Pav-erful cravings meet big capital
How much would a snack — a spicy potato dish that’s been mashed, battered, fried and sandwiched between an unsweetened bun, put together in a hurry just like everything in the city of its birth, Mumbai — be worth?india Updated: Sep 18, 2011 00:43 IST
How much would a snack — a spicy potato dish that’s been mashed, battered, fried and sandwiched between an unsweetened bun, put together in a hurry just like everything in the city of its birth, Mumbai — be worth? The right answer would be a mere Rs10, but if you really want to know the worth of this Maharashtrian staple, it is around Rs100 crore. Ask Venkatesh Iyer and Shivadas Menon, founders of the Mumbai-based Goli Vada Pav food chain, who recently got an investment of Rs21 crore ($4.7 million) from a venture capital firm for their vada pav chain to go national.
“If we even get 50 crore Indians to have a vada pav for Rs10 it can be a Rs500 crore market. The product can be served in five minutes. You don’t have to worry about giving special masala packets, spoons or making it from scratch like a masala dosa or a messy paani puri,” says Venkatesh, an ex-investment banker who has worked with corporates like Big Bazaar.
The Indian Quick Service Restaurant market is growing at 25% each year, of which 90% comprises unorganized players. “Goli Vada Pav is one of the few companies that caters to the demand for Indian fast food and has the systems and processes to build a profitable scalable business,” says Siddhartha Das, General Partner, VenturEast.
Vada pav was created nearly forty years ago supposedly by a finger food vendor in Mumbai who had the bright idea of putting the fried potato bonda in a bun and serving it with salted chillies and garlic chutney. But only a few took a bite at the idea of making it a brand.
“There have always been stand alone vendors selling vada pav, who have an ardent fan following. What we have started in hindsight was the most obvious thing to do — make it a brand name,” says Dheeraj Mehta, Managing Director of Jumboking, a vada pav chain that has sold over 8 crore vada pavs in the last ten years. Selling the idea was even more difficult, especially to primary investors. “When I first pitched the idea most of my old clients said, ‘kya goli de raha hai’ — Mumbai slang for ‘nonsense’. That is how the name came about. Since it was an idea right there for everyone to see,” adds Venkatesh.
While Goli Vada pav, which is already present in Karnataka, Tamil Nadu and Andhra Pradesh, takes this idea across the country, its competition has been around for ages. “The McDonalds and KFCs of the world know that you have to put a meat patty in bread to make it a success, but for vegetarians the vada pav is a great alternative, especially since it costs less than Rs15,” explains Venkatesh on why the vegetarian dish will always have an upper hand in the fast food business. Jumboking’s Mehta couldn’t agree more. The chain aims to expand to 200 stores in Mumbai alone.The street smells and sounds that accompany every bite of the spicy snack will soon be a luxury as Jumboking serves up its vada pav in new air conditioned stores; and Goli Vada pav has a "sanitised process" and bread supplied by Vista food, a food manufacturing company that provides the same to all McDonald’s outlets in India.
Dubai, USA, UK and Singapore are the next big markets for these chains, with Indians living abroad craving for their spice fix. “There are some things you just can’t get over as a ‘Bombayite’ no matter where in the world you are. In the UK you can now eat one, mostly in London within Southall and Hounslow. I hope these chains come here,” says Avril Lobo, a 31-year-old online retailer based in London. The chains are aware of the market abroad. “We will move to Dubai and the US in a year, but now we are focusing on taking it up north to markets like Delhi and Chandigarh,” says Venkatesh.
As the humble snack traverses the country and the globe, the variations are catching up too. You can now get a schezwan, cheese and even a paneer vada pav. Mehta says, “We are looking forward to adding a mint and mayo sauce to go with the paneer vada pav. The next big thing will be a Delhi style chhole- vada pav.”