Mumbai: As the four friends huddled over a class project for a business plan, all they could think of was food. The only canteen in their college served a strictly vegetarian fare. They craved for anything but.
Their craving became their project, their business plan: outlets serving egg-based dishes, the closest they could get to a non-vegetarian spread on a vegetarian budget.
“The idea started off as a simple class project when we were given about two months to prepare,” says Ashish Kothari, 23, who conceived the idea along with three classmates at the Thakur Institute of Management Studies and Research (TIMSR), Mumbai. “It fit like pieces of a jigsaw puzzle when we figured what we loved most.”
The project was adjudged the best in the college for the 2010 academic year. But it really graduated into a business when Mrinalini Kohojkar, the director of TIMSR and the brain behind the class project concept, suggested that the management students take their plan forward using the college campus as a testing ground.
The college’s 12,000 students would finally have a choice.
The students—Kothari, Sudhakar Yadav, Saurabh Mhatre and Carolin Christian—got to work. Through the summer of 2010, they trudged the nooks and corners of Mumbai conducting feasibility studies and collecting research. They gathered that while a market for egg-based dishes existed in the metropolis, hygiene did not figure as an important factor for most players, who, in any case, were unorganized.
“We ran pillar to post to secure suppliers and inputs. It offered us a chance to polish each of our skills ranging from communication to language to bargaining capability,” says Christian, the lone woman in the venture and the youngest.
With the concept established and Rs 1.3 lakh borrowed from their families, the group’s next task was to construct an outlet in the campus. Every quote they received from developers to build a 60 sq.ft joint was way above their budget. So they decided to outsource the construction to labourers, designing their outlet themselves.
The exercise took nearly four months and they finally launched Eggilicious, a name conjured with help from potential customers, on 23 July with a hired staff of three.
The menu quoted a maximum price of Rs 25 and offered 12 egg-based dishes such as egg mayo sandwich, french toast, frankies and even a dessert, egg pudding. It was a success, says Kothari, “else we wouldn’t have had an altercation with our canteen owner two weeks after we set up”.
Initially, the venture sold dishes involving 150-200 eggs daily, a low count due to the Shravan season when certain Hindu communities keep off meat and eggs. Three weeks on, the daily count rose to 300 eggs. Its daily revenue was about Rs 3,300. Then came some real-world challenges. Inflation elevated to new highs affecting the prices of key ingredients such as onions and tomatoes. Egg prices rose 40% to around Rs 4 each.
That’s when their classroom knowledge came handy and the group began hedging with forward contracts with their suppliers. “At half the market price, even some of the parents requested us to supply veggies,” says Kothari. Eggilicious began offering soya-based dishes as well.
Nine months into the business, Kothari and his gang are trying to scale up. The group has begun making presentations to venture capital (VCs) investors, seeking investments of around Rs 15 lakh in a year to set up two outlets in Mumbai suburbs Malad and Andheri. They did not disclose the names of the VCs they have contacted.
Securing VC funding may prove tough.
The student-entrepreneurs have an uphill task, says Mahesh Murthy, a partner at Seedfund, an early stage VC fund. While their business model is niche, it can be replicated by anyone with capital.
At least two similar concepts have hatched in the past eight months: Yolkshire, a Pune-based restaurant that serves more than just egg-based items, and Eggsunday, a takeaway joint on the Mumbai-Pune expressway and near a mall in the western suburb in Mumbai that’s set to expand. Bangalore has Egg Factory.
Besides, Murthy says, it would be difficult for small companies such as these to scale up enough to earn substantial returns for the investors. Despite an average 25-30% growth every year, not many companies in the Rs 4,500 crore Indian food and beverage industry have been able to grow enough to hit the capital market—a key option for VCs to sell their investments.
And, as is the case with several student start-ups, Eggilicious faces a potentially threatening internal hurdle. The four founders, while keen to scale up their business, have more secure options in hand if their venture fails, having already landed jobs in campus placements.
on suggestions from potential customers and friends
Ashish Kothari, Sudhakar Yadav, Saurabh Mhatre, Carolin Christian
23 July 2010
Number of employees
Investment to date
Rs 1.3 lakh with money borrowed from their families
The next milestone they plan to cross
To open an outlet each in Malad and Andheri
Eggilicious was among the finalists of the NEN First Dot Student Startup Showcase