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Soumik Kar

Big Idea

West asian wonder
Maroosh goes for a big bite of India's QSR market

Avantika Seth

"We launched Maroosh as a QSR that would cater to party goers and others who just wanted to head out for a quick bite" — Ketan Kadam, founder, Maroosh

 

There’s nothing unusual about the seaside promenade at Carter Road in Mumbai’s suburb of Bandra on any given weekday evening. There’s the same old cool breeze blowing, carrying with it the scent of chilli and mayonnaise. There’s the same old brightly lit narrow lane off the promenade, packed with people, dogs, street vendors and fast food joints. Adding to kathi-roll king Carter’s Express and Café Coffee Day facing the sea are a smattering of recently opened QSRs such as Mad Over Donuts, Maroosh, Dumpling King and WOW Popcorn, making the locality the place to be for the peckish. After all, the hundreds flocking to the seafront are more in the mood for a quick bite than a fine dining experience. 23-year-old IT professional Robin Luthra, for instance, couldn’t care less whether her favourite snack chicken shawarma is a Lebanese dish or Chinese. “It doesn’t really matter. It’s the best thing available here,” she says, eyes fixed on the mayonnaise dripping off her roll. Maybe it is the quasi-global nature of the suburb or the migrant urban professionals that populate it, but the popularity of QSRs serving up world cuisines has shot up recently. At the very least, it could be why an August 2015 report by Technopak on the food service market in India pegged the size of the QSR market at 272,680 crore in 2014, projecting a figure of 423,140 crore by 2020 at a CAGR of 8%. 

With an eye on the evolving palate of Indian consumers thanks to travel, serial restaurateur Ketan Kadam in September 2000 founded Maroosh, a brand owned by Impresa Hospitality Management, which offers bite-sized Lebanese and west Asian specials. Chicken dishes make up nearly 70% of Maroosh’s menu, which offers items such as kebabs, curries, rice, shawarmas and wraps, all priced between 145-250. The Mumbai-based company has an average sales-per-store of 10 lakh-12 lakh per month, with an Ebitda margin of 13%. Kadam, who was in the past a stakeholder in Impresa’s Two One Two Bar and Grill and Café Sundance, sold his stake in the two in order to focus on Maroosh’s growth. And if research is to be believed, there is more than enough scope for that. According to Technopak, 65% of QSR audiences are less than 35 years of age. Factors such as increasing spend on lifestyle activities, higher earnings, increased spending power and a growing women workforce has driven the growth of the organised food market, aided in part by QS Adopting a lean business model while keeping their capex low compared with their MNC rivals, some domestic QSRs have already turned profitable or are on the threshold of breaking even. 

On fire
Spotting a vacuum for good entertainment centres in the city, Maroosh’s Kadam had in the past launched popular Mumbai nightclub Fire N Ice. Knowing the short shelf life associated with the world of nightclubs, he was looking for an opportunity in the food space. “I noticed that a lot of customers from clubs ended up leaving early to grab some grub on their way home,” he says, tracing the evolution from Fire N Ice to Maroosh. Looking out of the window of his Lower Parel office, Kadam thinks back to 2000, when the first Maroosh outlet came up in the nearby Phoenix Mills. The store was located right next to Fire N Ice, so that people partying at the nightclub didn’t have to leave the premises in search of food. They could step into Maroosh for a bite and go back to the club. Maroosh is now set to touch 22 crore in revenue by March and claims to have grown 10% Y-o-Y. “We closed the last fiscal with 17 crore revenue. The hike is due to store expansion and sales growth,” explains Kadam. 

Jayendra Shah Partner, NA Shah Associates“I was always convinced about the potential in this segment. Apart from the 24-hour coffee shops in 5-star hotels, there weren’t too many places to grab a quick, filling bite. That’s why I started Maroosh — a QSR that would cater to party goers and others who just wanted to head out for a quick bite,” adds Kadam. After being funded by Ronnie Screwvala’s Unilazer Ventures, which had acquired a 43.5% equity stake in IHM, Maroosh received 4.5 crore from another Mumbai-based VC firm, Trans-Continental Capital Managers (TCCM) LLP. According to Kadam, the company’s valuation is about 75 crore after its last round of funding. “Given the number of processes that it has automated, Maroosh has reached global standards in terms of standardisation and a strong back-end. It is now looking at brand extensions through which it can deliver to places that don’t allow live cooking,” says Jayendra Shah, partner, NA Shah Associates, who is a part of the investment committee at TCCM. The fund plans to release its investment as and when the company achieves performance and footprint milestones. “Younger audiences head out to eat on the weekends or even order in on weekdays very often. That’s where QSRs fit,” Shah says. “Lebanese cuisine is quite familiar to the Indian palate and yet differentiated. It is easily replicable and has the ability to travel outside India,” he adds. 

Pocket friendly 
Kadam explains that the funding received so far is being deployed in strategising a marketing push and dealing with store capex. “We want to position ourselves as a strong brand first, rather than handing out heavy discounts to allure customers.” says Kadam, adding that Maroosh will focus on local marketing for now. “Social media generates interest in brands but doesn’t drive revenue back to them.” Unlike most start-ups today, Kadam is not a big believer in either mobile app or social media marketing. “In August alone, we received 6,000 orders through calls, 180 through the web and only 54 on the app. To go app-only makes no sense,” he explains. About the company’s business model, he says, “We are totally sales-driven.” Maroosh has outsourced its production, shipping the finished items to its stores. “Setting up a centralised kitchen that caters only to your own outlets makes little business sense given high rents, cost of hiring skilled kitchen staff and utility costs. It’s more feasible to partner with a company that prepares the dishes and deliver them to all your outlets. 

Ravindra Yadav Associate director, food services and  agriculture, Technopak“Our logistics partner is Coldex, with whom we’re about to go live. The company will handle inventory management for us on an 8% commission.” Kadam admits that hiring Coldex might add 1.5-2% to costs but says it will help reduce spoilage and overheads, enabling him to also buy larger quantities due to the expanded storage capacity. Besides, the company has tied up with Bengaluru-based RoadRunner, which charges 30 per order, for delivery to customers. Tying up with RoadRunner also ensures that Maroosh saves on losses due to late delivery. 

The company has hired three to four chefs who keep working on new recipes and amend existing ones. It gets its chicken from Vista Processed Foods, bread from Daily Bread N Foods, sauces and curries from Cremica and cut vegetables from Malgudi Express. While Maroosh’s chefs share their recipes with these companies, they are under a non-disclosure agreement with the former, 55% of whose sales are driven by its Lebanese section. “There is no actual cooking that has to be done inside the store’s kitchen, which reduces the time taken to serve dishes, cuts costs and helps prevent poaching of our recipes,” Kadam explains. “Owning all our processes is costly and tedious. You can’t focus on everything. Producing at the outlet level is feasible for less than 100 stores. If you want to standardise your products, you have to support it with back-end infrastructure. Outsourcing helps us maintain a standard quality.” Maroosh currently has 21 outlets (20 in Mumbai and one in Pune), of which 19 are running profitably and generate a revenue of about 33,000 per day. “The ones inside malls touch 50,000 per day,” he adds. Maroosh caters to marriages, house parties and corporate parties as well. 

The company currently owns all its stores and has started franchises in Visakhapatnam, Kolkata and Pune through an agreement with Travel Food Services, which will retail Maroosh’s rolls across 40 railways stations in India. “We also aim to open 30 more outlets by the end of the year, adding 500 stores over the next five years,” he says. Other places on its radar are Bengaluru, Goa, Hyderabad and small towns in Maharashtra, with plans to go pan-Asia soon. 

Big appetite
The company currently witnesses 25% sales through the delivery of its products. Maroosh’s average ticket size ranges between 300-400 and the company achieves average monthly transactions of about 9,000 tickets on delivery, while the stores witness average monthly transactions of about 60,000-65,000. One reason for Maroosh’s success is the presence of its stores at the right locations at the right price. “Chains like Maroosh are successful because they have kept their menu size small. The only problems they face is with regards to expansion. The company needs to maintain the consistency of its products and ensure a uniform customer experience,” says Ravindra Yadav, associate director, food services and agriculture, Technopak. 

Kadam agrees. “I do not believe in growth for the sake of growth. Many brands make the mistake of opening stores just to establish a presence. What’s the point of owning that many stores if they bleed you financially,” he asks. “We are evolving our menu to cater to specific customers in specific locations, like starting an all-veg menu in a Jain-dominated area like Ghatkopar,” he says. Next on the cards are pocket-friendly rolls at 100. There are also plans for an FMCG foray with ready-to-eat curries. “We are planning to sell these at big retail chains,” he adds. Maroosh sure seems to have an appetite for growth.

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