Indian milk and dairy products giant Mother Dairy is leveraging its brand affinity to make inroads into the quick service restaurant segment (QSR).
The 46-year-old company launched its first eat-in restaurant, Cafe Delights, in Noida last month, and has plans to open another 59 such outlets in the next 12 months. “We are a strong brand in milk and ice cream segments. We want to capitalise on this strength. Mother Dairy is looking to expand aggressively in the QSR segment by offering consumers affordable snacking options,” said Sanjay Sharma, business head, value added dairy product, Mother Dairy Fruits and Vegetables.
The New Delhi-based company, which had a turnover of Rs9,500 crore ($1.4 billion) in financial year 2019, already operates 1,500 Mother Dairy outlets (booths, kiosks, etc) and 350 Safal fruit and vegetable booths. Customers to these outlets could also be potential targets for Cafe Delights, says Sharma.
In an interview with Quartz, Sharma talked about Mother Dairy’s new focus on QSR, and the challenges of running a restaurant chain. Edited excerpts:
What is the business opportunity that Mother Dairy sees in the QSR segment?
Delhi offers consumers a lot of eating-out options. However, unlike, say Mumbai, it does not have a strong ice cream parlour culture. This culture can be developed in Delhi as well if consumers have the option of enjoying their favourite ice cream without having to travel much. We are getting into QSR segment to further push our ice creams among consumers through Cafe Delights outlets. Consumers stepping out to have ice creams would also like to try out other snacks, and hence we are offering them snacking options as well.
So, who is your target audience?
The key idea behind Cafe Delights is to create a meeting place for families, college students, and office goers during the day and in the evenings. We have put together a menu that offers consumers quick and wide-ranging snacking options such as pizza, pasta, sandwiches, rolls, ice cream, and beverages made from Mother Dairy products.
Why did Mother Dairy choose Noida as its debut market?
We enjoy strong brand equity in New Delhi and adjoining areas. Consumers connect with us. Going by our brand affinity, we decided to foray into the food segment by launching our first QSR outlet in Noida.
What is the average outlet size?
Our stores will typically be 250-350 square feet. We are creating small meeting places with space for 6-8 tables and a seating capacity for 25 to 35 people. The stores will be open between noon and 11pm. The outlets will have a live kitchen where consumers can ask for customised milk shakes and ice cream shakes, which will be made using Mother Dairy beverages. The outlets will also sell our branded and packaged milk shakes.
Why have you taken the franchisee route to set up Cafe Delights?
We are playing to our strength. Mother Dairy has lent its brand name to these outlets. Cafe Delights is our concept and Mother Dairy has designed the entire look and feel of these outlets. The menu, too, has been determined by us. The day-to-day operations of these outlets are managed by our franchisee partner.
What is your pricing strategy?
We have ensured that our products are not expensive. Our target audience is middle-class, so our products are priced affordably so as not to hurt consumers’ pockets. Most of our snacks and beverages are priced below Rs100. We have kept our menu affordable to attract maximum footfall.
When do you hope to break even?
Given our price points, even if we have a footfall of 200-250 people per day for 300 days out of 365, we will break even. Keeping our prices low, we are hoping to get more footfalls and turn profitable within a year. With our low prices, our average ticket price is Rs125 for two people. We are targeting to increase this to Rs250.
QSR is a crowded space to be in. How do you assess competition in this segment?
We are aware of competition in QSR space. But we are not competing with brands like Pizza Hut or Domino’s Pizza. Most of these players run out of malls, etc. Mother Dairy is not going to open outlets in these places. We rather want to stay and operate near our consumers. Mother Dairy is going to open all its outlets closer to its existing milk booths. Our focus areas are localities next to our booths, where people can simply walk in and have a quick bite at affordable prices.
What’s the biggest challenge facing Mother Dairy in QSR segment?
QSR landscape presents huge challenges before a player. It is a business where it is very difficult for any player to establish customer connect. Especially when well-travelled customers are keen to experiment and want to try new flavours and dishes. Today, people want to experiment with their food and restaurants. We are looking to get in more people to our outlets by offering them wide-ranging quality food options at affordable prices.
Do you also plan to make deliveries from Cafe Delights?
Once we establish our restaurant network, Mother Dairy is looking to deliver ice creams to consumers through food aggregators. We are keen on delivering packaged ice cream to anyone within a 2km radius of our restaurant. Mother Dairy is preparing to tap into this future opportunity, wherein consumers assured of a quick delivery will start ordering packaged ice cream through online food aggregators.
Apart from good quality food, what are the other expectations of consumers walking into Cafe Delights?
We are looking at consumer demands and working to fulfil them. College students walking into our outlet have asked us to play music in the store, or give them the option of playing their own music using Bluetooth, etc. Consumers cutting across age-groups also want WiFi in the outlet.