Saturday 19 March 2016

Thinking of starting a QSR chain? Have you checklisted these?

Food and Restaurant trends for 2016 reports that more and more people prefer Quick Service restaurants with local flavors, fancy menu at a reasonable prize than a fine dining experience.  The Indian QSR market is expected to touch a whopping 25000 Cr by 2020, surging up with revenues growing at a rate of 25% per year.  Reports say that an average Indian middle class family eats 8 times a month outside is in a Quick Service Restaurant {QSR}! In India we have seen a rapid growth of US origin QSRs such as McD, Burger King, Dominos as well as our own popular ones such as Faasos, Goli Vada pav to name a few.


So what differentiates a QSR from other restaurants? A lot of budding entrepreneurs in the food business have this big dream of running a QSR chain. Here are the top 5 Checklists for a successful QSR Plan

1. A centralized recipe management system: When you dine in a QSR, there is no difference in taste no matter where it is located.  The taste and recipe has to be repeatable in not just 10 or 100 but in 1000s of joints. Standardization and the ability to train towards this is a make or break factor. Find that particular recipe management system that will work for your business, fine tune it, use it.

2. Scalability: The second element to establish is scalability. Can you scale such that you can start and run at the rate of 30-40 new outlets every year? To start 100 outlets with a Powerpoint impressed VC fund is quite simple, but that is just expansion. What one needs to achieve in scalability is growth with profits. This is where very standardized cost and inventory management along with strict practices will play a key role. And this where most QSR fail to show profits.

3. The choices on Location: Can you be so smart about your location choice for about a 100 outlets? Can every single Location be a money spinner? Who is taking that decision for you? And how do you know it is time to close an outlet? As the Boss of your business, you need to have statistics and analytics helping you to measure the ROI of each location and take decisions before they drown the entire business. As a rule of thumb, the poor money makers should not be more than 20% of your total outlets.

4. Less On Menu is High on Profit: Are you having too many lists on your menu?  A QSR menu should  have 5-8 items on the food and Entree menu and around 3-4 on drinks/desserts. Anything more than that will drag your cost down. Even the main dishes should be variations of a single food item. For example, Faaso's differentiates only on the ingredients - it does not deviate from Rolls and serve vada pav. The rule of the game is to stick to just one common base and play around with the rest. Pizza hut literally shot themselves in the foot by launching a briyani which did not gel well with the theme at all. The less menu directly favors your ability to scale and control costs

5. Speed of delivery: Be it in dine eating or door delivery services, QSRs cannot take more than the committed time. Have you computed your delivery times based on the processes that you have established earlier? Can you deliver in that time? What can go wrong and how will you mitigate the risks? Have you found the right logistics, location wise to deliver on time? Enough fleet? Good partners for food delivery? How much is the commission bleeding on delivery? All these have to be factored into your delivery cycle and should translate into customer delight Every time. This makes a big difference in bringing repeat customers to your doorstep.

These 5 elements factored well in a Business Plan along with some good recipe ideas can bring you the much desired VC funding!

 

Saturday 12 March 2016

Food Tech Startups are killing our Food Services Ethics and here's how!

I am all about honest cooking and good Food.  Fresh food made from local produce, made with no preservatives and eaten immediately after cooking. In our family run food business back there in Madurai, we still use wood fire cooking and there are no refrigererators to store left over stuff.  Over 80 years, we have learnt the art of managing our kitchen and food preparation so well that left overs are very less. Almost NIL. The food is absolutely delicious as is.

Eating is nothing less than a wholistic experience

Food is not just about satiating your taste buds and sense of gratification. Food is a wholesome element very closely tied to our health, Body and Mind.  Frozen food, with added preservatives and taste makers is a chemical Bomb. Not good food. On the same lines, a food services owner needs to connect with every customer to bring a great food experience.

Coming from a background that hails these philosphies, I am a big skeptic of technology linking to food. Offlate there has been a lot of hype, enormous funding linked to food technology startups in India.  Starting from FreshMenu, Swiggy, Tiny Owl, , SpoonJoy, Yumist, Bhukkad, Zomato....there has been an explosion of players in the entire food supply and delivery chain between 2014 and 2016.
These startups attract a lot of consumer attention by promising some spectaluar looking food, rated 5 out of 5 by some hand crafted analytics, promising delivery times within 30 minutes at a reasonable prize. There is a considerable leverage of technology to make a consumer believe this to be real. Several first hand narrative of these food delivery business have been a contrast to what these business promise.


 We are losing out on the Core Values of Eating

 But what consumers are losing out, in the name of convenience is:

  • A first hand experience of the environment where the food is cooked and served. A good eating experience must also involve visuals of how and where it is cooked not a make believe experience made from websites
  • Consuming a considerable amount of added preservatives to artifically maintain the freshness of food
  • Consuming a considerable amount of pre-cooked frozen ingredients in the name of exotic menu
  • Good restaurants serving authentic food going out of business due to messed up ratings created by technology

The good news, however, is that,  nearly 80% of them are now seeing a downfall, scrambling for money in the already very low margin food business. Delivery Commissions heavily run over the food profit margins resulting in neither the delivery nor the supply chain making the kind of money that is worth the effort. People call it flawed business models, too much competition, but the fact is - THERE IS NOT MUCH MONEY and a lot of compromise in this. 

Stick to the Core Ethics of Food Services

 Till then, a suggestion for all food startups to stand by the 3 ethics of a good food business to flourish without the support of technology or a big spend on marketing:


  • Connect directly with your customers. Food is about a personal experience and an emotional connect
  • Keep it fresh and real. Do not compromise on food quality by adding chemicals OR preservatives just to enhance taste. The best example is the American Mexican Grill Chipotle. Local Produce, cooked in front of your eyes, Highly prized for all that quality
  • Own your business End-to-End. Cutting off from delivery keeps you in a blind spot about what customers actually think and feel about your food. A mistake by Swiggy on poor packaging directly impacts your business but you dont get the feedback. Food business is about continuous feedback and reinveting yourself.
In the end, a few players will continue to be successful and those will be the ones that are Honest and Loyal to their customers.






 

Saturday 5 March 2016

Repeat Customers hold the key to profitability for a food Startup!

For a business to thrive, the number one need is to create a loyal customer base. Customers who will repeat their purchases/visit with your brand. While this is true for any industry, food businesses depend to a very large extend on repeat customers. Studies have found that nearly 45% of  customers that come dining into a Quick Service Restaurant are repeat. This is huge.






Here are a few facts and Tips on customer loyalty:
  • An increase in customer retention is directly linked to a reduction in costs. Not only do they bring you business, but also serve as marketing channels through word of mouth and a direct increase in profitability by 25% to 125%
  • QSRs lose nearly 25% of our customer base every year because customers relocate, find our competition better than ours or find new eating interests. To gain that same percentage of customers back, we will need to spend a lot of money and effort. In effect losing a loyal customer base directly increases our cost which is an overhead.
  • To retain existing customers, it is very important to help your customers go beyond the boundary of just satisfaction and transform this into customer loyalty.  To build that connect it is very important to know your customer base personally well and to create personalized experiences when you are a startup
  • Food is tied to people emotionally. A dining/food experience needs to bring out positive emotions such as - special,valued, important, welcomed, heard, Joyful, and respected. Before your food startup becomes too big, ensure that you set in such a culture among your staff that they understand and behave as if each customer is a king/Queen. Customers love the larger than normal life experiences that they go through. Create Such emotional experiences for your customers.
  • Stay Connected with your customer through Social Media, Emails, Blogs, Telephone. Social media and digital marketing that use analytics based approach to create personal and custom messages are not just a hype. They are required to keep connected to your customer every day.
Some of the best examples of  QSRs that give these delightlful & personalized experiences are Rajdhani, Stoner Ice Cream, Burger King to name a few.  So if you are a personal baker Or a personal catering service OR a QSR that sells specialized items just make sure you get an emotion ticking for the customer. That is what will set you apart from competition and take you to profitability