Tuesday, March 20, 2012


I arrived in the upscale Panchsheel Park area in Delhi for a meeting ahead of schedule. To bide my time, I walked around the area looking for a coffee shop. I chanced upon a sign board "Graffitea" (what a FAB name!) - I walked up the narrow stairs into this joint. The place looked interesting and I ordered a Masala Tea. The young lady at the counter asked me how I heard about the place. I told her "I hadn't heard about the place, but simply chanced by it when walking around". I asked her how long they have been open and if she was the owner. She enthusiastically replied that they were just 25 days old and it was her place - rented of course.

I decided to do an impromtu interview with the owner, Pooja, on the phone, 2 days after  my visit and feature Graffitea as a business - would be interesting to feature a spanking new business 25 days after they opened, rather than just featuring the long lasting successful ones.

Graffitea was conceptualized by Pooja and her brother based on the market opportunity they saw in Delhi for coffee shops - a little ironic that they ended up starting a joint named after "Tea" after being inspired by Coffee. Guess the name did the trick. If this first experiment of their works well, they plan to open other units in Delhi soon.

How would I evaluate Graffitea as a business? The Good, the Bad and the Ugly

The Good:
1) The Name is "FAB" in my opinion. Why didn't I register this domain? Could have made a few bucks on that.
2) The place has been done up quite well to suit the name and the theme - a cool hangout.
The Bad:
1) It is in the First Floor - a place like this has potential to gather a cult following - so the first floor downside may be mitigated to some extent. Plus the place is small - so they anyway can't handle too many footfalls.
2) For some reason, the place to me seems like a cool Beer joint. They may want to think of offering draught beer - the licenses in Delhi are cheap.
The Ugly:
1) They need to have a lot of Graffiti on the walls, in the toilet (they can go berserk here) etc. to suit their name. Get rid of the paintings and bring on the real Graffiti.
2) Their menu needs to have a focus on "Tea" given their name - but "Tea" is just one of the options on the menu. Plus the "Masala Tea" was run of the mill - they need to make their "Tea" options truly stand out.
3) They have a Display Pastry cooler which stocks what seems to be "Standard" stuff available everywhere. They may want to get creative with this and do cakes and pastries that are very unique - with icing in the form of graffiti.
4) The Split AC looks weird and spoils the look and feel of the place. Guess they don't have a choice. But they may want to use some creativity to make this damn machine look good and fit into the space.

Clearly, it is easy for me to go critical on this place, but I liked the vibe and feel of this place and hope they figure out a way to make money and make this a cool happening joint. From my discussions with Pooja, the owner, they seem to have got the fundamentals right and have started well - they need to quickly get their act together on their financials, refine their customer proposition & menu offerings, to make this place work as a business. I truly hope they do and wish them all the best. 

Thursday, March 1, 2012

Cafe Amul - What they need to get right? IMHO - In My Humble Opinion

The amount of interest and enquiries, I have got about Cafe Amul after my post on them (http://restobizindia.blogspot.in/2012/02/cafe-amul-is-this-truly-diamond-in.html) has been unreal. I think I may have conveyed a message that Cafe Amul is absolutely THE BEST franchise opportunity available in India today. Just to set the context right, my belief is that Cafe Amul has the potential to be THE BEST Franchise opportunity and I can see them doing 1000+ stores in India in the next 5-7 years if they want to. But they need to get a number of things really right before embarking on this aggressive growth plan. Again, these are just my thoughts and opinions - so please make your own assessment.

Their Customer Proposition:

They need to define this. It could be something like this:
1) Value for Money (VFM) all day Light Eats, Snacks & Desserts
2) Clean & Comfortable ambience (Air-conditioned to the extent possible) with tidy restrooms
3) Lower Cost option to Café Coffee Day and other Coffee based hangouts
4) Aattractive & affordable place for families with kids, college going youngsters and others to hangout and have a light meal/snack/dessert
5) Leverage of the strong Amul brand (Trust, VFM/Affordable, Quality, Family Oriented)

Things they need to do:

1) Offer a better ambience & experience to customers

  • A highly inviting, attractive & family friendly Café design
  • Air conditioned atmosphere (unless excellent outdoor seating option is available) with Wifi access
  • Better seating (more comfortable) with kid friendly options where possible
  • Better leverage of  the iconic Amul ads in the Cafe design (Collage on the walls, tables, LCD Screen) & the Amul girl (a.k.a . The McDonalds  man)
  • Better presentation of food – Better quality crockery/cutlery and clever leverage of  the Amul girl in disposable/take-away cutlery & presentation items (e.g. Sundae spoons)
2) Prepare a more robust Financial Plan

  • Current Investment, financial projections and Operating expenses information need to be projected more accurately.
3) Improve Real Estate Leverage
  • Reduce Real Estate Space Requirement to about 800-900 sft (down from the current requirement of 1200 sft)
  • Reduce the space required for the kitchen & pantry area by refining the menu offerings, while maximizing the customer area
3) Make Operations simpler to manage
  • Fewer Menu Varieties
  • Lesser Staff
  • Better leverage of 2 shifts (unit can be open from 8 AM/10 AM to 11 PM)
4) Reduce Upfront Investment Commitment

  • Set up a unit with a Capex of  around INR 30-35 Lakhs (down from 40 lakhs – 50 lakhs currently) – including working capital provision for the first few months
  • Smaller investment due to smaller real estate space requirement & lesser kitchen equipment
5) Refine Menu Offerings
  • Better leverage of a small kitchen with minimal equipment, while still offering reasonable variety to customers
  • Hot Kitchen Focus on Dosa, Paratha & Sandwich Varieties and offer consistent and great quality food. Consider adding Egg preparations (sensitive issue???)
6) Remove or clearly separate the Amul product sales counter in the Café
  • Do not offer low margin products inside the Café (e.g. Stick ice-creams)
7) Reduce Revenue Target to INR 7-7.5 lakhs per month
  • 15% Operating Margins (EBITDA) Target (Cost of Sales / Food Cost < 50%)
  • Offer an attractive Return on Investment (RoI) – Investment Recovered in 4 years
  • Operational Breakeven under INR 5 lakhs monthly revenue

8) Create a strong Franchise support team with a focus on:
  • Recruiting & Setting up Franchise Cafes
  • Providing Ongoing support (Marketing, Operations, Best Practices sharing)
  • Ensuring Quality (Audits, Process Improvements etc.) & Brand Promise
  • Ideal model would be to set-up one company owned & operated unit in each new city/region before inviting franchisees
  • Reasonable Franchise fees can be charged to fund the Franchise Support organization (Not a revenue share)
What should their menu look like?
Hot Kitchen Menu Design Principles:
  • Dishes that appeal to customers throughout the day (Breakfast, Lunch, Snacks, Tiffin, Dinner)
  • Dishes that are prepared fresh using minimal kitchen equipment
  • Dishes that can support overall food cost at less than 50% (ideally <40%)
  • Dishes which allow offering reasonable variety and options to customers
All-Day Light Eats
  • Dosa Varieties
  • Paratha Varieties
  • Sandwich Varieties (Grilled & Non Grilled)
  • Omelette Varieties (Egg??)
Minimal Kitchen Space & Equipment needed:  Tava (2), Sandwich Griller, 1 or 2 single burners, Work Tables, Wash Area

Desserts & Beverages
  • Ice-Cream Scoops & Sundaes
  • Gulab Jamun & Shrikand
  • Chai & Coffee
  • Milkshakes & Ice-Cream Milk Shakes
  • Buttermilk & Lassi Varieties
Mid-Size Pantry Area for Desserts & Beverages: Display Freezer, Blender, Dum Chai Boiler, Filter (Coffee), Small Milk Bain Marie, Work Tables