Quick profits with QSR biz

In last seven years Kaati Zone has grown remarkably and has occupied a significant place among Indian QSR brands via franchising. In an interview Kiran Nadkarni, CEO, Kaati Zone shares the brands success and expansion plans.

Neha Gohil (NG): How has been the Kaati Zone’s journey so far?

Kiran Nadkarni (KN): Kaati Zone’s journey so far has been quite eventful. We have built strong fundamentals during the last seven years which will help us launch exponential growth. Our achievements in the last seven years were akin to building the foundation of a skyscraper.

NG: What is the USP of your company? How does the brand differ from other QSR brands?

KN: Our food is healthy and wholesome. It is a great take-away which allows customers to consume it on the move without soiling hands. And it is prepared in quick time of less than 2 minutes. The prices are moderate and the customer experience with our food is consistent across the entire network of stores. We compete effectively with other food offerings in quick service format, branded or otherwise.

NG: Has the brand faced competition from other QSR’s? What strategies have you developed to deal with it?

KN: We compete not just with competitors who offer kaati rolls, but with anyone offering food in quick time at moderate prices. Our strong product differentiation highlighted above and superior service helps us position ourselves well in the marketplace.

NG: How has franchising helped the brand so far in achieving its target?

KN: Franchising has helped us in two major ways: We have been able to generate momentum in expansion quickly. Secondly, the local entrepreneurial talent has helped manage the store operations and brand experience better. Since we are planning to set up a large number of stores, franchising is the best strategy for growth.

NG: Presently how many franchise outlets do you have? What are your further expansion plans via franchising?

KN: We presently have 19 franchise stores in six cities. We will continue to grow mainly through franchising.

NG: How much investment will a franchisee require for opening an outlet? How much specific area you demand?

KN: Our smallest format of store is a kiosk which is less than 100 sq. ft requires an investment of Rs 8 lakh for a franchisee (excluding any rent deposit payable to local property owner).

NG: Where do you see your company in the next five years?

KN: In next five years, we would like to have a footprint in major cities across the country and presence in at least one international market.

NG: What are the challenges faced by a franchisee? How do you help them to overcome those challenges?

KN: The biggest challenge for everyone in retail industry is hiring and retaining manpower talent. Unfortunately, the franchisees have to face this challenge themselves, since they are most familiar with local situations. We provide training to franchisee employees regularly so that the new staff can deliver quality experience to customers. We also help franchisees in planning local marketing.

NG: Is the business lucrative? What are its growth factors?

KN: The business of building a QSR brand is a long-haul one. Initially, a company has to establish a strong back-end and processes and systems to handle multi-city and multi-location expansion in a subsequent phase. During this initial phase, a company is normally not profitable. Profitability is achieved once a certain scale is reached in terms of number of stores. The key success factors of any QSR business are: (i) superior customer experience across entire network of stores, (ii) an efficient supply chain, and (iii) processes and systems that enable massive scale-up.