Cavinkare's QSR business? Another big company with a big QSR plan rethinking their strategy - Is the Restaurant business even worth getting into?

Posted by fshsfhsfh on Monday, April 23, 2012

I saw an article in the Times of India today (article below) stating that Cavinkare is mulling an exit from its QSR business. When they launched CK's Restaurant in Pondicherry and Vegnation in Chennai in 2009, the group was exceptionally bullish about the QSR space (they were talking about a 300 CR business -http://articles.economictimes.indiatimes.com/2009-11-02/news/28417679_1_cavinkare-chairman-md-ck-ranganathan-second-restaurant) . Having a strong entrepreneurial culture and mindset, I was really hoping that Cavinkare would be in this for the long haul and figure out a highly scalable and profitable business model and execute their plans. But it looks like they are considering throwing in the towel early. I am terribly disappointed. 


To me C.K.Ranganathan of Cavinkare represented a common man who managed to bootstrap, fight against the odds and the goliaths, had a never say die attitude and managed to create a large successful company - For those unaware, Cavinkare's big innovation was sachet shampoos (Chik Shampoo) and they are now a large FMCG company battling with the Unilevers and the P&Gs. 


There are 2 possibilities with their QSR business:
1) They would rather invest in businesses which will offer them success faster and is also more easily scalable. Understandable given their expertise is in the FMCG space (they also have Green Trends, their salon business) 
2) In their assessment, making a QSR business work in India will be tough, given the high real estate costs, ever increasing inflation on food costs and increasing difficulty in finding labour at low rates.


If the reason Cavinkare is exiting the QSR business is the latter, then it will be a great cause for concern for everyone in the restaurant business, given C.K.Ranganathan's visionary thinking. 
If the former is the reason, then I am disappointed. Come on Cavinkare - you took on the Unilevers and the P&Gs, now don't give up against the Dominos, Pizza Huts and the McDonald's. 


Article Credit: Times of India, Bangalore edition, Monday, April 23, 2012


CavinKare mulls exit from QSR biz 
After getting into Quick Service Restaurant (QSR) business in 2009, CavinKare is contemplating an exit from the segment. It is learnt that C K Ranganathan is not happy with the progress this business has made. More importantly, the one outlet in Pondicherry and two in Chennai, besides industrial canteens, have not helped CavinKare standardize the business for rapid rollout. An insider said that food was not shampoo which one could ‘sachet it and sell it’, but it needs a different kind of approach.

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