The How Jumboking Travels the Growth Path
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COVER STORY l JUMBOKING 2001 23rd August- First outlet opened THE 2004 Franchising launched with 6 outlets. VADA PAV 2005 23rd August 15 operational outlets. 2007 Awarded as Best New Concept in Franchising & Most Innovative Franchisee model KING As a 2009 HOW JUMBOKING Case study by promoter, knowledge@ Wharton I have to on Jumboking TRAVELS THE graduate 2011 MS Dhoni from being a becomes GROWTH PATH Jumboking’s Jumboking is the success story of how the desi doer and an customer number 90,000,000 vada pav built growth in the international style executioner QSR chain. Mumbai-based Dheeraj Gupta 2012 to a culture Upgraded to an started Jumboking in 2001, making the vada pav International creator.” Frozen Products relevant to Jumboking in the way that burgers Supply Chain are to McDonalds, fried chicken to KFC and 2013 pizzas to Dominos. With 53 stores in nine cities, Expanded nationally with Jumboking is today the largest vada pav chain in the launch of India. Dheeraj shares the lessons he learnt while its expansion programme in traversing the path to transformational growth. 18 new cities. Awarded as Best Indian QSR Chain. AS NARRATED TO SANDEEP SONI 22 | Small Medium Entrepreneur | November 2013 November 2013 | Small Medium Entrepreneur | 23 COVER STORY l JUMBOKING Getting the operations tight realised that he of course would cities, though it will In the vada pav business, the have a slightly different way of FACT FILE stretch our supply margins are good but the ticket doing things. I had to redefine my Started with Rs 2 lakh as chain but once we size is low. To do a daily sale role to ensure that the professional investment that Gupta got from do that for let’s say, of Rs 10,000 at Jumboking, we got the space to operate freely so his family, Jumboking however from Mumbai to need 400 customers. A Subway that we don’t end up replicating wasn’t his first attempt at Delhi then we will entrepreneurship. Considering restaurant needs only 80 customers work. During the 2008 recession, I open stores in all the that he had a family business to reach that amount. The beauty had to let go of my senior team as major cities on that background running sweet of franchising business is that it became a matter of survival for shops, Gupta, an MBA, initially route. Now we have from the cost front, the operations the relatively small company at that ventured into selling packaged stretched our supply are very tightly held because the point of time. When things began sweets with Manali Foods in chain up to Raipur franchisor of the business is directly looking up again I hired a new COO. 1998. However, he couldn’t go on the route towards controlling all expenses happening That was in 2011. too far with that and had to East which has cities at the stores. In 2009, we realised This experience helped me shut it down in 1999. like Aurangabad, that our franchisees were running understand that after a certain Amravati, Nasik, and Gupta, finally had his eureka The Schezwan Jumboking – a vada pava with much tighter operations than we point, the promoter has to play a Chinese sauce was an idea of a franchisee, and in these 53 stores where there are Pune. Today my supply chain cost were doing at our own stores. When different role than the CEO or COO. moment when he later went to today it gives us 10 per cent of the sales. around 300 people working, even is the maximum at Rs 35 per kg and we gave our company-owned stores The promoter always has the benefit London. He ran into people who 15-20 per cent attrition means 40-50 every year this cost is going to come to franchisees, our sales increased of knowing the company inside out had Burger King franchisees people leaving and joining every down to optimum level of Rs 20 a by about 30 per cent and operating since he has been there from the and gradually stumbled upon month. So this is something that we kg over the next two years. costs decreased by about 40 per cent beginning; the professional needs ways to run a fast-food business have left completely on franchisees We are looking at operating in on the same lines in India. and the store upkeep also improved. time to settle in. The professional and it has worked great for us. The the top 20 cities by next September However, it had to have a desi We built our franchise network by has to be given clear cut key result flavour, something like vada culture that we as a company try and top 50 cities over the next three keeping franchise fees at 6 per cent areas and then the promoter has pavs, which had a mass appeal to create is amongst the franchisee years. We are looking for properties and ensuring that we deliver a 10 to let him do his job while the too. He returned and set-up group. We try and bring into each in three more cities that would be per cent saving on food cost. Tight promoter plays the role of the the first outlet by the name of franchisee a culture of customer operational by December end. In operations, brand building and mentor than the doer. Chaat Factory near the Malad service and store upkeep. We feel terms of store size, we don’t want innovative product development railway station in Mumbai. the franchisee staff should be loyal to become Haldiram which has have built our network. Start-up to Growth Stage: Gupta, however, quickly to the franchisee not to Jumboking. 2500 sq. ft store neither we will go Changing Demands realised that vada pav was the for push carts as it is a completely Getting the Timing Right For our first 10 stores the kind best seller on his menu and Investing in Innovation different business model. We firmly believe that the company of team that we were operating eventually rebranded the store Our entire manufacturing is 90 per cent of the brands go should be run by numbers. You with and the systems we had in as Jumboking focusing on outsourced and this has been from wrong because they try to become should build a top level team place were very basic. The food vada pav. pav as a product would be able to the day one. Product innovation everything. For us, India is a market only when your balance sheet can cost, profitability, rent, number of sustain even a single store? But by is what we focus on. Ideation or which can support a minimum of support it. When we were small managers etc. were known to me. to a franchisee store and see one the time we reached 10 stores, we origin of the product happens in 1,000 Jumboking stores. in size, we decided to grow at 50 But as we grew with the number of of his staff members is without chalked out that Mumbai alone the marketplace and to be able to per cent new stores year-on-year. stores, I realised that all the levels uniform, I will not correct him. I am could have up to 200 stores in implement it we move back to our Future of Indian QSR market This meant that when we had 20 the teams would require different there from a marketing perspective around five-year time. So the vision kitchens to check if it is possible I am sure that at least 10-15 very stores, 50 per cent growth would skill sets. As a promoter, I have to to understand what new products kept growing and we started giving for us to do. 80 per cent ideation strong Indian food brands will be have meant that we need to add 10 grow with the company. At the same are needed to boost sales. Of course, franchising outside Mumbai also. comes from the market while 20 per created over the next decade. I stores every year. Now that size did time, my team also has to grow. So I will mention it to the CEO later. The first three stores were company cent from the kitchen. Innovation, believe food items like Biryani and not require a CEO. Today, we have I will have to figure out a way to As a promoter, I have to owned and the fourth store was a supply chain and brand building at sweets have huge potential lying 53 operational stores, and as per take my team along. I tell them as graduate from being a doer and an franchised store in 2004. However, Jumboking happened from day one. untapped. Further, there is a huge the growth target, we are planning to where they all will have to be if executioner to a culture creator. we franchised the second and third The product additions that we did misconception about FMCG and to add at least another 27 stores in they want to be in operations at 500 My focus is on culture creation store within the first two years itself were because we realised that the restaurant segment that people in the next 12 months. This is where stores. As the company grows, as as to whether we want to have a and later we franchised our first market was willing to pay more for the food industry have. Haldiram as the promoter I would struggle to the team grows, system creation is franchise system which is very non- store also.