Making of a crorepati from Vada Pav business

Venkatesh Iyer
44 years
Age at starting current business: 37 years
Company name: Goli Vada Pav
Headquarters: Mumbai
Seed capital: Rs 1 crore
Source of money: Savings and loan from family and friends

The idea of having my own eatery had been simmering in my mind for a decade, but it took me a year to refine and serve it. Months of brainstorming and sweating it out paid off when I opened my first outlet, Goli Vada Pav, at Kalyan, Mumbai, in 2004. I began my career as a management trainee , in 1989, in what is now the Centurion Bank. After four years, I set up a financial services firm, Balaji Corporate Services. Since one of the services included raising funds for retailers, I got a chance to study the trials and tribulations of running a retail chain.

During all these years, I knew I wanted to start my own business, but it was only in 1995 that I decided which field it would be—the food industry. I toyed with several ideas but kept procrastinating as I didn’t believe the financial climate was conducive to starting a business. The impetus finally came from a neighbour, who was the then CEO of Kellogg’s India. “No matter what we do, Indians prefer desi food,” he once told me. This got me thinking about the vast opportunity in ethnic food, especially if one were to consider the population of more than a 100 crore.

If I could target even a fraction of this populace, the profit could be huge. The important question was: what should I serve? I wanted it to be finger food, something that could be eaten easily on the move. I whittled down the choice to idli and vada pav, finally settling on the latter. During the incubation period, if I mentioned the idea to anyone, they would snigger and ask, “Goli de rahe ho (are you pulling my leg)?” As a fitting response to this mockery, I named my venture Goli Vada Pav. By January 2003, the blueprint was ready. Besides my family, the only person who supported me through this and eventually joined hands with me was Shivdas Menon, an old friend and colleague.

Menon and I put a huge chunk of our savings in the venture and also borrowed money from friends and relatives. We invested Rs1 crore to buy equipment and a van, and build a 500-sq-ft kitchen at Dombivli. We hired 20 people to handle the kitchen, eatery and transportation. For the next one year, we visited every vada pav vendor to get the taste of our product right. We would surreptitiously ask them the number of pavs they sold every day to get an estimate of their sales. The first few years were financially tough as is the case with all startups.
I sold my car and bought a smaller one but still used public transport. I would either take a bus or pay Rs10 to share a jeep while commuting from home at Vashi to Kalyan. I cut corners in every sphere; this meant no holidays and no parties. During this period, my salary was less than a quarter of what I used to draw earlier. As the business dealt with food, we began generating revenue from the first day. In the initial years, all the revenue was ploughed back into the business. We used it to open two more outlets, hire more people, expand the kitchen to 3,000 sq ft and buy a new vehicle.

Advertising was an area we hardly spent money on. We simply ensured that our joints were in the busiest areas and guaranteed the highest footfalls. On Ganesh Chaturthi, we designed a 5-ft Ganpati on a huge vada pav for a procession, and there were a hundred boys wearing Tshirts with our logos. We set our own lyrics to popular Hindi and Marathi songs and distributed these to auto rickshaws. A major challenge in the initial years was controlling wastage and pilferage. We had to deal with standardisation issues too as the product was made manually.

This problem was solved when Vista Foods, an American food processing company, agreed to be our supply chain partner. It began manufacturing vadas in a fully automated and certified plant in Navi Mumbai. This also ensured that the food was hygienic. However, the pavs are still made at a local bakery. In six years, we have expanded to 75 outlets in Maharashtra, Bangalore and Coimbatore. This year, we hope to double our sales to Rs25 crore and open 50 more outlets.

We have managed a fast expansion because we opted for the fanchisee model after our third store. Franchisees bring their own capital or space and as they are part owners they run the outlets efficiently. I’m finally living out my dream—and all it took was a vada pav.