As good as mom's cooking

Like all good sons, Navaj Sharief joined his family’s steel trading business after he finished his MBA from Bangalore University in 1996. But it didn’t exactly set his heart on fire. “I had my mind set on a food business,” says the 39-year-old, who gave into the craving and started an outlet in Bengaluru’s posh-suburban Koramangala in November 2008. His family wasn’t thrilled; they asked him why he wanted to be a cook, of all things. “It’s very important to do something you love,” Sharief replied. So food it had to be, but what food? Chinese? Italian? Mughlai? Just biryani and kebabs, he decided: “Indian food is my favourite and biryani tops the list.” He tweaked the family recipe to suit the large-scale format with a no-compromise rule on the ingredients. Subsequently, he got traditional wedding cooks from Bengaluru and Hyderabad and trained them to match his quality standards. Thus was born Ammi’s Biryani.

The name was easy to pick. “I wanted the brand to have an emotional connect,” says Sharief, who still believes that his Ammi’s biryani is the best. Soon enough, his family came around. They now support his passion and love his biryanis. And does his Ammi like it? “Yeah,” he laughs. “Of course!”

Differentiating his biryani was not too difficult. There were no quick service restaurants (QSRs) exclusively serving biryani, and Sharief knew packaging would play an important role in the grab-and-go format. Voila, he came up with the biryani-in-a-box featuring different compartments for raita, saalan and mithai, even a bone tray for discards, plus a pouch with a spoon and paper napkin. Customers loved the convenience. The biryani-in-a-box was a big hit. Take the case of Bharath Kumar who lives in Indira Nagar and orders biryani almost four times a week. “Their biryani is one of the best I’ve had and the packaging is so convenient as well.” 

There are now 19 Ammi’s Biryani outlets across Bengaluru. Sharief wants to take it to other metros, but one step at a time. “We need to remove all the chinks before we take it to other cities,” he insists. “Bengaluru is our testing ground.” Sharief plans to increase the number of outlets to 35 here in less than a year’s time. 

Money follows taste

Getting the per-store model right is very important for a QSR. “Most businesses that fail to scale-up either get their unit model wrong, or don’t focus enough on standardising their operations,” says Kanwaljit Singh, MD, Helion Ventures. “A start-up should focus on getting the unit model right before getting into expansion mode.” Helion, which is very bullish on QSRs, has invested in Mast Kalandar, a chain of 40 North Indian vegetarian restaurants, and Booster Juice, a brand with 15 fresh fruit juice outlets, spread across New Delhi, Hyderabad, Bengaluru and Chennai. 

“Being an entrepreneur is very difficult,” Sharief admits. He started the business with Rs.50 lakh of his own funds. “You have the vision but the capital drains away. Sometimes, we paid salaries on the 23rd of the following month, but every time things started to look bad, I would get help either from a bank or a friend.” Then, in November 2011, SAIF Partners approached him and the would-be partners got on well from the first meeting. 

The PE firm invested Rs.40 crore in TMA Hospitality Services, which owns Ammi’s Biryani, in August 2012. The money couldn’t have come at a more appropriate time. The company had been looking to raise funds since 2011, when Sharief roped in an investment banker, “I didn’t have a clue about fund raising,” he recalls. “After a few unsuccessful attempts, I decided to stop meeting VCs.” He stretched his capital and then opted to open three outlets via the franchisee route in September of that year. Now, given the funding options, the franchisee route has been put on the backburner. “We don’t want to go berserk and expand just because we have funding,” says Sharief. “We definitely have a model that’s scalable and that is the value our investors saw when they invested in us.”

The money will fund expansion and enable a new commissary that meets international standards — Ammi’s already has a central kitchen that ensures quality standards, and keeps the real estate costs down. Food is shipped from here thrice daily to its outlets.

“Consistency is a challenge,” Sharief explains. “Our back-end checks-and-balances make sure the biryani is consistent 98% of the time. We have tried our best to maintain standards.”

Secret ingredient

Ammi’s has an ERP system that makes it easy to know a patron’s taste, offer suggestions and locates the closest branch. Each outlet costs Rs.20 lakh to set up, and breaks even in 18 months. Revenues from home delivery contribute 60% while dine-in has a 25% share; the rest is takeaway. The 15 outlets average Rs.90 lakh per month, and the company hopes to rake in Rs.12 crore in FY13. The traditional mutton biryani retails at Rs.145 but it’s chicken biryani (Rs.135 per portion), perceived as the healthier option, that’s the highest selling item.

Though the biryanis are made with zeera samba rice, Ammi’s has a pricer basmati variant for its North Indian customers. “Providing value for money is critical for a QSR to succeed,” says Samir Kuckreja, founder, Tasanaya Hospitality, which offers consultancy services to the sector. “You have to be competitive on your price because a QSR customer is discerning.”

Food businesses also have to take into account variables such as food inflation (8-10% per year), rising real estate prices and labour costs. Due to volatility in vegetable prices, food vendors prefer quarterly contracts. “Onions made us cry last year, so vendors with long contracts either went out of business or out of Bengaluru,” Sharief says.

It’s challenging, but the organised F&B industry is tipped to grow to $3.9 billion by 2017 (from $1.9 billion in 2011). “The main growth drivers are middle class consumers, and the convenience of a QSR meal as a substitute for home-cooked food,” says Singh. 

But, scaling up is easier said than done. “Home-grown QSR brands have needed more time to scale up than expected,” says Prashanth Prakash, partner, Accel Partners, which has invested in Kaati Zone. “The tipping point for successful international brands has been 12 years. So investors and entrepreneurs need that kind of patience.” Indeed, with a fast-selling product and having tasted success, all Sharief needs is patience.