A bitter-sweet story
Arun Gupta, owner of the popular Nathu’s, has beaten the economic downturn by focusing on providing his customers value for their money, reports Moushumi Das Gupta.delhi Updated: Aug 23, 2009 23:01 IST
Ahead of the festive season, almonds and sugar have begun to taste bitter to Arun Gupta. Every morning, when his men go shopping for these, Gupta, 52, prays that there is no further escalation in prices.
These days, more often than not, his prayers are left unanswered.
Gupta owns Nathu Sweets, the popular sweetmeat shop in central Delhi’s busy Bengali Market, which is the flagship of the 13-shop chain of the same name run by his extended family.
Over the years, politicians, celebrities and commoners alike have developed a fondness for its array of sweets and snacks such as sohan halwa, ghevar, rabri, kalakand, chholey bhature and aloo chaat.
In the past few months, however, business has hit a rough patch. Costs of raw materials have skyrocketed. The price of khoya, a key ingredient, has risen by Rs 20-Rs 25 per kilogram. Similarly, sugar prices have increased by Rs 12-Rs 13 per kg, dry fruit by Rs 30-Rs 35 per kg and milk by Rs 2-Rs 3 per litre.
Gupta has been forced to think of ways to cut costs without compromising on quality.
“It’s a dilemma. With raw material prices shooting up, it’s tough to maintain profits at existing prices. If we increase prices too much, we stand the risk of being forced out of the competition,” he says.
Unlike other industries, the impact of the slowdown is yet to dent the sweet meat industry. But, it has upset budgets of mid-segment shops like Nathu’s.
The Bengali market outlet had sales of Rs 5 crore in 2008-09. Gupta refused to share other financial details and annual growth rates, saying: “We did feel the pinch. The impact of the slowdown is bound to reflect in our growth margins this year,” he says.
But he’s also sure that he'll come out of it relatively unscathed.
For one, he has frozen all fresh recruitments. This helped him contain costs. “I’ve asked my wife to help me run the business. Having her supervise the kitchen has helped us contain costs and improve efficiency. For instance, a cook who was earlier making 40 dosas every day, now makes 60,” he says.
He has invested in automation to improve efficiency. “I’ve bought mixer grinders in bulk. This allows my staff to produce larger quantities in the same time,” he adds.
This also helped him provide better value for money.
Gupta has also aggressively cut down on wastage. “Earlier, we used to make huge quantities of food products in anticipation of demand. We still do, but more thought now goes into it and we produce extra quantities only against bulk orders,” he adds.
With taste being subjective, most sweetmeat shop owners, like Gupta, say quality is their biggest USP.
Then, Gupta decided to put on hold his ambitious plans to expand his chain across north India and, instead, focus on running a tight ship. “This is not the right time to expand,” he says. But Gupta hasn’t fired any of his staff to cut costs. “They are like extended family,” he says.
The shop, which is choc-a-bloc with customers through the day, started as a tea stall set up by Gupta’s grandfather Nathu Ram Gupta in the mid-1930s.
Gupta senior had come to Delhi from Narwana village in Haryana looking for a job.
“My grandfather’s train stopped at a station just behind Bengali Market. At that time Lutyen’s Delhi was coming up and Bengali Market was teeming with construction workers. Looking at them and the absence of any eatery nearby, he thought of opening a tea stall. That was the only job he knew,” Gupta recalls.
From a temporary tea stall to 13 outlets spread across north India and a staff of 200-plus, Nathu’s has come a long way. But the very first shop at Bengali Market continues to be the flagship outlet. Gupta joined the business in 1978, right after graduating from Deshbandhu College with a degree in English literature.
Old employees at Nathu’s say the tradition of quality started by Gupta’s grandfather continues.
“We have changed the decor. But the quality has been consistent,” says Ratan Lal Khatri, 50, who has been working in the shop for 25 years.
Old clients confirm this. “When I was a teenager, visiting Nathu’s after school was a ritual. Apart from the chaat, we also came here to get a glimpse of celebrities. I once spotted former Prime Minister Atal Bihari Vajpayee and BJP leader L.K. Advani, who were then MPs, eating chaat here,” says Aman Verma, 34, a Karol Bagh-based exporter.
Just across the Nathu’s flagship outlet, Bengali Sweets does brisk business. Its owner, Jagdish Aggarwal, is not perturbed by Nathu’s popularity. “I don’t want to talk about others. I stick to my job of making the best quality sweets.”
Manohar Lal, chairman, Haldiram’s, has a different take. “Each one of us has a loyal clientele. The scale of our business is larger. I don’t consider them (Nathu’s) as competition.”
In the next three months, during Dussehra, Durga Puja and Diwali, Gupta expects demand to pick up. After that, the popular sweetmeat chain will have to evolve a fresh strategy to stay profitable.