Building an Empire Selling Only Chole Bhature
Introduction:
In the world of fast food, where countless outlets serve a variety of cuisines, Sita Ram Diwan Chand has achieved something remarkable—building a renowned business solely around a single dish: Chole Bhature. Located in the bustling streets of Delhi, this family-owned business has stood the test of time for over 80 years. What makes this story more compelling is how the business not only thrived but also expanded without diversifying into multiple dishes, focusing instead on delivering quality, consistency, and an unmatched customer experience. This case study explores how Sita Ram Diwan Chand has become an iconic brand, the challenges it faced, and the valuable business lessons it offers.
Business Overview:
Owner: Puneet Kohli (third-generation entrepreneur)
Business Model: Single-product (Chole Bhature) with multiple revenue streams such as Lassi and Bottled Water.
Location: Delhi, India, with expansion plans in progress.
Legacy: Over 80 years in the market, with a loyal customer base.
Operations and Supply Chain:
Sourcing and Inventory Management:
The core ingredient sourcing for the business is meticulous. Each ingredient, from spices to chickpeas, is carefully monitored through inventory sheets. The company ensures that they have a constant supply by maintaining 5-day safety stock levels to prevent shortages. They also manage their inventory costs, using in-house IMS (Inventory Management System) to track everything, from flour to packaging materials.
Production Process:
Every day, the business prepares its signature dish with the same recipe perfected over decades. The production follows a structured approach, ensuring that every batch meets their quality standards. The business processes 600 plates per day at its current location, making it one of the busiest food joints in Delhi.
Technology Use:
Sita Ram Diwan Chand does not rely on complex software solutions. Instead, they use simple POS systems and Excel sheets to track raw material usage and sales, which are sufficient to monitor daily operations efficiently.
Marketing & Branding:
The fascinating part of Sita Ram Diwan Chand’s success story is that they rely heavily on word-of-mouth marketing. Unlike many modern startups that invest heavily in social media or digital marketing campaigns, they believe in building trust through taste and service. Customer satisfaction drives repeat business, and over time, the brand has built a name synonymous with Chole Bhature.
Customer Experience:
Their philosophy is simple: the first-time customer comes because of the brand’s reputation, the second time for the taste, and the third time for the excellent service. This mindset underscores the importance of customer retention in their business model. Repeat customers and their experiences are what sustain the brand over the long run.
Financials and Profitability:
The business maintains a 20-22% Net Profit margin despite rising food costs and salaries. Here’s a breakdown of key costs:
- Food Cost: Around 40% of revenue.
- Salary Costs: 10%, which can go up to 12% in case of operational needs.
- Digital Marketing: 5-7%.
- Overheads: 15%, including rent, utilities, and other fixed costs.
Their margins on additional products like Lassi and bottled water are incredibly high, contributing significantly to their bottom line.
Competition and Intellectual Property:
One of the biggest challenges in their business has been dealing with duplication. With dozens of outlets attempting to replicate their success under similar names, brand dilution could have been a serious threat. However, Puneet Kohli, the current owner, believes that while people may try to copy the product or the name, no one can replicate their luck or customer loyalty. Their unique recipe and loyal following keep them ahead of competitors, despite imitation attempts.
Lessons in Management and Growth:
1. Focus on Core Competency:
The major takeaway from Sita Ram Diwan Chand’s business is the power of specialization. They never tried to expand their menu to other dishes. Their singular focus on perfecting Chole Bhature allowed them to develop an unmatched level of expertise. This can be likened to the corporate strategy of “focus differentiation.”
2. Scaling with Purpose:
Puneet Kohli has grand plans for the business. Within the next 15 years, he envisions 50 outlets in Delhi NCR and 40 across India. His strategy is meticulous, with a clear understanding of fixed and operational costs, including kitchen expenses and real estate for each new location.
3. Team Empowerment and Ownership:
Puneet shares how he involved his team in operational processes, including checklists and inventory monitoring. By giving them a sense of ownership and responsibility, the business has minimized micromanagement and encouraged accountability. This people-first approach is essential in service businesses where employee satisfaction directly affects customer experience.
Brand Management:
Differentiation & Brand Identity:
Sita Ram Diwan Chand thrives on its unique selling proposition (USP): authentic Chole Bhature served with consistency. The focus on quality control ensures that customers always receive the same high standard of food, driving loyalty.
Expansion Strategy:
The brand is preparing for significant expansion, with plans to open small, 400 sq. ft. outlets across various parts of India. The operational model for these outlets is well-structured, including:
- 10 staff per outlet.
- Fixed kitchen costs and streamlined supply chain.
- A 15-day location finalization process to ensure timely setup.
Customer-Centric Approach:
One of the guiding principles Puneet learned from his father is that customers are king. He uses the mantra “SSG”—Start Simple, Start Genuinely—as the foundation for their customer service philosophy. The idea is to keep things uncomplicated, focus on quality, and ensure that customers feel valued.
Conclusion:
Sita Ram Diwan Chand’s success story is a testament to the power of specialization and maintaining a focus on quality, consistency, and customer service. The business has not only thrived but has become a Delhi icon. Its growth strategy is well thought out, and with plans for nationwide expansion, it offers valuable lessons in operational efficiency, marketing, and brand management.
This case study serves as an insightful resource for business students, executives, and entrepreneurs aiming to build sustainable brands by sticking to their core competencies and ensuring long-term customer satisfaction.
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