King Vada Pav Business Location Analysis Report

Details of small business and their current location, competition etc.

The Indian fast food sector has always been dominated by foreign companies, such as McDonald’s, Pizza Hut and Subway. However, during the past of couple of years, domestic companies have started venturing into this field with products of local delicacies. Initially, the Indian domestic fast food was unorganised, but gradually, it has taken the shape of a profitable and multi-billion rupee industry that has posed a serious threat to the foreign players. One of the renowned names in the Indian fast food industry is King Vada Pav (KVP). Owing to its strong financing and favourable positioning, KVP is set to give strong competition to other local and international fast food companies and/or franchises.

The company commenced its operations on August 23, 2001 (Gupta 2013). Its operations started as a result of dedicated efforts by its founder and Managing Director, Mr. Dheeraj Gupta. Marketing policy was formulated based on foreign fast food marketing strategy. The product (vada pav) was given the name Jumbo King (brand name). Vada pav (a local delicacy) was chosen as its main product with an intention to provide an opportunity to the local populace to savour economic and hygienic local food. KVP is by far the largest vendor of vada pav in India’s financial capital. With 43 countrywide stores, the company sells almost 0.15 million vada pavs on a daily basis. During the years, different variants of vada pav have been launched, such as Regular Combo, Grill Combo, Butter Grill Combo, Schezwan Combo, Schezwan Cheese Combo, Tandoori Paneer Combo, Veg Crispy Combo, Veg Crispy with Cheese Combo, Corn Palak Combo, Corn with Cheese Combo, and Jambosa.

As a reward for its dedicated service and exceptional business acumen, KVP was awarded with the ‘Indian Restaurant Awards’ in 2013.

Why this site was selected

Vada pav is a preferred snack for the local people of Mumbai. Earlier, it was sold by road side vendors, and as such, hygiene was a serious issue. In order to capitalise the popularity of vada pav in Mumbai, KVP chose this location. Mumbai is situated near the Arabian Sea, so local people as well as tourists visit the beaches (Juhu Chaupati, Girgaon Chaupati, etc.). In order to gain advantage, KVP has opened outlets near such beaches and other tourist attractions. These locations have proved to be very beneficial for the company, both in terms of profitability and popularity. In order to serve the business and working class, outlets in main market places of Mumbai have been opened. Even though there are other players that have outlets in the same locations as KVB, the brand name Jumbo King is so popular that it does not make much difference.

Another important factor that attracts the locals is the availability (actually abundance) of raw material in the local markets. Vada pav is a local eatable, so all the ingredients, such as gram flour and the required spices, are easily available. Since the company has most of its business activities within Mumbai, the market is also accessible. The business is located within the city so basic infrastructure, such as roads, water and electricity, are also available. People’s mindset plays an important role in attaining success of any business. KVP has chosen a product of people’s choice; the business has great prospects. There are several outlets within the city with an excellent distribution network. All these factors make the selection of location a good and sensible decision.

Nearby business and suitability of the location

In terms of competition, there are some domestic players that are into the same business. Domestic companies, such as Jain Vada Pav, Bhau Vada Pav, Ashok Vada Pav, and Patil Vada Pav, claim a sizeable customer base in Mumbai. However, their drawback is that they do not have as many outlets as KVP. Nonetheless, a risk of competition from new entrants is always there. Success stories of people in this business have influenced many people to start their own venture of vada pav. Moreover, starting a vada pav outlet does not involve much investment. The government licensing fee is also very nominal. The raw materials are easily available. The switching cost, in case the business does not perform well, is also very small. Considering these factors, the threat of new entrants will always be there.

Bigger companies, such as McDonald’s and Haldiram, target the middle class people, and their product rates are higher. These companies signify a sort of status. On the other hand, KVP stands for the masses, and that is why its popularity is more than of the bigger players. Even the middle class population is getting attracted towards the company due to its decent outlets, quality, reasonable price, and locally preferred taste.

Trade-off between cost versus suitability of the location

In order to gain a better customer base and keep in view the location with a majority of locals, KVP had to compromise with the price of Jumbo King. A strategy of keeping a significant difference in prices of different products has been adopted. Products having similar prices tend to sell less. However, on the contrary, products that have different prices sell better (Ciotti 2013). Considering the popularity and varied choices of customers, KVP is gradually increasing the number of products in its menu card.

Recommendation and discussion of better location (or why this is the best site)

As far as selling vada pav is concerned, there could not have been a better choice of location other than Mumbai. Vada pav is a locally preferred eatable that has no specific time to be savoured. As a result of mass advertisements by the companies engaged in this business, vada pav has gained popularity among the Indians (within and out of Mumbai). Vada pav has been associated with Mumbai and tourists want to taste the Mumbai vada pav. KVP has launched different varieties of vada pav, which has prompted even the locals to try the new additions. This has made Jumbo King so popular that within a short span of 13 years, the company sold its “100 millionth vada pav on April 01^st” (India Retailing 2014, p. 1). Outlets have been opened at places that are usually thronged by locals and tourists. The political environment is also in favour of the product. Due to awareness among the people of promoting domestic products rather than foreign goods, and also due to the efforts of local political parties, such as Shiv Sena, the local government is in favour of the product because it depicts the local culture.

Update of location plan

This is not required because the present location is appropriate, and there is no need for any change.

References

Ciotti, G 2013, 10 pricing strategies that can drastically improve sales. Web.

Gupta, S 2013, Jumbo King vada pav – a recipe for success. Web.

India Retailing 2014, Jumbo King to sell its 100 millionth vada pav on April o1st. Web.