Featured Business: Juice Junction

Posted by fshsfhsfh on Monday, March 28, 2011

The information below is based on excerpts from an Interview with Mr.Shodan Bhandary, Founder and CEO, Juice Junction, Bangalore.

About Juice Junction:
• An iconic neighbourhood juice joint in Bangalore that serves quality juices and quick eats (sandwiches, fruit bowls) at affordable prices.
• 45 outlets, all in Bangalore (23 company owned & managed and 22 owned & managed by friends through what I would call a unique “Free Franchising” model - more details below).
• An approximate Rs. 10 Crore business (Rs. 5 Crores generated by the company and the remaining 5 Crores by the free franchise partners independently), with a net profit of about 15%

The Juice Junction Story:
In 1978, Sanjeeva Bhandary started a small juice shop “Suman Juices” in Wilson Garden, Bangalore, as a side business. In 1988, when Shodan Bhandary (Sanjeeva Bhandary’s son) completed his graduation, he wanted something to do, and took over the operations of this juice shop and renamed it “Juice Junction”. After 4 years, he set up their 2nd unit in Richmond Road with an investment of Rs. 1.2 lakhs. In the next 19 years, Shodan grew the business to 23 units (plus another 22 through a very unique business partnership model, I will term as “Free Franchising”). Well, that doesn’t sound like an exponential growth business – but guess what, Juice Junction has grown without any debt (no loans) and no external investments. All the funding for Juice Junction's growth has came through internal cash accruals – the traditional way of doing business. This also highlights how difficult and time consuiming it is to grow a business in this space, even if you have a successful business model.

The Free Franchising Model:
A remarkable thing that Shodan did was to help friends start and run their own “Juice Junction” stores by lending his expertise and support for no direct returns. This is like a franchise model, except that Shodan gets no money/returns from these units. His friends invest, start and run a unit and he just helps them by lending the brand and the expertise - Fascinating stuff in an era, when people expect money even for sneezing.

The Operational Stuff:
Product Pricing - He reviews prices of his products once a year and decides whether to make a change or not. During other times, if a certain fruit is too expensive (e.g. Pomegranate selling at 250 bucks), he does not offer the product in his store. He believes that in his business innovation and hygiene are critical factors. All his stores have feedback forms and customers regularly pass on feedback which he personally reviews and takes action where necessary.
Shodan’s life - As expected, his life is not easy – he personally is there in the city market every morning (6 days a week) at 5:30 AM to buy the fruits that will then be transported to his various stores. He believes that this is the only way, he can control what his stores sell and stay grounded with the supply side of the business. His day typically ends at 9:30 PM and it’s been a long while since he has taken a vacation/break.
Controls - He has put in place innovative ways to track and monitor his stores – using the number of cups used in the store, plus some experiential analytics around number of servings for a portion of a fruit. So if during your next visit the guy refuses to give you an additional cup, you know why?

Key Challenges:
Shodan today feels that his biggest challenge is “labour”. If he can get people, he says that he can open 50 stores quickly. To keep his people engaged, he pays them higher than market salaries, gives them a generous food allowance in addition to letting them eat what they want at his stores. He also provides accommodation, bus fares and is diligent about giving his people salary increases every year. In his early years, he would have 3 or 4 people waiting at his office everyday asking for a job. Now he says that he hardly gets anyone who comes in search of a job.

Vision and Future Plans:
• He is very happy where he is and plans to grow the business at his own pace. He employs 212 people, runs a profitable small business and is proud of his accomplishments. Today setting up a new unit costs him between 10-12 lakhs. He picks only those locations which can generate sufficient footfalls – he is particularly careful about choosing locations that offer a large captive base (a large company or college), with scope for additional footfalls.
• He does not want external investors as he believes that he will have a tough time meeting their documentation/reporting requirements and business expectations and may not be able to focus on his core business and do what he wants to do.
• It was not until 2005 that he realized that the brand “Juice Junction” was actually valuable and he got the trademark registered.
• Juice Junction is still a propriety concern even after 33 years in business. He is considering making it a private limited company.
• He has invested in his own farmland in Hosur, where he plans to grow Organic fruits and vegetables which he can use in his stores. He is already seeing “Healthy/Healthier products” playing a big role in his business and expects this to increase significantly moving forward. By setting up his own backend Organic farm, he believes Juice Junction’s proposition will be very unique and differentiated from his competitors.

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