Wednesday, October 27, 2004

The business story from the Indore dosawala

The cool winter breeze has started to blow. Moist is in the air, and up the hummock where IIM Indore sits cozily, the weather is turning out to be cooler as every day passes. I and Jam went out to the city to the beauty parlour (well, euphemism apart, it was a hair dressing shop), had some snacks and, as we entered our campus and started climbing the hill, we clearly felt the chillness in the evening air. I'm told that Indore is known for its extremes, and that it might touch as low as 3 degrees in winter and 45 plus in summers. For a typical South Indian like me - hailing from more temperate places that is - this certainly isn't amusing. But all this is an experience, I'm told. Whatever!

We've also made it a weekly habit to visit a dosa shop some 10 kms from our institute. These days, dosas are really at a premium. Some of us would pay any amount to get a bite on a tasty bit of dosa. The dosa shop we are frequenting isn't a shop really. It's just one of those mobile fast food pushing carts you could spot on any Indian city. But don't underestimate it. What surprises us is the number of customers the shop manages to attract, despite not owning a place on its own. We could see Fords and Esteems waiting in queue for the dosas. One of the owner opted for this business after obtaining a degree.

The unavoidable questions on our minds were: what's making the business so successful? What warrants the owners to leave jobs and travel hundreds of Kms to setup shop? Why don't the store owners upgrade the shop to a bigger one?

There are reasons behind every move made by the dosa shop owners.

What's the income made by the dosa shop wallas? When a group of us went to have dinner there, we spent an approximate 200 Rs and consumed some 20 mins of their time. They open the shop for 7 hours, and the demand is almost full everytime. At times, the demand even overflows. We calculated that the dosa selling at Rs 10 would cost a max of 5 rupees to prepare - considering that the owners were willing to give us a 40% percent discount since we hail from the same place as they were. That means a revenue of approx. 2100 per day - translating to abt 60K per month, evaluating the least possible figures. This would be shared by about 3 to 4 people - a far cry for people who would've otherwise earned much lesser. Additionally, it makes a lot of difference to work for oneself than for others.

Well, what attacts people to the shop? [In business terms, what's their USP/UMP?] I guess the 'Madrasi' tag is definitely a decisive factor. People around here would definitely be interested in eating dosas prepared by people who're from the place dosas originated. Secondly, the taste is good. That's definitely one reason we go there; and as Kotler says, we definitely increase the demand by word of mouth. When we asked why they didn't go for a shop upgrade, one of the shop owner mentioned that small mobile shops are the ones that attract mobile populace. He said that such shops are real 'hits' in North India, and that his relatives alone have covered places like Rajasthan, UP etc with similar dosa shops. True words, considering the fact that an estiblished regular shop nearby attracts hardly any customer even after selling similar tasting dosas at the same price.

The whole episode has been quite a learning for us. Foremost, down to earth people from a remote hamlet in Madurai showing such a lot of business sense has firmly instilled a lot of humility in us. Second, common business can be learned by such experiences in real life. McDonald's and Starbucks alone don't make miraculous success stories!


At Wednesday, October 27, 2004 11:58:00 PM, Blogger Jam said...

Dei Govar,

Ur posts are getting better and better as time progresses. The past two posts have just been awesome. Keep up the good work man.


At Thursday, October 28, 2004 10:26:00 AM, Blogger Govar said...

Thx Jammy. :)

At Friday, October 29, 2004 4:48:00 PM, Anonymous Anonymous said...

I don't get it
60k for a month for 3-4 ppl, works out 20-15k
Man isn't this MBA at its theoretical best
Everything is fixed in your caluclation doesn't factor any variations, at this rate India can be better off promoting DOSA centres rather than ITeS.

Are you still reading???

At Friday, October 29, 2004 6:06:00 PM, Blogger Govar said...

That's exactly why I mentioned 'Ive evalutated the least popssible figures'. All the variable factors included, the dosa wouldn't cost more than 5 Rs. I could've done a complete fixed-variable-cost analysis that includes even the salt in the dosas. But only at the cost of boring myself and the readers in the process.

Infact, when we calculated, we took into accont a lot of factors, and the figure came much more than what I've mentioned. Even the shop owner told us that he'd take with him a sackful of currency notes when we visits his hometown nexxt. Howzzat?

Anywaay, would appreaciate if u leave ur name next time!

At Friday, October 29, 2004 7:08:00 PM, Anonymous Anonymous said...

Hey G O V A R

Next time you are going to have dosa there, take me along.

Btw, awesome post. Keep it going. It is one of the few distractions that are very very for the lack of a better word distracting. Thnx.


At Friday, October 29, 2004 7:45:00 PM, Blogger Govar said...

Sure Sachar :) Yeah, its a distraction, but a worthwhile one.

At Thursday, December 23, 2004 11:57:00 PM, Anonymous Anonymous said...

machan GROVER
if what u said is true i think instead of doing PGDBM in delhi bschool i can start up a mobile dosa shop here. the demand is huge but the cost is a prohibitive factor for persons like me who r very price conscious(i.e.high quality at lower price(contraictory claims which has been the driving force for all the organisations)) and to escape the routine torture of sooka rotis and spiceless dal chawal.
grateful to have come across a good blog.
will be a regular visitor to this blog.
keep it going...

At Friday, December 24, 2004 3:18:00 AM, Blogger Govar said...

Machan :)

Pls leave ur identity as well. :)


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