Fast food chain Nirula’s will likely close FY24 with 250 outlets from the current 135 stores across the country, said Board Chairman Sanjiv Singhal. “Our customer revenue grew by 35 per cent last year and our outlets grew 50 per cent to 135. We were also able to significantly expand the menu offerings. It is likely that we will close FY24 with 250 outlets so the outlook remains extremely bright,” Sanjiv Singhal told FinancialExpress.com. In terms of investment in the expansion plans, he said that the brand has an in-house project and design team and builders and so, for the same specifications, Nirula’s outlet costs upto 50 per cent of competing brands.
In terms of price increase, Sanjiv Singhal said that while Nirula’s is trying to hold off any price hike “as long as its practical”, it is inevitable to not take any price hike with milk prices this year at ‘historic highs’. India has been facing an increase in milk prices and it is not expected to ease up until November. In fact, in the last 15 months, there has been a hike of around 14-15 per cent in milk and milk products, RS Sodhi, former managing director of Gujarat Cooperative Milk Marketing Foundation, had said.
Here are edited excerpts from the interview…
Elaborate on the company’s performance in 2022 and your projections for the year 2023.
Our customer revenue grew by 35 per cent last year and our outlets grew 50 per cent to 135. We were also able to significantly expand the menu offerings. It is likely that we will close FY24 with 250 outlets so the outlook remains extremely bright. We are also looking to add a South Indian menu, a theme based all chicken menu plus start our first standalone bakery cafe. Finally, on the food services side we have signed up some really big names and the provision of food services to these large corporate clients is also likely to become a significant portion of our revenue.
What percentage of surge in sales are we expecting during this summer season?
There is obviously a small surge in the summer but now the seasonality of our sales is more subdued and there are two reasons for this. Firstly, our focus on food which by nature tends to be less seasonal and secondly, expansion into what I call the 365 day Ice Cream market such as Bangalore, Kolkata, Pune, Mumbai and Hyderabad have contributed to this trend.
What is the most preferred channel for retail for Nirula’s? Are we going to witness any change in the same?
We like high street stores and outlets in malls. In the past year, we have pivoted towards larger stores with seating because we found that it enhances the customer experience and makes customers more sticky so we have either closed our really small stores and replaced them with larger ones and in some cases, we have opened larger stores in the vicinity of the kiosks. On the retail channel front, we have also made a push for the shop-in-shop format with our partners 24×7 and Reliance Smart Bazaar
Which region brings in the maximum revenue for Nirula’s?
We have a long history with the North and this obviously does the best for us but if I was to answer your question in another way, there is a strong correlation between our store sales and the affluence of the area. So for us the ‘SEC-A’ definitely works much better. Let’s take Gurgaon as an example – last year we had 22 odd outlets and we thought we were saturated. In the last 12 months, we have opened another 8 outlets and plans are final in different stages of execution to open another 10 and take the count to 40. Our learning is to view affluent neighbourhoods as micro markets and to understand that ice cream is an impulse purchase and you are more likely to stop at our outlet when it is on your way.
How do you see competition from other brands in the category?
On the ice cream parlour business, I see Nirula’s as a premium offering and frankly I don’t think there is much competition. Yes of course you have some enthusiasts making similar ice creams in their kitchen but I’m talking of scale and I don’t think there is a second to us. On the food side, we have obviously lost ground to competition in the burger and pizza business but we have a new improved delivery friendly product and we see customers coming back for the taste and for the purity of the product. We have a premium momo offering and again I believe we are the only premium product that gets sold on scale. So our product is equivalent to the best at any starred hotel but we probably sell more momos and dimsums than all the hotels put together. Finally, we have new concepts like chicken, the bakery cafe, the healthy brand and Indian. The initial response is very encouraging and each of these brands fill a white space in the market.