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Enterprise

MAGAZINE | SEP 05, 2014

"Currently, w e sell 2,000 meals a day. Within three years, w e w ant to prepare 100,000 meals a day" Jesse Van De Zand, Cofounder & CEO
GOOD BUSINESSES

In Good Taste
Janta meals supplies nutritious food for migrant workers at economical prices
HIMANSHU KAKKAR

Started 2013
Location Gurgaon
Initial investment Rs 40 lakh
Social impact Providing nutritious, hygienic and affordable food for migrant workers 2013
***
When I eat at a roadside hotel, I have to pay Rs 60 for a decent meal. Thats too expensive for me. Here, I
get a decent lunch for just Rs 500 a month, says Akhilesh Pandey as he steps out of a Janta Meals outlet
in Gurgaon after a quick meal. The 23-year-old migrant from Faizabad, Uttar Pradesh works as a data
collection agent for a finance company. For a third of what Pandey would pay at a restaurant, he gets a
hygienic, nutritious meal at Janta
. But most importantly, he gets to eat home-like food as is advertised by the
board at the outlet, which invitingly reads ghar ka swadisht khana.
The man behind the venture (and CEO) is also a migrant 32-year-old
Dutchman, Jesse van de Zand. He had been managing start-ups in the
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Janta meals started

because cooking
remains an
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inefficient
Netherlands since 2007 at Enviu Foundation, a platform for social and
proposition for a
environmental entrepreneurs, but had never handled a food start-up before
migrant worker
coming to India in 2013. What puts off fellow Europeans is the very reason
for him to be in India. I love the chaos here, he laughs. The idea of serving
meals for less to migrant workers was first pitched to van de Zand by Prabhat
Agarwal when they met early last year in Gurgaon. Agarwal later became the financier of Janta Meals.
The IIT and IIM graduate already had successful businesses to his name but decided to enter the social
sector five years ago with a NGO-run school called Aravali Scholars

A large part of
Janta meals target
customers eat at
roadside carts and
stalls

. Since then, he has financed three social enterprises Janta Meals, a

biomass-based refrigeration start-up in Uttar Pradesh, and a rural BPO in
Uttarakhand.
The duo felt Gurgaon, where Agarwal runs his school in the Sikandarpur
area, was fertile ground to start such an enterprise. There are around
50,000 migrant workers in this area alone, but the latest census registered
only 4,200 here, he says. When migrants are not counted properly, one can
safely conclude that there are no effective policies or programmes to cater to

their needs either.

The motivation to start Janta Meals came from the fact that cooking ones own food remains an inefficient
proposition for a migrant worker he doesnt have cooking gas, refrigerator, running water, time or a
large house.

Twists And Turns

Van de Zand started a pilot project in August 2013 in a rented outlet near the Sikandarpur metro station,
home to a huge migrant population, with an initial investment of Rs 40 lakh from Agarwal
. The meal, which included four to five rotis, dal, sabzi, chutney and salad,
was offered for a measly Rs 20. Jantas first two outlets in Sikandarpur
market and Sheetla Colony were set up to test the demand for its product.
Both outlets could serve about 250 meals in one shift, had 12 women cooks
each and a manager to oversee operations: enough to serve their clients,
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Costs of fuels and

vegetables make up
50% of the selling
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mostly NGO schools.

business.outlookindia.com | In Good Taste

price and
controlling them is
a challenge

Once the demand was proven and it decided to scale, Janta established a
larger kitchen in Gurgaon. Within a couple of weeks, a couple of hundred
customers came in, recalls van de Zand. Despite the companys focus on
nutritious, hygienic food, he admits that Indian workers dont care much for nutrition. The original business
model had franchisees that would cook food and sell at their outlets. The company would finance the
initial set up, provide supplies and guide them. However, this didnt prove effective, so we switched to a
hub-and-spoke model early this year, says Apeksha Porwal, co-founder and CFO, Janta Meals. The 22year-old Porwal was earlier working with UnLtd India, an incubator for social enterprises.
Under the current model, a central kitchen at Sector 18, Sarhaul, works from 5.30 a.m. to 6 p.m. every
day to prepare 2,000 meals, with the potential to go up to 10,000-12,000 meals. The kitchen is a dimly-lit
hall with large burners, woks, refrigeration cabins, vegetable peelers and cutting boards. The place is
managed by Yogesh and 12 women cooks, who used to work earlier as maids, cooks and tailors. Food is
sent out from here twice a day through tempos to outlets located within a 10-20 km radius, for lunch and
dinner. The franchisee just needs to heat and serve the food, alleviating the concerns about quality,
sufficiency, inefficiencies and timeliness that plagued the original system.

Finding Franchisees
Today, Janta Meals runs six outlets, all in Gurgaon. We select franchisees based on how well they know
the area where the outlet is, so that we get a well-networked guy, says Porwal. The outlet is typically a
small shop in the vicinity of offices or industrial areas. The initial investment of Rs 1.8 lakh is made by the
company, to be paid back by the franchisee over five years. Out of this Rs 1 lakh is for equipment, which
includes a bain-marie to keep food warm and electric heaters used to heat chapattis and make tea. Other
equipment includes plates, cups, spoons, glasses, utensils, food carriers, tables and chairs. The
franchisee pays an interest-free lease every month for five years for the equipment, the cost of which is
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shared by franchisee and company.

Finding and training franchisees is one of the major challenges Janta Meals is facing currently. We have
to do a lot of hand-holding in the first quarter. We have to teach them everything, from how much to
order, how to present, how to avoid wastage to managing counters and customers, says Porwal.
The Sheetla Mata Mandir outlet in Gurgaon is a small, indistinct shop where eight to ten people are busy
having lunch. Behind the counter, Prem Kumar is struggling to keep up with the crowd. I came to
Gurgaon eight months ago from Bihar. Initially, I wanted to work and save Rs 20,000 to join a mobile
repair course, says Kumar, as he pours dal into another impatient customers thali.
Initially, Kumar worked at one of the carts that Janta ran in the area. Three months ago, however, he was
asked to consider becoming a franchisee. Kumar says that on his first day, he only sold meals worth Rs
250 but now sells around 125 meals a day and rakes in Rs 3,600. After three months experience, he has
become confident about the demand and is able to earn Rs 15,000 each month. Van de Zand believes
that potentially, franchisees can make Rs 25,000. What about the rent? I have to pay around Rs 3,000
each month, Kumar says; the total rent is Rs 9,000. Kumar says that if he is asked to pay more, being a
franchisee wont work for him.
To address this issue, Janta is looking at stationary carts at a cost of Rs 45,000 each, to play a major role
in targeting customers eating at roadside stalls. Moreover, these carts can manoeuvre narrow lanes in
slum areas and reach construction sites. We initially used the carts to test our food but realised that we
could have higher sales if the cart was equipped with a heating facility, had a stronger body and looked
appealing, says van de Zand. Based on this, Janta has ordered a cycle-driven cart from Bhogal Cycles,
which looks quite appealing and has an in-built bain-marie, as a pilot. But for now, the company is
focusing on selling meals from its brick-and-mortar outlets.

Economies Of Scale
Around Rs 40 lakh has already been invested in the enterprise, mostly in equipment and salaries. Janta
has also received an additional Rs 2.2 crore investment from Agarwal. The company aims to have at least
30 outlets in Gurgaon by early 2015. At the outlet level, franchisees make profits, but at the company
level (or kitchen level), van de Zand will have to wait. Currently, we sell 2,000 meals a day. Once we hit
3,000, we will fully cover our costs, he says. Janta started with 800 meals per day and by April 2014, the
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companys turnover touched Rs 5 lakh. It has now risen to Rs 12 lakh in June 2014.
As on date, Jantas franchisees contribute 50% to its turnover, the rest comes from sales to institutions
such as factories and schools. This is a de-risking strategy as revenues from franchisees can fluctuate
depending on the orders placed. Selling to institutions is an easier revenue source but we dont want to
make it institution-heavy as the impact is higher in case of franchising. We would like to maintain 50:50
ratio between the two, says van de Zand. The company offers institutional catering for fixed clients that fit
the profile of its target customer base. Some of these clients include NGO-run schools, Aravali Scholars
and LEU School. It has also set up a canteen in an apparel company in Gurgaon with 1,200 workers.

Hurdles Ahead
Dealing with high expectations of customers is a challenge for franchisees. Van de Zand was surprised
that even at Rs 20, customers were very picky and expected free refills. To deal with this, the company
started charging an extra Rs 5 for a dal or sabzi refill. Currently, of the Rs 20, 50% is the cost of raw
materials and fuel, 30% is kept by the franchisee and the remaining 20% is the companys profit. Of late,
vegetable prices have been volatile. Can the company handle a price rise in the near future? Van de
Zand believes it can. Our research shows that a hike of Rs 2 to Rs 5 should not be a problem, he
explains.
Still, keeping raw material costs under control is the biggest challenge. Jantas vegetable supplies come in
every day from Azadpur mandi in Delhi. Pulses come in about five times a month from a wholesale
supplier while spices and rice are bought in bulk from a local shop.
The kitchen is equipped with cold storage for vegetables and dairy products and a storeroom for dry raw
ingredients. The price of these ingredients does not fluctuate much, unlike vegetable prices. But costs
fluctuate based on the price of certain raw materials that remain constant: potatoes, tomatoes, onions and
coriander leaves (for chutney). For instance, tomato prices shot up from Rs 12 in July to Rs 60 a kg in
August.
Janta has been using signage and flyers to promote itself but most customers are drawn by word of
mouth. Mohit Bhardwaj, an automobile service center employee, says he was referred here. However,
hes not sure if he will continue to visit the shop if prices rise by Rs 5. On the face of it, Janta competes
with almost every restaurant and stall on the street. But Agarwal disagrees, Prices of a proper meal are
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at least twice or thrice that of street food. Chhole bhathure, samosa or chowmein are not substitutes for
good food. We are not facing price pressure but, yes, we want to make it affordable.
Despite the challenges, both believe they have created the business model and need funding to build
capacity. We want to attract institutional investment, says van de Zand. Within three years, I want to
prepare 100,000 meals a day, he says. Agarwal doesnt think van de Zand is overly optimistic. We have
1 million migrant workers in NCR. If we capture 10% of them in the coming years, we will get there. Jantas
customers certainly want it to expand. They must open in Udyog Vihar, says Bhardwaj. Looks like Janta
Meals has got customers eating out of its hand.
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