Vada pav stalls to go beyond Mumbai

The taste and fragrance of vada pav has slowly expanded across the country to help entrepreneurs make the item a successful fast-food business beyond its native Maharashtra. The prospects of the classical western-Indian street snack becoming a flourishing business has just got stronger, with VenturEast, a South-based venture capital firm, recently investing Rs 21 crore in Goli, a vada-pav joint. That and Jumboking Vada Pav, the two prominent vada-pav joints based in this metropolis, foraying into non-Mumbai markets.

Goli Vada Pav Private Ltd plans to add some 50 more stores by this year-end and 500 more in three to five years. “We already have 125 stores in 30 cities across four states,” says its CEO S Venkatesh. “We are planning to expand it to several other cities.” The firm’s goal is to add 100 stores every year in the future.

 

The decade-old Jumboking is slated to expand its stores to seven Indian cities. “We are currently operating in five cities. We will be opening stores in Bangalore and Aurangabad this month,” says Dheeraj Gupta, co-founder.

Jumboking is planning to add 24 stores by this year-end. It had also raised funds a few years ago from investors. “Our present expansion,” explains Gupta, “has been funded through internal approval. At present, we are not planning to raise funds. But after about two years, we might raise some funds.” Jumboking also plans to expand to 10 more cities outside Mumbai in the next two years.

Venkatesh, talking about the venture capital firm’s investment in Goli, says several firms approached them for the purpose. But VenturEast was chosen, because of their “pedigree, ability to understand the business, flexibility and passion for food”. He also mentions that the reason for VenturEast investing in Goli was because of their emphasis on quality: where the potato dumplings or vadas are prepared in fully automatic plants without any human touch, with every vada passing through an X-Ray machine and metal detector. For this, Goli Vada Pav has tied up with Vista Processed Foods, a subsidiary of US based OSI Group, which prepares burgers for McDonald’s.

Venkatesh adds that wastages, pilferage and standardisation of the product are challenges faced by the fast food business, which has been solved by Goli through their tie up with Vista. “Unless these challenges are overcome, it is not possible to win the investor's confidence,” he says.

Siddhartha Das, General Partner, VenturEast says, the quick service restaurant concept is attractive, as the mobile urban population is looking for more varieties in fast food, and at the same time expecting it to be cooked and delivered in a hygienic environment.

“Vada pav is an ethnic food that is popular in western India. Our belief is that Goli Vada Pav will extend the popularity of this beyond Maharashtra with their menu innovations and through their supply chain efficiency.” He also adds that the business of quick-service restaurants has a large market potential with the mobile urban base of consumers growing, so for now they are focusing on that as the big plus. This is the venture capital firm’s first foray into the restaurant business, although VenturEast has made investments in the food sector, specifically in organic foods.

The economic growth of these firms has not been marred by inflation. “We are growing at the rate of 25-35 per cent year on year,” says Gupta of Jumboking.

“The margins have not come down due to inflation.” Venkatesh of Goli says a strong back-end supply chain has helped their business remain unaffected by inflation.

Internationally too, these vada-pav joints are gaining popularity.

Says Gupta of Jumboking: “We have received enquiries from Malaysia, Dubai and New York. But for us, the market in India is huge. So, right now we are not looking at international expansion. Since our back-end expansion is in place, we are concentrating on national expansion.”

Goli’s Venkatesh also informs that they have also received enquiries—from the US, UK and Dubai. “For international expansion, the managerial bandwidth needs to be strengthened. Also, the SOPs (standard operating procedures) have to be upgraded in the next two-three years.” But, they may expand to Dubai and UK very soon, if the interested parties meet their criteria, he adds.