Incredible Insights From India's F&B Brands
From tea and pizzas to biryani and Chinese
Hello there,
I love eating out. I think we all do, even though it bores a gigantic hole in our health routine.
Just the fact that going for a run (that burned 300 calories and almost killed me in the process) could be undone by 1 greasy-as-f**k piece of Gulab Jamun was enough to send me into treatment-resistant depression last Sunday.
Despite these hard facts, we love going out, ordering in, and experiencing culinary orgasms regularly.
While we take these restaurants and food chains’ existence for granted, a LOT of work goes behind the scenes to deliver the experience we’ve come to love. The amount of insight mining, varianting, consumer testing, and supply-chain work is incredibly complex.
I recently tuned in to a podcast where CXOs from firms like Dominos, Chaayos, and The Whole Truth spilled the beans on some interesting insights into the food business.
Here are 10 points that I found very interesting:
The problem with Biryanis: It is super hard to scale a business that sells Indian food items like Biryanis because from one region to the other, the variables- like the hardness of water, the boiling point, and the kind of masalas available- keep changing. That makes it exceedingly hard to standardize a process that can be rolled out everywhere to achieve scale.
Moat via standardization: This point implies that if you crack something like this (i.e. standardizing the production of a difficult food item), there’s incredible money to be made. That’s what the likes of Behrouz Biryani have achieved through their processes. It also gives the business a very deep moat, because it raises the barrier to entry as specific knowledge is required to crack a successful pan-India Biryani biz, and a random person can’t just get up and start one- it’s too difficult to allow such behavior.
Chinese: A similar problem applies to Chinese cuisine because, in that country, the cuisine changes every 100 km- making standardization as hard a problem for a businessman to crack as is getting matches on Bumble when you're 58 with a bald patch. This problem is compounded by the fact that just like our cuisine, Chinese food has a lot of complex and local ingredients, making things 5x harder. This is so different from a burger which can easily be broken down into simple components and a process to assemble them- take 2 buns, place a patty, throw in 2 tomato slices, some lettuce, a decent amount of unhealthy mayo + ketchup, and you’re done. That’s why a lot of this can even be automated by machines.
Cuisines & Scale: A deep insight here is that the older a civilization, the more complex its cuisine, and the harder it is to standardize and scale its food. That’s why Indian and Chinese are so hard- they use many local, fresh, and non-standard ingredients with many regional variations in the preparation (we all have a different Poha recipe), while the recent ones have relatively straightforward ingredients and processes that can be scaled- think pizzas, burgers, wraps, and donuts.
Why Chaayos: Speaking of local stuff, nobody thought that a chain like Chaayos could work because a) We can make tea at home and b) We all have a specific type of tea we want, and even a slight modification sends us into an episode of violent, apoplectic rage. So why does Chaayos work? It’s not because chai is their main product. It’s a combined package of the chai, the desi snacks that go very well with it (which isn’t a thing that happens with coffee), and a nice, cool space where people can hang out for a couple of hours. Just the chai may not cut it, but when you combine all 3- people are totally up for such an experience if they don’t want to go to a Starbucks and get their net worth wrecked.
I’ve never had a Papad like that Tea delivery: Another curious fact is that delivery is a big part of Chaayos’ business today. Now how does that work? It goes back to the insight we just discussed- we all want our specific kind of chai. When someone makes tea at home, they customize it to their preferences- and you can never please everyone with your personal ingredient formula. This, coupled with our growing Q-Commerce-induced laziness, makes ordering *your kind of tea* a very attractive idea. No wonder Chaayos sells the ‘Meri Wali Chai’ proposition banking on this core insight.
Dominos in India: Let’s change gears and talk about pizzas. Dominos is the big-daddy in India, with 2000 stores and an ambition of reaching 10k- it’s not a matter of *if* it’ll happen but when. India has 5-6k QSR stores in total while China has 10,000 KFC stores alone! So if we even get to half of their current per-capita income, the explosion of QSRs and waistlines is a given- and Dominos is going to ensure it hogs the centerstage in that drunken party. The main reason people order from them is when they’re feeling a craving for cheese- which is why pioneering formats like Cheese Burst have built very strong associations for the brand and will allow it to scale deep into the hinterland.
What Dominos Does: Here’s the fun thing about the brand. They face a 70% attrition in their staff. They have a 30-mins-or-free offer which means incredible pressure to crack superior logistics. They work on mundane things like how to automate the box-folding process to reduce time by a minute- because that means thousands of man-hours saved at the national level. This is the kind of work that happens behind the scenes to keep their machine growing. Dominos is a training, logistics, engineering, and manufacturing firm that just happens to sell pizzas!
On distribution: When Tropicana wanted to enter India, consultants discouraged them because this was a fresh juice market. They launched regardless and ensured very deep distribution. The fact that it was present everywhere led to very quick adoption and created a major success story, beating all expectations. The insight here is that you can focus on deep distribution when your product category is already deeply penetrated. The same won’t work for protein bars, because the need for having one isn’t deeply established yet. It’ll only work the day when millions think “I need to eat a bar every day, now let me see which brand to get”.
A final insight + inspiration for aspiring food entrepreneurs: 70% of the $50 Billion food services market in India is unorganized with a median ticket size of 60 Rs i.e. mostly selling stuff like a plate of chaap or aloo tikki. That’s where the big opportunity is, but vanishingly few people are building brands in this space. Everyone can sell a roll for Rs 250, but if you can crack something in this ticket size, it’ll open up the belly of the Indian market and set the stage for unseen levels of penetration & scale. That’s where the next alpha might be.
That’s it for the day, friends.
If you loved this, you might also like these:
What Food Psychology Reveals {So much fun}
A Note To Everyone Building India [Crowd favourite]