Bikaji in no rush to take a big bite of restaurant biz, focus stays on snacks for now
- The Bikaner based ethnic snacks player says that its QSR strategy will play out in the next 18-24 months.
Bikajisays that it’s using pricing and other promotional means to push competition from regional and local players.
- The company plans to expand geographically and is also eyeing exports and intends to keep up with double digit volume growth for the next ten years.
AdvertisementWhile its closest competitor Haldiram’s is expanding its quick service restaurant (QSR) chain, recently-listed Bikaji is choosing to go slow and steady. The ethnic snacks player says that it has a plan in place but will play out its QSR strategy over the next 18-24 months.
“For a successful QSR, we need a strong base kitchen because you cannot have different quality in each restaurant. Consistency is very important,” Rishabh Jain, CFO of Bikaner told Business Insider India, in an interview.
The company already has two such restaurants in Mumbai, but it wants to build its base before it expands it into a chain. “In Bikaner, we are coming up with a frozen plant and once it’s commissioned in three to six months, we will hold trials of all the foods and roll out our plan,” Jain says.
Restaurants, especially QSRs use frozen and ready-to-cook food to deal with supply chain disruptions and keep its taste and quality standardised across the chain.
It plans to expand its QSR business with restaurants in nearby areas like Rajasthan, initially. But it believes that this route of growth has a long play in the markets. “QSR is a big market and people are experimenting with new products. Bikaji being an old and a renewed brand, can do a good because of the quality and taste that we can bring at the right price point,” Jain adds.
‘Competition is something we have to live with’
Bikaji recently reported a 5.1% growth in volumes in the second quarter of FY24, and also logged in its best ever volume growth of 17% in the salty snacks category. But, like most of its peers, the company is also seeing a resurgence of smaller, local and unorganised players eating into the market.
The snacks market has always been replete with unorganised, regional and local players. In the last 5-6 years they have been hit by GST, Covid and last year it was high inflation. Now that inflation is cooling off, they’re mushrooming back. Bikaji believes that they’ve been able to beat some of it with its wide product mix and pricing strategy.
“Consumers are always willing to pay a premium for national brands but the premium shouldn't be too much. For the first time, we have a 10% off on our flagship brand Bikaneri Bhujia. This will reward our loyal customers, recruit competition and push back unorganised players,” says Manoj Verma, COO of Bikaji said in the interview.
The company has passed on all the economies of wheat and oil prices cooling back to its customers. But in the long-term, the company believes that high competition in the segment is a norm.
“Competition will always be there and we have to learn to live with it,” Verma added. The company has plans to expand beyond its key states of Rajasthan, Bihar and Assam.
The Bikaner based player sees a long runway for growth in its packaged snacks and sweets business in the country which it believes is a ₹7,000 crore business for both organised and unorganised players.
“We are a ₹2,000 crore company so the opportunity is big for us, and depends on how we execute our plans. And, 70% of our business is coming from three states. So, we have all of India ahead of us and export is also a good opportunity,” says Jain.
For the last ten years, its volumes have been growing at a 20% compounded annual growth rate (CAGR). It intends to keep up with double digit growth for the next ten years. “Our target is to grow ahead of the category,” Verma adds.
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