Mumbai-bread barons

Late in 2006, a 40-year-old man approached Vista Processed Foods, the Indian arm of USA’s OSI Group that makes burger patties for McDonald’s India, with a simple request: Could Vista make ready-to-fry potato patties for his vada pav company too? His venture was nowhere near McDonald’s in scale or brand value — just 20 outlets in and around Mumbai’s suburban Dombivili area.

Vista’s response was an outright ‘no’, but the vada pav seller managed to convince company officials to visit his outlets and central kitchen before taking a final decision. The officials not only visited Venkatesh Iyer’s Goli Vada Pav stores, they also discussed his future plans and made a short film on his chain. The boards of McDonald’s USA and OSI Group saw the film and gave the go-ahead for Iyer’s proposal. That led to trial runs for making patties for vada pav alongside McDonald’s cutlets.

This masterstroke from Iyer made Goli a national chain with more than 300 stores in 18 states over the last eight years. Thanks to the Vista plant in Mumbai, Goli vada pav tastes the same whether in Gorakhpur and Porbandar or Kochi and Kolkata. “The key for any ethnic food chain to go national is the standardisation of the product, and offerings that have a national appeal and low pricing,” says Iyer.

“Vada pav, like Amitabh Bachchan, has a national appeal cutting across states and age groups, and can stand on its own without advertising or marketing,” he elaborates.

In Mumbai, you can get a vada pav for anywhere between ₹7 and ₹40. The megalopolis sells an estimated 20 lakh vada pavs every day, of which only five per cent comes from organised players like Goli and Jumbo King, another city-based chain with a national presence.

The chain reaction

Vada pav was born outside Dadar station in 1966 when snack seller Ashok Vaidya experimented by serving potato fritters inside a pav (a local bread/bun), together with sweet and spicy chutneys. The idea quickly spread to every nook and corner of the Maximum City and became its best-known breakfast- and snack-on-the-go.

When Dheeraj Gupta opened his first Jumbo King outlet in Kalyan in 2001, little did he know his vada pavs would one day fetch him a multi-crore business across India. “We started with vada pav, as it is the single largest snack consumed in Mumbai. It was largely unorganised. For the first ten years, we restricted ourselves to Mumbai as we tried to bring in automation to create an international product at reasonable prices,” he says.

To make standardised patties and sauces in bulk, Jumbo King tied up with Pune-based Tasty Bites Eatables, which exports ready-to-eat food to the US and other countries. “Since there was no other benchmark ten years ago, we had to do all the groundwork — from building supplier base to marketing the final product.” That led to 78 outlets across India, with the number about to touch 100 by May this year.

In contrast to Goli and Jumbo King, which have outsourced the manufacture of vadas and chutneys, Indore-based Wow Vada Pav has set up its own plants in Mumbai and Indore. Co-founder and director Harpreet Singh realised the need for them when he was operating his four snack bars in Indore and found that dependence on cooks led to inconsistency in taste as well as pilferage.

Moreover, demand can never be forecast accurately, leading to either wastage of food or turning away a potential customer. The company turned to frozen foods technology to counter this problem and began standardising the product. “And since vada pav has a universal appeal, we began with it,” says Singh.

Freeze now, fry later

All the three chains rely on frozen foods technology. Patties made at the central plants can be stored for up to nine months in a freezer and fried at the outlets whenever needed.

The chains have also invested in logistics to ferry the patties from the plants to outlets across India. Jumbo King has partnered with Shriram Distribution Services, whose cold-storage trucks collect the patties and chutneys from the factory, stock them in depots, and ferry them to various cities and stores. Goli has a local logistics partner in every city it is present in, as also Wow, which has 170 outlets within 18 months of launching.

The buns or pavs are sourced from local bakeries. Iyer says local bakers in other centres are trained in making pav, a largely Mumbai speciality. “Our chefs spend two days training bakers in every city we open an outlet in,” he says. Jumbo King’s Gupta gets his pav from a certified bakery in each city. “In the next couple of years, we will be able to make pavs also at a central bakery,” he says.

Wow and Jumbo King get their sauces made at centralised plants, whereas Goli ropes in local vendors to make the tamarind-gur chutney, garlic chutney and tomato chutney. “We give them our formula and our chefs work with them. They supply according to the taste and quality we specify,” says Iyer.

Hot on the patties trail

With a robust backend in place, the vada pav chains are able to focus on growing their franchisee network. “All our stores are run through franchisees and there are no company-owned stores,” says Gupta.

He prefers the franchisee model as each store is run not by a manager but an entrepreneur, who will make an extra effort to offer quality products and services. “Instead of one person taking the profit, it is better to let everyone share it,” he adds.

The vada pav franchisees typically have a gross margin of about 40-50 per cent, depending on the rent. The popularity of the snack is spurring the rapid expansion of the franchisee networks. Jumbo King is eyeing not less than a thousand outlets in the next five to seven years, while Wow is looking to grow to 250 outlets in the coming year.

Nearly one lakh patties leave Goli’s Mumbai plant each day and arrive at its stores countrywide; Jumbo King despatches six lakh a month. Wow’s plants can manufacture two tonnes of products per day and are currently running at half that capacity. Both Goli and Jumbo King have been profitable for the past three years, attracting investment from venture capitalists as well as high net worth individuals over the past decade.

Snack sans borders

Even as demand for the humble vada pav grows at a breathtaking pace, the chains are constantly innovating to offer variations suited to local palates. Goli’s range of offerings includes palak-makai (spinach-corn) vada pav for the southern markets in particular, and masala vada pav resembling samosa for the north. Jumbo King’s vada pav comes in variants such as Schezwan, chole (chickpeas) and crispy vegetables, while Wow too offers a masala paneer vada pav.

Surprisingly, none of them have experimented with non-vegetarian yet. “We are 100 per cent vegetarian by choice,” says Gupta.

Iyer, however, is open to the idea of including eggs and chicken to the staple offering of potatoes at his stores. Goli has come up with a soya vada pav for chicken lovers.

“There is an opportunity in the non-veg segment. We can introduce chicken vada pav or omelette pav at a later stage… in specific stores,” Iyer says.

The love for vada pav knows no borders, and all three chains are flooded with requests to open overseas outlets. “We get a lot of enquiries from the UK and Dubai, but we are holding on,” says Iyer. Ditto for Gupta, who says the India opportunity is big enough to defer overseas foray for now. “India is a very large market and it is important not to spread too thin. You just cannot go and put up a stall somewhere. As a company, we have to make a lot of investment and we would rather make them in India today,” he says.

But Singh is not risk-averse. He is already planning to supply frozen vadas to countries such the UAE. “It should start in the next few months,” he says. And when that happens, it will be vada pav’s longest journey yet from the streets of Mumbai.

(This article was published on April 3, 2015)

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