With the changing consumer landscape, India’s homegrown vada pav chain Jumboking has recast its staple product into a modern Indian burger and plans to take it big nationally, come 2019.
Between fast American giants Burger King, KFC and McDonald’s, the humble Indian vada pav brand, Jumboking, is steadily working on increasing its base and expanding into markets beyond its home turf of Mumbai and Pune. In its 16-year journey, Jumboking Foods has had its own learning curve and has taken several corrective measures. With the changing consumer landscape, Jumboking has positioned its traditional vada pav product as an ‘Indian burger’, by infusing it with different flavours like schezwan, crispy veg, corn palak, nachos, etc. “We are trying to perceive how the youth looks at it. The moment we call it vada pav, we are struggling to sell it,” states Dheeraj Gupta, MD, Jumboking Foods. Initially the ‘Indian burger’ product
contributed to around 20% of the total sales, while the remaining 80% came from the traditional variant, but Gupta mentions that over the last one year the ratio has changed to 60:40, with 40% coming in from the Indian burger variants.
Going ahead, he expects the ratio to become 20:80. Typically a vegetarian fast food dish native to Maharashtra, vada pav is a deep fried potato patty lodged in a bread roll with condiments. Usually eaten with chutney and onions, it is considered as cheap street food in Mumbai, but is now being offered in stalls and restaurants throughout India. However, making this product relevant to consumers across the nation can be quite a challenge, particularly bearing in mind the customised enticement that MNC chains like McDonald’s and Burger King provide to the Indian palate.
“Jumboking is very Mumbai-focussed and that way you cannot really compete with the big players. They in fact have more competition from the local vendors,” believes Harminder Sahni, founder and MD, Wazir Advisors. The challenge stems from the fact that when people consume vada pav, it is not a standard product as every vendor/outlet has its own flavour. “Trying to standardise it is tricky,” adds Sahni.
“It is more of a perception issue,” Gupta insists. “When we sold our product at Rs 20, people were questioning us but selling a crispy veg burger for Rs 40 is considered value for money.” Although the chain has a Junior Jumboking product priced as low as Rs 15, it contributes to less than 10% of the total sales. Gupta is sure that the modern age ‘Indian burger’ will be very relevant, when the brand goes national in the near future. Jumboking is predominantly present in Mumbai and Pune with 50 and 10 stores respectively, and plans to get to 200 stores by March, 2019.
“That is when we plan to go national with a sizeable ad budget,” Gupta adds. “We do have plans for a more aggressive national expansion for which we are open to talking to PE investors.” The brand has 10 stores in other markets like Lucknow, Bengaluru, Gujarat, etc.
In order to expand, one needs an advertising budget of over Rs 40-50 crore. For a company with a franchisee based model that mainly does tactical marketing, it’s a long journey ahead. In fact, Jumboking recently launched a new billboard campaign in Mumbai with Bollywood actor Pooja Chopra. Gupta mentions that it spends 4% of its sales in advertising. “Our ad spends are in the range of Rs 1.5-2 crore a year but we need to spend Rs 6 crore a year in Mumbai to do justice to it.” Jumboking’s turnover is presently in the range of Rs 75 lakh per store per annum in Mumbai, with other markets contributing lesser. With modern 200-300 sq ft stores requiring an investment of about Rs 20 lakh, the franchisee model works well for the company. Each city has one master franchisee — Mumbai being a large city has four master franchisees, while Pune has one.
Each franchisee gets a 45% margin on the sales. “We charge a weekly royalty of 10% per week from each of our franchisees. We have another 20 franchisees who have signed up with us and are at various stages of training, store identification and store construction,” highlights Gupta.
But going ahead, the brand aims to compete in the same turf as global companies. Despite being smaller and the likes of a McDonald’s being located right opposite it at some high frequency locations like railway stations, Gupta claims sales have not been affected. In fact, Jumboking has tied up with Swiggy for delivery and approximately 10-20% of its business comes in from this. It has also tied up with Paytm and has further plans to develop an app that will house a loyalty programme.