Goli Vada Pav is a vada-pav chain, very famous and prominent in Maharashtra.

While vada-
pav is something that every Mumbaikar is fond of and can find it anywhere, in every street, what
is special about Goli Vada Pav is that it is made at a fully automated HACCP (Hazard Analysis
Critical Control Points) certified hands-free plant. It is an ethnic fast food chain, giving
authentic Indian food, flavor and taste, along with hygiene at an economical price.

They serve 10 different varieties of vada-pav – ranging from Indian onion bhajji stuffing to
Chinese sauce stuffing. More details here.

They have tied-up with Vista Processed Foods, a subsidiary of the US based OSI Inc, which
supplies burgers to McDonald Chain worldwide, for the last forty years. There is a automated
process for every step: slicing, peeling, dicing, sealing, packing and delivering the vada-pav.
There is a quality check and control at every milestone. The vadas are frozed at -18 degree
Celsius and packed and set to the outlets. At the Goli outlets, these vada-pavs are unpacked, deep
fried and served, with various kinds of stuffings. The standardized vada pav has a shelf life of
nine months.

The brain behind this concept, Mr S.Venkatesh was into finance for 15 years and then ventured
into the vada-pav business, starting off at Kalyan in 2004. Then, it was a small outlet, selling
vada, tea and some other snacks like samosas. Today, they have are a fast-food chain, with an
annual turnover of 10-12 crores, with outlets over the country, selling more than 1.5 crores of
vada-pav everyday.

Initially they spent more energy on quality, research on water content of potato, tying-up with
tech firms and standardizing other processes. Today, while their backend is stabilized, their focus
is on marketing and expanding their reach. In the next five years, they plan to grow to 180 crores
company. They plan to expand to 1500 outlets in the country by 2012.

They are planning out this expansion in two business models : one a small kiosks of 75 – 100 sq
ft in size, with one staff, serving only vada pav. Other – 1000 to 4000 sq ft in size, with 10 – 12
staff size, serving 11-12 products.

With this energy, I hope GoliVadaPav one day becomes an international chain. All the best and
great going!

You won't get much variety if you visit an outlet of Jumbo King, a fast-food chain that is
expanding in western India. On offer are vada pavs (a potato-based patty in a bun), Pepsi
and lassi. This is fast food Mumbai style. It won't cost you more than a dollar. (The basic
vada pav costs just 17 cents and the most expensive 59 cents.)
"I was inspired by McDonald's: Behind the Arches, says Dheeraj Gupta, founder and
managing director of Jumbo King, referring to the John F. Love book about the world's
largest fast-food chain. "But my target is the suburban train traveler."

Most Jumbo King outlets are close to railway stations, with their constant stream of
commuters as potential customers. Many stop in to pick up a vada pav. In a city where
commuting can take two hours each way and the railways carry 6 million-plus passengers
daily, this is often breakfast or dinner. "You can get a vada pav at a roadside stall too,"
Gupta says. The difference between Jumbo King and the stalls, he says, "is that we are
hygienic."

Jumbo King is not Gupta's first venture. Shortly after completing an MBA from Symbiosis
Institute of Business Management in Pune, he started Manali Foods to export sweets to
places like Dubai, which have a large concentration of ethnic Indians. It didn't work. "I
suddenly realized I was looking at the wrong market," Gupta says. "There were 800,000 to
900,000 Indians in Dubai; there were 2 million in [the Mumbai suburb] Malad alone."

Having made a choice about his market, the next key decision was the product. Gupta's
family was in the hotel and catering business and also had run sweetshops. But sweets had
flopped once for Gupta, and he now decided bet on Indian snack foods. He opened an outlet
in Malad under the name Chaat Factory. (Chaat is the Hindi word for small plates of savory
snacks.)

That worked. But Gupta soon discovered that the item on the menu that really moved was
the vada pav. "We decided to stick to that alone," he says. Chaat Factory became a
misnomer. When customers began complaining that there was no chaat in the Chaat
Factory, the name was changed to Jumbo King.

From one outlet in 1990, Jumbo King reached 45 by early this year. It is targeting 250 this
year, and has already forayed to Gujarat from its home state of Maharashtra. The initial
investment was Rs. 200,000 ($4,300). Now, the company plans to pump in Rs. 75 crore
($16.1 million) over the next three years. The money will come from private equity.

More Company-owned Outlets

According to the company's plans, the funds will be used for setting up more owner-
operated outlets (outlets are franchised now), and kiosks within malls, retail chains and
airports. A deal has been signed with Bharat Petroleum for kiosks at gasoline pumps. And
Jumbo King plans to move inside railway stations; talks are on with Indian Railways for
outlets on platforms.

"Jumbo King is a brilliant idea," says Akbar Khwaja, managing director of United Pizza
Restaurants, which has 62 franchised outlets in 26 cities. (Khwaja is planning to start a
chain of franchised fast-food outlets called Satvik, serving "non-messy" items such as
samosas, kathi rolls, paranthas, vada pavs and tikkis.)

"Jumbo King has hit the right chord for Indian fast food," Khwaja says. "According to a
recent survey that [United Pizza] did regarding the top five Indian fast-food items across
the cities of Bangalore, Mumbai, Pune and Ahmedabad, vada pav tops the list, followed by
pav bhajji, kathi rolls, samosas and pakodas."

According to a 2004 online survey by ACNielsen, the marketing information company, India
ranks high in fast-food consumption. The survey showed that 37% of the population ate at
takeaway restaurants at least once a week. That was seventh globally and above the United
States, at 35%. Of course, the U.S. market size is far greater, given price differences, but
the trend is clear. "It doesn't matter where in the world you are or how well off, the fast-
food culture has become a way of life for all of us," the Nielsen report says.

For Jumbo King, striking the right lode doesn't translate into operating a gold mine.
Although mark-ups in the restaurant business can be as high as 200%, overhead is
challenging. "Our margins are barely 10% to 12%," Gupta says. "But that's healthy."

Jumbo King made money from the first year, because it pared costs to the bone. "Initially,
there was just my wife, a five-man crew and myself," Gupta says. Today, he has 30 people,
including three in Gujarat. The outlets have their own staff.

"One of our first lessons was getting our target clientele right," Gupta says. He recalls
opening a store in Masjid Bunder, an area classified as SEC C, a low socioeconomic
classification that accounts for 21% of the urban population. More than 50,000 people went
past the store every day, "but hardly any customers. It was a disaster. We found that, while
we expected to reach SEC C, 75% of our customers were actually SEC A."

Buying Roadside Snacks from Mercedes

"The price-quality equation is a big item on the Mumbaikar's mind," says Harish Bijoor, CEO
of Harish Bijoor Consults and a visiting faculty member at the Hyderabad-based Indian
School of Business. "If that is met, the offering works. If not, it does not." Value is key in
India, where it's not unlikely to see someone driving a Mercedes stop to buy snacks from a
pavement stall.

But Gupta realized early on that he would have to work hard to gain customers. There was
no money to spend on promotion. "We grew only through PR and word of mouth," he says.
His wife, Reeta, was freelancing for certain newspapers around that time and persuaded
friends in the media to write about Jumbo King. She says, "I found that the concept of
hygienic vada pav was the subject of some curiosity. So my friends helped me give some
initial news value to Jumbo King. After that I took care of marketing."
Reeta, a Symbiosis alumna, has since stepped out of an active role in the business.
"[Following] our MBA, we had become a joke when we started Jumbo King. People said,
'You are MBAs competing with roadside vendors.' I had to be supportive. From selling vada
pavs physically at the counter to filling feedback forms at railway stations, I got my hands
dirty at every stage."

Today, Reeta is a sounding board for her husband while she tends to her own PR firm. The
mom-and-pop operation has grown to a point where it needs to professionalize, so Jumbo
King has brought in a professional CEO, Karandeep Singh, from Café Coffee Day. "My
mandate is to make Jumbo King India's largest [quick service restaurant] chain in the next
few years," Singh says. Other professionals have also come on board.

The expansion drive brings tough work, starting with getting the menu right. As many
multinational chains have belatedly realized, the Indian food market is fragmented. What
works in one state may not in another.

Jumbo King has already experienced that. In Gujarat, there are some items in addition to
vada pav on the menu. Gupta justifies the variety. "In its formative years, McDonald's tried
their new products in one location," he says. "If it worked, it was introduced all over. The
Butter Jumbo King, first launched in Gujarat, is now available in other places."

The menu will change and perhaps expand, for Gupta doesn't see his business as just
selling vada pav. "We are in the business of catering to people on the go," he says. Besides,
the vada pav that Jumbo King serves is different from the one it competes with in the
streets of Mumbai. For one, it is larger. The bread is round. (The standard pav is square.)
And the vada itself is flat instead of round.

India's Standardization Challenge

The McDonald's recipe for success is standardization. Is that possible in India? Bijoor thinks
it will be difficult. "Take the taste of the humble samosa," he says. "Every region and indeed
every town of India has its own samosa with a taste all its own. Arriving at the true-blue
national samosa is a game of lowest common denominator taste management. When a
national player puts it together, he puts it with the lowest common taste acceptance
parameters of the people of all regions. What emerges is what I call the ration-shop
samosa. The taste is acceptable, but it is not a taste to kill for. Local players are able to
offer this. It is possible to go national with brands of snacks such as the samosa, but the
approach needs to be as localized as possible, with local kitchens and local recipes that
differ city to city. Recipes have to approach the highest common denominator taste palates
of each city and not the LCD palates."

Khwaja of United Pizza disagrees. "Different tastes in food is certainly not an issue," he
says. "There are items which are popular all over. If McDonald's can come and sell a
concept like burgers to Indians across the country, why can't Indian food do well? The time
is now ripe for Indian fast-food chains to catch on because the Indian middle class is getting
more brand-conscious."

Branding may evolve with expansion. Jumbo King's message in Maharashtra is "the hygienic
vada pav." That's what differentiates it from the vada pav available at half the price from a
cart perhaps just 100 meters away. In Gujarat, where vada pav is less known, it is being
sold as "Mumbai's favorite fast food." Explains Gupta: "When we go to other states, we will
probably say that this is what Mumbai eats on the go, and try a Bollywood connection.
Bollywood sells all over India." Will it work? The proof is in the eating.

Gupta inevitably will face competition. Some chains have already recognized that India's big
markets exist down the price ladder. Domino's Pizza has extended its international Pizza
Mania promotion to India. But while the cheapest pizza on its United Kingdom menu costs
£4.95 ($9.11), in India the cheapest is Rs. 35 (75 cents). In India, you have to order at
least four pizzas for free home delivery. But that works out to just over $3.

Another U.S. chain, KFC, has launched a snack box for Rs. 49 ($1.05) and a chana snacker
for Rs. 25 (54 cents). Like the Domino's Pizza Mania fare, these are not targeted at the
bottom of the pyramid, but at middle-class customers seeking value.

Gupta isn't fazed. He points out that the Future Group, which runs national-level stores such
as Pantaloons, Big Bazaar and Food Bazaar, had started a chai (tea) and samosa chain
some years ago. Called Chamosa Bars, about 200 were set up. They failed. The business
was not big enough. "You need to be an entrepreneur to do something like Jumbo King,"
Gupta says. "You can't be part of a larger group. This is a maverick kind of business."

Jumbo King's Competitors

That may be why Gupta doesn't see the existing players as competition. This includes the
multinational chains; the Udipi restaurants that dot Indian cities, serving similar fare but
without common ownership; and even the low-price Indian Railways catering service, which
has outlets at stations.

Bijoor disagrees. "In the foods and snacks business, everyone is competition for everyone
else," he says. "A snack is an impulse item. When the impulse strikes, one looks at local
availability, compares offers, taste needs and prices, and decides. All this in a nanosecond.
To that extent, the Jumbo pav and McDonald's compete with one another."

United Pizza's Khwaja sees it another way. "The real competitor for Jumbo King is not
McDonald's but the man selling vada pav on the roadside. They must turn each of them into
a Jumbo King franchisee."
Jumbo King's next challenge is getting the money together for expansion. Gupta will need
funds because he is changing his model. "Currently we are into 100% franchising," he says.
"In the future, the ratio will be 70% franchisees and 30% company-owned outlets." Jumbo
King gets 10% of sales from franchisees as its fee.

Both models have worked in India. Explains CEO Singh: "Café Coffee Day is a chain of
company-owned stores and Jumbo King is into franchising. But at the bottom of it, both are
a bunch of young guys trying to create a big brand."

Gupta says finding private-equity funds won't be a problem. But what will make or break
the chain is this, according to Khwaja: "Indian fast-food chains have not caught on because
of the mind-set of Indian entrepreneurs. They under-invest and expect quick profits. Indians
typically like to have complete ownership of their business, and so we end up having small
companies. In the chain-food business one needs to have long-term vision and large
investments."

"The absence of Indian fast-food chains is not because of differences in taste or food
habits," says Bidisha Nagaraj, Café Coffee Day's president of marketing. "The entry barrier
is not so much the palate as the investment that is required. Rentals themselves are a huge
cost. If one is looking at a chain of 100 outlets, it can be a huge amount for a small
entrepreneur to invest."

"Jumbo King has a great product and a great concept," she adds. "What it needs to do is to
work on its distribution model. It needs to look at being present in places like cinema halls,
food courts of shopping malls, railways stations and airports. As there is only one product,
they can also look at backward integration to bring about more economies of scale."

Jumbo King may sell just vada pav. But, in terms of management strategies and decisions,
it has a lot on its plate.

Jumbo King has been founded by MBA couple Dheeraj Gupta and Reeta Gupta. Jumbo King has a team of people
spanning the functional areas of operations, business development, franchisee relations and marketing.

Dheeraj Gupta:
     Graduate in Hotel Management and Catering Technology from IHM Mumbai, Post graduate MBA from symbiosis
Pune. Looks after the franchising program, operations and finance.

Reeta Gupta:
     Biochemistry graduate from Mumbai University and Post Graduate MBA from Symbiosis Pune. Looks after the
marketing and liaison.
Gupta's family was in the hotel and catering business and also had run sweetshops.