Day 2: Garcia’s
Ashit Patel opted out from his dreary day job to set up a food business like no other in this city of opportunities. Purva Mehra tells more.Special: Small Ideas Big ChangesUpdated: Nov 14, 2008 16:12 IST
Andy Garcia, the Cuban-born American actor, probably has no idea that his last name is often on the lips of Mumbai's pizza lovers - all because it caught the fancy of the founder and former proprietor of Garcia's Famous Pizza, Ashit Patel, when he was watching Brian de Palma's The Untouchables.
At that time, Patel was seeking a challenge outside his job training corporate executives in soft skills, and wanted to enter the food industry. A stint from 1994 to 1997 as a franchisee of Mumbai's then premier pizza chain, Smokin Joes, pushed him towards the Italian pie. "Even though Garcia's is a Spanish name that has little to do with pizza, I believed it would suggest a European product, and not something staid like the other chains," said Patel, 49.
When Patel started in 2004, Smokin Joes, which launched in 1993, had established itself as the city's first only-pizza chain. Domino's had followed, promising to deliver within 30 minutes, and then Pizza Hut's weekly innovations kicked in. But Patel's passion for food and business acumen quickly gave Garcia's a reputation of a chain that delivered very tasty pizzas for nearly half the price of its rivals.
Unlike most entrepreneurs who start with small ideas, Patel did not have much money to begin with. He could not imagine doing a sit-in restaurant. A delivery service was the best option. But then, Domino's was what one thought of when it came to a pizza delivery chain.
How could he make his business different? He decided to go with low prices and meal combinations. "I asked myself why anyone would pay an exorbitant price for slices of bread and cheese," he explained. "So I priced small cheese pizzas at Rs 45 and large ones at Rs 120. To be different, I also introduced new six- and ten-inch sizes that packed in more toppings than larger pizzas at other chains, all at about half the price."
Like the existing pizza chains, Patel introduced coupons, but added meal combinations. "The 'Big Deal' was quite popular as people could buy three large pizzas for Rs 500," he said. "We also introduced special plans between 3 pm and 6 pm - a slow period for sales."
This idea of the value-for-money pizza worked. In time, it forced other chains to lower prices. By making pizza affordable, it revolutionised Mumbai's taste for Italy's popular, staple dish. "Ashit's vision was to bring pizza to the masses," said Prasad Brid, former store manager for Garcia's at Tardeo. "But because of Garcia's low rates, people were able to order regularly."
Part businessman and part food connoisseur, Patel realised his competitive prices and innovative deals were pointless without a menu that instantly conveyed Garcia's edge. "Our first menu didn't even specify we only delivered," admitted Patel. "It was my financier Cyrus Nallaseth's idea to revamp the menu's look and feel."
So they hired a professional food photographer and made the menu much classier than those of American fast-food companies. "I christened the pizzas with European names such as 'Spicy Senorita' and 'Italian Lovers'," said Patel, adding that sales jumped 60 to 70 per cent at once. In a final effort to set his product apart, Patel packed his menu with variety. "Other chains operated on fixed menus that were very limited. I introduced new varieties such as the pahadi chicken, chicken tikka and oriental chicken."
Right from the start, Patel, who has a master's degree in economics and political science from the US, remained unrelenting on his insistence on low prices. Yet he did not want to compromise on quality. He believed profits would follow if customers were satisfied. So fresh vegetables and dough, a unique blend of several cheeses and freshly marinated meats featured in the daily preparation.
Patel was able to charge low prices because he kept costs down. He eliminated several layers of managers. For instance, those in charge of an outlet also worked as purchase managers. With no time-bound delivery guarantee, each of Garcia's 20 outlets employs just eight to ten delivery boys, which Patel said was a quarter the strength of bigger chains' outlets.
Sticking to small stores without sit-ins kept Patel's overheads low. Based on his start-up capital, Patel was clear that he would build a chain only in Mumbai. Crucially, he was also clear that he did not want to franchise his company, because he wanted to control quality.
But that meant Patel had to run the operation on his own. The lack of initial funds posed a serious challenge. "My brother lent me money to set up a store in Bandra," he recalled. "Whatever revenues were generated from this first store, I pumped into a new outlet at Tardeo."
Nine months after constant run-ins with the municipal corporation, punishing competition from the big chains and no profits, Patel met Cyrus Nallaseth, a US-based entrepreneur and immigration attorney who was excited about Patel's idea. "I needed a business to fund a charitable enterprise I'd been planning," said Nallaseth, Garcia's current chairman. "Ashit had vision. I financed this enterprise because I believed in his ideals of quality and accessibility."
Nallaseth first funded five units and a central kitchen. As the outlets grew in number, the kitchen served as a central place for key activities: producing sauces, marinating meats and preparing the cheese blend. Pleased with the results, he funded 11 more, bringing the total outlets to 18. "The kitchen helped standardise procedures," said Patel. "All our outlets prepare fresh batches of dough every three hours."
Having worked in the kitchen as administrator and manager himself, Patel never had problems retaining staff. Mr Congeniality believed that allowing staff to take their own decisions was the way to keep them interested in the job. "Since Garcia's was a new venture, there were challenges everyday," said Swapnesh Golwalkar, who managed the Prabhadevi outlet for two years. "But that's when I had maximum learnings."
The early days were hard. In 2004, Garcia's first outlet in Bandra sat vacant. For hours, Patel and his crew waited for the phone to ring, before finally setting off at 3 pm to hand-deliver fliers at every building in the area for the next three hours. Without a marketing budget, Patel relied on word-of-mouth publicity, not the quickest route.
Today, Garcia's has outlets all over the city that are strategically located in every business hub, such as Bandra, Malad and Andheri. Patel estimated that the business would have been generating revenues of Rs 10 crore to Rs 12 crore a year before he made his exit late last year. Patel's vision was to target those people paying monthly instalments on loans for cars, bikes and homes - in other words, those who could not afford cooks. "How would this demographic ever pay Rs 600 for a pepperoni pizza, which was nothing short of a five-star rate?" he asked.
Parents began ordering his pizzas for their kids more often. For the office folk, Garcia's luncheon deals became a hit at meetings and on employees' birthdays. "Garcia's caught my fancy because of its crust," said Shamita Bose, who has her favourite Veggie Delight for lunch every two weeks. "It's thin and consistent. I don't want to pay extra money for the crust of my choice like at other pizza chains. Garcia's cheese blend is tangy; not the regular processed cheese others pass off on pizzas."
The city, Patel said, had played a vital role in the chain's success. Even though rent and archaic licensing processes can drive new ventures to ruin, for Patel, the city's passion for eating out represented pure opportunity. "If I can understand the pulse of 20 million people, I don't need to look elsewhere," he said. "All types of food from vada pao to pizza can make a killing here."
The competition agrees. "For an industry that is growing at 30 per cent a year, the entry of new players is to be expected," said Dev Amritesh, vice president, marketing, Domino's Pizza India.
After 20 units were firmly established in Mumbai, the management began thinking about expanding to Pune. For Patel, this was his cue to move out and on. "My expertise was conceptualising," he said. "My excitement lasts in the start-up phase, when I have the challenge of getting the business up and running."
"We plan to add 30 to 40 stores in Mumbai first and will then consider moving to other cities," said Nallaseth. "An R&D team is also in place to keep adding innovative flavours to our menu."
Patel has ventured into a chain delivering Chinese food by the name of Mr. Chow's. "The pizza chain model was easy to duplicate, but I wanted more of a challenge," he said.