiter notes down the order is called KOT (Kitchen Order Token/Ticket). Usually, KOT books are printed as a 2 copy (Duplicate) or as a 3 copy (Triplicate) – i.e. The first sheet could be white, the second sheet will be of a different colour (say yellow) and the third sheet (if it is a 3 copy KOT) will be in yet another colour (say blue) – then the sheets repeat themselves in the same colour order. There is also a serial number generally printed – 1 number for one set of 2 or 3 pages to enable tracking if required.
• KOT books are usually of A8 size (one fourth of a A4 sheet) or of A5 size (half of a A4 sheet).
• The waiter inserts carbon sheets to make automatic copies – 1 if it is a 2 copy KOT book, or 2 if it is a 3 copy KOT book. Nowadays you get self copying paper (i.e. a carbon sheet need not be inserted to make a copy) at reasonable prices. Most banks now issue check books of this nature.
• The waiter starts with writing down the table number (in most restaurants, the tables are numbered and allotted to waiters – i.e. one waiter is responsible for a set of tables – say Tables 4 to 8). The waiter then notes down the order.
• One copy of the KOT is given to the cashier (for billing purposes). Another copy is given to the kitchen for preparing the dishes - Usually, to the “Barker” in the kitchen. The waiter keeps the third copy with himself. In small restaurants, a 2 copy KOT is sufficient as the waiter does not need one and can always refer to the cashier’s KOT if there is any confusion with the orders.
• The role of the “Barker” is to collect the KOTs, literally shout out the orders to the respective kitchen staff (i.e. for juices, he shouts the order to the guy in the pantry, for starters to the cook who is responsible for making the starters, for the entrees to the main cook who prepares the entrees etc.). Once the respective food items are prepared, the barker then assembles the dishes according to the KOT and hands over the prepared dishes to the respective waiter.
• Having a good barker is very critical in most restaurants – especially during busy times. Think of the Barker as a Orchestra Conductor. The Barker also makes decisions on whether to send an order in full or in parts – e.g. if a table has ordered drinks, starters and entrees, the barker will make a decision to send the drinks and the starters first and then the entrees. In some cases, if the food order is going to be delayed, he may send some of the entrees earlier.
• The waiter then hands over the dishes to the respective table.
• Additional orders are noted down on a new KOT, with the same table number and the process is repeated. The cashier collates all the KOTs received by table number and when the waiter asks for a bill, the cashier prints out the bill.
• Once the payment is made, all the KOTs for that particular table are stapled and filed. At the end of the day, the cashier and the manager are expected to compare the KOT orders with the bills that have been generated to ensure that all orders have been billed. The kitchen is also typically instructed not to prepare any food without a KOT for audit/control purposes.

So the next time you go to a crowded restaurant, be a little more nice to the staff – most of them are typically on their feet most of the time and are trying their best to keep things under control.