Food Entreprenueurs: TastyKhana

By guest author Erika Valdez

Known for being a country in which home-cooked meals are highly valued, India prides itself on being a society in which food traditions stand strong. Yet fast food restaurants such as McDonald’s and Jumbo King have not only made an entry into the market but have prospered. There is also growing demand for more sophisticated options among young Indian professionals and families who enjoy Sunday brunches and discovering new restaurants. The expansion of fast food chains into India’s smaller cities and towns and the demand for premium brands across major cities has resulted in strong growth in recent years. What’s more, India is the world’s second largest producer of food next to China, and according to McKinsey & Co, the retail food sector in India is likely to grow from around $70 billion in 2008 to $150 billion in 2025. The company has the potential to be a leader in the food and agricultural sectors, according to the Food Industry of India, and one of the most promising sub-sectors is fast food. This situation creates a large number of fast-growing food markets.

The next story profiles TastyKhana, an end-to-end solution provider for any food-related requirement in Pune. Aside from being known as the cultural capital of Maharashtra, Pune has a large number of restaurants that serve cuisine ranging from Italian to continental . This is where TastyKhana comes in.

TastyKhana founders Shachin Bhardwaj and Sheldon Dsouza decided to venture into India’s vast food industry in 2007 when Bhardwaj noticed the need for more Web-available information on the city’s restaurant sector. The company started as an online food-ordering website that offered menus of restaurants so that customers could easily order from the menu. TastyKhana’s ­– khana is the Hindi word for “food”– services expanded to include food delivery anywhere in Pune (the company picks up and delivers food through any of its associated restaurants), table reservations at any of the restaurants on the site, and party venues for those who wish to hold private events.

Both founders grew up in Pune and graduated from the Maharashtra Institute of Technology at Pune University, and both had a totally different career before taking this path –Bhardwaj was working as a quality control specialist in Synygy Inc and Dsouza was a software developer at an embedded system company called Codito.

TastyKhana was initially founded with personal savings from both of the founders, angel investors, and the help of friends. According to Bhardwaj, a combination of bootstrapping, angel funding, and extraordinary mentorship were key to the making of this company. The first round of funding was a pre-revenue stage, yet the big change occurred in October 2008 when the business model was changed to incorporate a food delivery service with delivery managed by TastyKhana. This was done through the acquisition of a small delivery service provider called Food on Wheels. This acquisition significantly changed the model of business and helped the founders to ramp up revenues by ten times their initial numbers. Bhardwaj says that the acquisition of Food on Wheels was the milestone in the two-year-old company’s change from online listing service to an end-to-end service provider.

Bhardwaj’s roles in the company include being involved in building relations, marketing, strategy, and operations. Dzousa handles the technical sector by focusing on building a scalable architecture for the company’s back end.

Restaurant referrals and word of mouth have been the primary ways in which TastyKhana has found its customers. The restaurant themselves provide such leads since they outsource the delivery service to TastyKhana—when a customer calls a restaurant, the call is automatically re-directed to the company.

TastyKhana addresses the needs of for restaurant owners who are unable to manage their own delivery service—outsourcing the delivery services makes excellent business sense, and it helps the company generate additional revenues at no additional cost. According to both founders, the outsourcing of delivery is what has contributed to the company’s current position.

There are currently about 30 employees (including 20 delivery boys). TastyKhana averages 60 orders per day (and increasing) and has catered to about 20,000 customers to date. Annual revenues are approximately $100,000. Goals to meet by this year’s end are to stabilize the business, prepare the infrastructure (both in terms of technology and people), and eventually go to a pan-India level. The company is and has been online partners with brands such as Kingfisher and BigFlix in Pune and recently signed up with McDonald’s to manage McDelivery from one of the restaurant’s outlets in Pune.

“From a customer perspective, the non-fast-food cuisine is a huge untapped home delivery market which is currently unorganized,” Bhardwaj explains. Such a market provides a large number of opportunities for businesses such as TastyKhana. At the same time, Bhardwaj and Dsouza agree that the entrepreneurial path has not been simple. It is extremely stressful and time-consuming. One has to be prepared to spend time away from family to deal with everyday issues. “In our society, failure is never acceptable – it is a kind of stigma that stays associated with you, and more than the entrepreneur it is the parents who are affected,” Bhardwaj explains. Yet both agree that this has been an amazing and thrilling experience. Learning everything from scratch has taught them how to operate everything that makes up TastyKhana, from hosting a user-friendly website to resource management. “The hand-on experience that one gets as an entrepreneur, no MBA can provide. As an entrepreneur you really become an expert at multitasking, which is very important during the initial stages of any startup,” said Dsouza.

As usual, I wanted to hear their opinion and advice for people who are planning on taking the entrepreneurial route. Bhardwaj believes that it is really up to each person to decide if he or she is ready to take up this task. “You will get 100 different pieces of advice from various people, but my take is you are ready when you realize that this is the only thing that you want to do.” Overall, both agree on the importance of having a plan and knowing that while the path is not going to be easy, at the end of the day it will be extremely rewarding. I agree and also believe that it is about finding the right market niche to be in. “The Indian market has great potential for the next generation of entrepreneurs; there are a lot of untapped areas that need to be explored. People with good ideas should go forward and implement them. It just requires focus, hard work, and dedication. Some may fail, but the experience will last for a lifetime,” said Dsouza.