[music playing]
[theme music playing]
[theme music concludes]
Sharks, engineers really love to solve problems.
The real problem is, how does one become a real engineer?
In order to receive good coaching, students need to go far from home
to places like Kota, Patna or Lucknow
where they spend around Rs. 3 lakhs annually
Offline education has certain problems
that they themselves can't solve.
We teachers solve this problem of students
through Competishun.
Competishun is an ed-tech platform
The reason is that the prime focus
of ed-techs these days is money-mindedness.
Also, they don't have an exact idea
of what is needed to prepare the students.
We've been doing this for the last 20 years.
We know exactly what is required for a student to get selected
and we've built that ecosystem in Competishun in the last 3 years.
and get good results.
- Welcome to Shark Tank India Season 3. - Thank you.
In your pitch, you mentioned money-mindedness.
Without money-mindedness,
how do you propose returning our investment?
The valuation is Rs. 200 crores.
Our cause is such
that we want to create a win-win situation for everyone.
We were the first to start a YouTube channel in India in 2014.
I used to teach in Kota for 10 years.
Where in Kota exactly?
I've taught at Bansal Classes and Resonance too.
I used to teach the top batches.
I was the first to upload my sessions on YouTube
in India for free in 2014.
Our social angle is very strong.
How many followers do you have?
About 1 million followers.
That's low.
[Sharks chuckle]
Everybody has at least 20 million.
Our channel only talks about serious studies
so that the student can study and get selected.
When the child is at such an impressionable age,
effort is made to manipulate him in other ways
by reciting couplets or other smooth talk.
We don't do all of that.
The couplet you're talking about is done as a means of engagement.
Look at Shark Tank for instance.
They made education entertaining.
Now, lakhs of people know what equity and debt is.
Had it been in books, they might not have known.
Education and entertainment can go hand in hand.
That's why Shark Tank is successful.
I don't understand what's wrong with this.
You're making it such a big USP.
The success rate for IIT,
if we talk only about IIT,
you recite poems and couplets time and again,
it breaks the students' flow.
I completely disagree.
- When I studied for the IIT... - Yes.
I studied at FIITJEE
and it was normal there, as in for a few hours.
A few students in my class
used to be coached from 4 am to 11 pm and even midnight.
- You were supernormal, Vineeta. - No.
I feel that over there,
making them study for 18 hours a day
had firstly, destroyed their personality.
Secondly, I don't think it was better for them.
- Okay. Hang on a second. - Yes.
The teaching methods and approach might be different.
We can't decide which one of them is the best today.
Let's move on from that
and decide if your business is investible or not.
- Is that all right? - Sure.
Lay out your differentiation and positioning very clearly.
Could I give you a demo?
- Sure, go ahead. - Please.
The portal you see here is for a 'dropper'
who has passed twelfth grade.
A student who has passed the twelfth grade
- has different receptivity at different stages. - Okay.
Some have more time in hand while others do not.
For example,
we taught the same lecture in Praveen Classes,
then at Prabal's.
We even taught it at My Praveen Fast Lane.
Fast Lane means we taught the same lecture faster
- to a student with a higher receptivity... - Hmm.
And in lesser time.
We taught a crash course at C³.
The same content but in an even shorter duration.
It's for those who wish to clear JEE Main and not JEE Advanced.
Then again, we introduced another course called Champ.
It's a part of the same course.
This is only for the students
who wish to revise and have already studied earlier.
No, they also customised it I'm assuming.
Customisation.
- No one else does this. - Nobody.
You're getting traction then.
- A lot of people are going for it. - Absolutely.
They studied with us online.
- Give us an estimate. - Yes?
How many of those students must have opted for other coaching as well?
- Yes, it's possible. - How many? 90%?
I believe that roughly 500 students solely depended on us.
- if that's the case. - Come here if the demo's done.
What are your business stats?
If you look at the stats,
2020.
You could say the cost is roughly about Rs. 10,000 to 11,000...
- Is that your average revenue per order or user? - Yes, average.
Could you give us the cost break-up for Rs. 10 crores?
It goes towards rent.
The major chunk goes towards the salaries of the faculty.
How many faculties are there in total?
18 faculties including us.
Is there a star faculty?
- It must be you three. - No, we're the normal faculty.
How much were you making earlier?
Tell us.
I had a commitment of 90 hours for which I'd get Rs. 1.5 crores.
- Unbelievable. - Rs. 1.5 crores for a year?
I was told it'd be doubled if I put Competishun out of business.
Wow! That's good money.
Tell me something.
In this season of Shark Tank,
given the scenario outside,
no company with a revenue of Rs. 10 crores
asked for a valuation of Rs. 200 crores.
So, what you do not wish to be,
those bad ed-tech companies,
is what you're turning into!
Not at all.
What other ed-tech companies did was to lure students through ads
without generating a system and without generating trust...
How could you ask for Rs. 200 crores with a Rs. 10-crore revenue?
Let me explain it in two parts.
The first one is,
investments have been made even at a multiple of 30.
For those companies!
You're not them, but you want that multiple! Wow!
No. The ones who're on the verge of closing down.
You're having a round.
No, we're not.
We're still standing
which is a testament that if you teach well,
- you will grow organically. - Correct.
The opportunity is still there.
Second, the online companies that came right before Covid
pointed out flaws in offline tutoring
which exists even today.
Mohit, to justify a 20x valuation,
you also will need to grow at that fast pace.
You'll also start doing what they're doing.
They could not grow.
They could not, but you'll have to do that too and run ads.
Why would we do something that didn't help them grow?
If you won't do that, how will you return the investment?
We feel that other online coaching classes have conceded defeat,
the proof of which is visible.
We feel we're at the point...
Do you ever feel that the others are not doing anything worthwhile
and only you are?
I wish to know if anyone else
in this industry is doing a good job.
Yes, a few are.
For instance, PW did good work.
- PW. Physics Wallah. - Yes, they're doing good.
Why so?
JEE is attempted by 10 lakh people and NEET by 20 lakh.
The students who prepare seriously will be around 10 lakhs.
Physics Wallah started coaching 5 lakh students
- over and above those 10 lakh. - Yes.
And because their ticket size is just Rs. 3,000,
the student doesn't need to think too much.
He doesn't need to ask his parents.
You could not explain your business with the same clarity
as you explained that of Physics Wallah.
Ed-tech no longer has linear growth.
For instance ALLEN,
that is currently the biggest offline player
that might have taken 10 to 15 years to build earlier.
What is their valuation?
The last equity was raised at 1.1 billion dollars.
Okay, keep going.
Post which, you see hyper-growth.
The biggest problem with Physics Wallah, I would say...
- Forget them... - Let him finish, Peyush. Yes.
- What was it? - The biggest problem is
they cannot produce results in the top bracket.
What is it you want to do?
I'm not asking what Physics Wallah is doing,
what their problems are
or who is smart and who is not.
I am asking, what do you wish to do?
We wish to be the Bansal of online tutoring.
What's Bansal? That's my surname.
Bansal was known for its results.
They used to reject admissions back in the day.
Tell me something, Mohit.
When you were tutoring,
as far as I've understood,
- you used to be the star tutor at these places. - Yes.
- Absolutely. - So, what I've gathered is
that you will cater to the best students
and Physics Wallah is catering to the masses.
Did I get that right or not?
For now, Physics Wallah is catering to the masses.
In the near future,
when the results from an online platform...
You know about what everyone else will do!
How... [laughter]
Okay. As far as we've understood,
your USP really is
- to build a result-driven ed-tech company... - Yes.
- For JEE and NEET. Correct? - No shortcuts.
I have two views.
There are two types of gaming in results.
The first is an admission test to get into the coaching class
where the best students are accepted and are given discounts.
And we do not take the rest because that impacts results.
- Okay? - Yes.
The second gaming is
where they have loads of ads in the newspapers and on the buses.
When it comes to results, I am still of the opinion
that its biggest determinant is how strict the selection is.
Secondly, this is gameable.
So, building a reliable
and trustworthy business on this is difficult.
This has been changing for years.
Vidyamandir used to be number one during my time, it is Bansal now.
This will keep changing.
You won't be able to build a brand on the basis of results.
Secondly, I still believe
that to achieve results, offline is an important component
because keeping 15 to 17-year-olds
engaged online for hours at a stretch is difficult.
So, I cannot invest in you today, but best of luck.
I don't see clarity in your vision.
You said you wanted to be the Bansal of online,
or you could not tell us...
You didn't once say that you wanted to send x number of students to IIT.
You've been harping on about something unauthentic.
Second, I feel you're too competition-obsessed.
I don't think by being competition-obsessed,
you'll be able to build a big business.
I am out for these reasons but best of luck.
Thank you.
My answer is no too.
I agree with Peyush's views.
Will you be able to make
a successful business from being a star teacher
remains a question for me.
Being a star teacher,
you might be able to attract a niche audience.
However, how big will you become remains a question for me.
For that reason, I'm out.
- Okay. - All right.
I can't join you as of today.
With the intent, all the teachers are making money nowadays,
we will too.
From the business point of view,
I don't believe you can do something different.
I don't quite get what fuels your obsession.
So, I'm out.
I couldn't understand your differentiation.
You said a lot of businesses came,
and we've witnessed how dirty things got.
That word was used in ed-tech in a way, right?
For a moment there, I thought you were a breath of fresh air,
but as the conversation unfolded, you were playing the same game.
Or I was excited about tech, and ed-tech in particular.
These are the reasons I'm out. Good luck.
Find your footing, guys. You're all over the place.
- Thank you. - Good luck, sir.
- Thank you. - Very nice to meet you.
[sombre music playing]
[birds chirping]
'Let me give you a statistic.'
'The Indian government spends 7% of the GDP on welfare schemes.'
'It is the people's right.'
If you look at the gap between what the government spends
and the people who actually benefit from it,
there exists a huge gap.
'provides them with application'
'and documentation support to the last mile.'
'I'll give you Rs. 1 crore.'
'Aman and I would like to make an offer.'
- 'I'll take your offer, Sharks. - All right. Good one!'
'We were getting requests from everybody'
'seeking support of welfare schemes either for the people'
'whom they know or employ.'
The other thing that happened is
a lot of people wrote to us saying that they want to work with us.
My female Haqdarshak partner had accompanied me.
Looking at her work,
a lot of people placed their trust in us
and wanted to associate with us.
Our Yojana Card is also associated with our Yojana Chatbot.
None of the workers or farmers will need to write.
They can merely tell us in their local language
which welfare schemes they want information about
or application support with.
Our agents will then go there and help them apply for it.
I'm a farmer and I'm busy tending to the crops.
I didn't have an Aadhaar card or any ID card.
By the time I got one made, the scheme would be discontinued.
After my ID came through,
Vinay got my Yojana Card made.
Once that card was made, I got a benefit of Rs. 2,000.
'We came on Shark Tank in January 2023.'
From then until now, our growth has been exponential.
As far as the problem we were trying to solve went,
Shark Tank had a big hand in widening its reach.
Today, when people think of government welfare schemes,
Haqdarshak comes to their mind.
'Your effort, our progress.'
[theme music playing]
[theme music concludes]
Who doesn't love new clothes?
New style! New fashion...
- New self... - Excuse me, pitch!
Today's cheapest and lasting option is fast fashion.
Fast fashion.
Such good clothes!
- Super fast! Super cheap... - But...
Trends change daily.
Your new set of clothes starts looking boring in a few days.
Let's buy more. There's a sale going on.
What about our old clothes?
I'll donate those.
Oh, no.
NGOs don't require your bikinis
and your miniskirts.
They'll throw your clothes in the trash can.
Yes, Sharks. Our landfills are also
full of old clothes like our closets.
Globally, more than 10,000 crore new clothes
are manufactured every year.
but our crop tops and underwear will stay on this planet.
What's the solution?
Building treasure out of trash.
[thrilling music playing]
It's India's first thrift platform
We are experts in borrowing.
For instance, Mom makes me wear Sana's clothes.
And Alfiya used to steal my clothes when she was in college.
Where is my red top?
[joyful music playing]
The Indian mindset is about saving and reusing.
And this is our concept.
Bombay Closet Cleanse helps you shop, swap,
We started this business with Sana's closet cleanse.
To date, we cleansed more than 5,000 closets.
Our focus is offline experiences,
so we have two established offline stores in Mumbai.
increase their lifecycle,
and stop them from going into the landfill somehow.
For this, our ask is Rs. 1 crore for 2.5% equity.
[inspirational music playing]
- Sana and Alfiya... - Yes!
It was an entertaining pitch, I must say.
- Thank you! - Super!
Why don't we start with knowing about you first?
Are you two sisters?
- Yes. - Right.
Please tell us your background.
What did you study? And how did you start this?
Sharks, I'm Alfiya and I'm 26 years old.
I studied mass media
and my specialisation was advertising.
I used to work as a graphic designer before starting BCC
and I had freelance clients too.
I like branding
so this company is my baby.
- Do you live in South Mumbai? - No.
- Bandra! - You have an accent.
Your Hindi accent is unique.
I practised to speak like this.
To have an accent or to speak Hindi?
- To speak in Hindi. - Hindi.
[intriguing music plays]
Did you get the accent through thrift or because of the expenses?
- Expenses! - Expenses.
We had to pay rent in Bandra.
[laughing]
[exhilarating music playing]
Actually, I'm a qualified dentist.
- Wow! - Oh my God!
- Wow! - Who is the elder one?
- I'm older. - So it's you.
- My skin doesn't reveal my age! - [guffawing]
[laughing]
[exhilarating music playing]
However, I'm 34 years old!
- You're 34! - 34! No way!
Oh my God! I love your boots and your clothes.
- You should model for Quench. - I think so.
Please!
Actually, I was a shopaholic.
I had 700-800 clothes
which I wasn't wearing.
Whoa!
So we decided to try selling them.
Many clothes had tags intact.
"Maybe people would be interested in buying them."
So I called Alfiya.
"You are a graphic designer. Please help me."
Around 80 people came to my house.
Please do it again. "80 people..."
80 people landed at my door.
[laughing]
They are amazing.
- Yes, of course. - Yes, please!
How many followers?
The third boutique
shows our Bandra store.
It's lovely.
What does Rs. 7,500 mean?
Is it the price I need to pay?
- Yes. - Yes.
What is its original price?
It must cost Rs. 50,000 at least.
- It's quite good for Rs. 7,500. - It's wonderful.
Sana and Alfiya, suppose I come to your shop with my suitcase.
The suitcase contains 50 clothes.
I meet the shopkeeper and place my suitcase in front of him.
What next?
First, let me explain the process of procuring clothes.
We don't allow walk-ins.
Earlier, when we allowed it, as you said, many people just walked in
and we didn't have enough space in the warehouse.
to check stains and defects.
- The clothes in style... - The trained shopkeeper...
So your buying expert knows these things.
- Yes. - Yes, they know about fashion.
Do they refer to a guide book or they are trained?
We have detailed guidelines.
Some of the basic brands we mostly use have a pricing guide.
The customers read it in advance
so they have set expectations.
Our store managers use the pricing guide to assess it.
- The store managers are running the store and buying.- Yes!
Yes, they also buy.
We push them for store credit.
Which is a better deal for people.
When they swap, we give them double the value.
If I buy it for Rs. 1,000,
we give them 2,000 store credit in return.
Because you give them 2X credit. Your margin goes down.
- No, because... - So, it isn't a profitable deal for you.
I am unable to understand this math.
Listen, she sold you the product worth Rs. 1,000.
The product that you were going to sell at the shop for Rs. 1,000
- instead of that you gave a credit of Rs. 2,000. - Yes.
So, next time, when that customer comes
they will buy the product that's worth Rs. 2,000 instead of Rs. 1000.
But we are also making money from their clothes.
I get it.
So, as per my understanding what is happening is
that you think it's a more favourable option for you
but it doesn't add up mathematically.
You might not have high demand.
When you offer store credit
your demand is increasing.
That customer isn't buying the product.
And they wouldn't have purchased it in the first place.
But mathematically,
- this is a loss. - It isn't right.
- Okay! - It's not a loss. The gross margin is less.
Lesser margin.
Explain the unit economics.
How much salary do you take?
- I take Rs. 80,000. She takes Rs. 1 lakh. - I take Rs. 1 lakh.
The profit mentioned, is it after your salaries?
Yes! Our salary is included in our fixed expenses.
Tell me something! You mentioned
that you make 15% profit.
Is 15% profit each in both the shops?
We opened our shop in Versova recently in June.
There was one shop.
- So, the monthly average sale is Rs. 16 lakhs. - Yes.
This year your shop's average sale is Rs. 12 lakhs.
- Yes! - Your sales have gone down.
There aren't that many people.
Hold on! I wanted to understand your net margin.
Inventory will be a big problem in this business.
- Yes. - Let's say you bought 100 clothes.
How much percent of it gets sold
- or is dead? - We rarely have dead stock.
Because we clear it for Rs. 99 or Rs. 50.
- I understand. - We sell around 3,500 products.
I put 1,000-1,500 pieces in clearance sale.
- How... - Monthly!
So, the percentage is...
- You buy 4,000 units, right? That is 25%. - Yes.
Your profitability is 15%.
Did you include dead inventory in that figure?
It is our inventory.
- Because honestly... - We can say that
a decrease of 5% to 10% is expected when
dead inventory is recorded in the books.
No! The stock gets cleared.
We rarely have...
If you bought the product for Rs. 100 and sold it for Rs. 50,
you'll have to record a loss of Rs. 50.
- Correct. - So, there will be a net loss in those products.
In those products, yes!
Are you keeping that record in your book monthly?
- Yes. - No, they are not doing that now.
[tense music playing]
- Alfiya and Sana! - Yes!
- It was a pleasure meeting both of you. - Thank you!
I am out for a couple of reasons.
Running between 5 to 10 shops is fine.
But there will be scale issues in the future.
Because you won't be able to maintain
Alfiya and Sana what I feel will be challenging is...
You mentioned that once you opened the second store
- the first store was cannibalized. - Correct!
I am questioning its demand.
You will have a small boutique business, and you will make money.
But I doubt it is scalable.
For that reason, I am out.
But it is a good business for you
where you are making good money for yourself.
All the best!
I will recommend two things to you.
Please strengthen the operational aspects of your business.
you are selling in the market.
Even if you sell it for a cheap
price, keep your aspirations high.
I am out because it is still small.
Okay? Best of luck.
- Thank you so much! - Thank you!
Hurry up and tell me
what is your equity split.
Oh!
Negative?
How is the bank balance negative?
What do you mean?
We've just obtained an unsecured OD.
How much money is stuck in working capital?
What do you mean by that?
Do you know the definition of working capital? Inventory!
- That is the issue! - And receivables.
[tense music playing]
How much money is tied up in inventory?
Around Rs. 4-5 lakhs.
- You had to obtain OD for that. - Yes!
You are asking
for a valuation of Rs. 40 crores.
Your this year's profit might be Rs. 30 lakhs.
Calculate how much that is.
How many times do you have to multiply Rs. 30 lakhs
to get to Rs. 40 crores? Tell me.
You are on Season 3 of Shark Tank.
Sir, my math is not good. I...
130 times or so.
- Yes! - Why...
Why the big valuation?
You're either selling your business to investors
or you're selling your vision of where our business is headed.
- Yes. - Okay.
I have to believe either of the two.
Explain your next three-year journey.
There are a few things I want to do.
where the clothes are collected
- and sorted. - Got it!
Alfiya and Sana, nowadays, fast fashion
creates fabulous trendy clothing
priced from Rs. 500 to Rs. 2000 and sells them in a flash,
by producing them overnight.
If a person can buy from Zudio, a brand owned by Tata Group,
why will he or she be seen in your shop?
Your second challenge you mentioned
that you will grow your business with marketing.
Suicide!
Your economics doesn't support it.
Lastly!
According to me, you seem to have a solid business,
but
when it comes to business terms, investor speak and returns
you appear to lack a natural instinct. You're very uncomfortable.
Go with your instinct.
Go with what comes to you naturally.
Only then you might do somewhat better.
- So, I am out! Good luck! - Okay, no, worries!
I really wanted to, you know,
support two very enterprising women.
But there are
many gaps.
Right now, this is not investible.
Please don't go into negative cash flow.
You can run this on a profit.
I am out for now.
- Okay! No worries. - All right!
[upbeat music playing]
[theme music playing]
Sharks., all of us enjoy a premium coffee.
But you have to spend a minimum of Rs. 250
to have a cup of premium coffee.
- Absolutely! - To stay awake at night
if you want a bigger cup of coffee, you have to spend Rs. 500.
So, to have a cup of premium coffee
do I have to burn a hole in my pocket?
Is there no other option?
There is! There is a similar premium brand
that sells coffee for a not-so-premium price.
Are you saying expensive coffee's time is up?
- Ta-ta? Goodbye? - Yes!
Because we have introduced KIOSK KAFFEE.
Sharks, you will get premium coffees
at affordable rates at KIOSK.
From white flat blend for your parents
to western style secret recipe coffee for Gen Z.
KIOSK has all your needs covered.
when prominent businesses were on the verge of shutting down,
we engineers, without FMCG background entered this industry.
And gradually we opened 50 outlets.
Our vision is to make affordable coffee accessible to everyone.
Of course! There is no need to ask.
- Of course! We would like to drink. - The menu is on your desk.
Bro, I will have a black coffee.
- Make that two. - I don't have coffee.
Drink something, Azhar.
Drink this. Have a roasted Hazelnut Frappe.
- Peyush sir! - Sir... What is your name?
- Pranay. - Pranay sir!
- How many black coffees? - Three black coffee.
One strong Latte.
And one Hazelnut Frappe.
What is your flagship product?
Kafe Frappe is a standard drink where we serve a coffee shot.
That is very famous.
We have an elaborate menu in cafes.
We have mentioned our best-selling items
- on the menu. - Is this how you cut the menu?
- Yes! - Haven't you paid attention to this?
You have not left any margin.
It is not well made.
- This must have happened in a hurry. - Okay.
Our menu is displayed on a TV.
- Are you wearing an LED? - Yes.
Are the three of you friends?
- Yes! - We are college friends.
Which college were you in?
Which year did you start?
24th December 2020.
used to buy a coffee. Nilesh and I used to hesitate.
The coffee is expensive. We can't afford it.
Every time we went there
we used to buy one coffee and share it among the three of us.
The bill used to be around Rs. 500
because Sangram would opt for add-ons.
Nilesh and I used to pause before dividing the bill.
This is how the journey began.
We decided to start a business.
You were sipping on coffee
you decided to quit your job and venture into the coffee business.
There is Nescafe Cafe in India.
- The coffee is cheap. - Sir, it is brewed coffee.
- This falls under freshly brewed coffee. - Okay.
The coffee is good. It is really good.
- Thank you so much. - Very nice.
Do you have the label in your shop as well when you serve?
- This is how we deliver it. - That is how we deliver it.
What type of roast did you put in our black coffee?
I loved your coffee.
It is believed
that arabica is premium and robusta is less premium.
They only use arabica in cafes and not robusta.
But there has to be a punch.
Robusta gives you a punch. You can feel the punch of robusta.
And you can feel that punch in our drink.
I don't drink coffee so I cannot comment on taste.
As a newbie, I liked the taste.
Others sell it for Rs. 250 and you sell it for Rs. 70.
There has to be something different. Why is their coffee expensive
while yours is cheap?
There is a brand difference. They have a brand.
Operation cost...
They have big lounges
at premium locations.
We drastically reduced the operation cost.
At KIOSK
We are focussed on the product.
If you want to have coffee you can come here and have it. That's it.
In India, people generally
visit coffee shops for experience.
10 years ago, only meetings used to take place in coffee shops.
But it is not the same any more.
People genuinely come to have coffee.
The growth in India
What is your exact model? Is it just a kiosk
Right? And the price point is exactly the same.
That is great. New models are good.
We get fresh coffee
at Starbucks, Cafe Coffee Day
and there are many chains like yours.
How big is the total of this business in India?
- The total is Rs. 5,000 crores. - Yes.
Let's exclude premium chains such as Starbucks
and those who sell a lifestyle.
They are not selling coffee.
- Right! - You think so too.
I believe it too. They are selling lifestyle and aspiration.
Excluding them, what is the market size of those selling coffee?
Do you have any idea?
We are not sure. But big players are ruling that market.
A huge sector is still unorganised.
There used to be Nescafe counters.
You are doing the same with brewed coffee in counter format.
- Correct! - Good.
Share the sales figures for your business.
Our last year's sales were Rs. 8.4 crores.
Are these sales yours or from your franchisee?
It's the total sales of the company.
What's the run rate this year?
Share the revenue split of your revenue streams.
Around 2.5.
20% is the cost of materials.
No! The cost of materials is 45%.
2 times. Sorry! It will be 2 times.
Average! How much revenue does a franchise generate in a month?
- It will make a net profit of Rs. 60,000. - How?
How much is his sales?
- Yes! - Some might be loss-making. How many are making loss?
Around 2-3...
Let's assume they grow every year.
The payback takes around 3-4 years.
I believe that if the payback takes so long
- in a franchise business... - No one will opt for it.
How is it benefiting it?
He will rather put Rs. 12 lakhs in the bank.
Basically, its economics
isn't working for both of you.
Because the problem is Rs. 2-Rs. 2.5 lakhs per outlet.
The reason
Starbucks sells coffee priced at Rs. 250-Rs. 300 because
they have to cover the expenses of rent
and manpower costs in major cities in India.
If you want to make business
one outlet should at least generate a minimum of Rs. 4-Rs.5 lakhs.
Now, it has become a part of...
I have noticed when I go to Starbucks or Costa Coffee
people park their cars early morning
take the coffee and leave. They don't even sit at the cafe.
- But they still spend Rs. 250-Rs. 300. -Right!
You can serve a takeaway model to that market.
You have addressed the right problem.
Three of you are engineers and are solving a problem
I like the taste of your coffee.
There is an issue with your business model.
When you try to scale it
the rental cost won't be the same.
People cost won't be same.
Compliance cost! You will have to increase revenue per outlet.
Don't open more outlets.
When the revenue is around Rs. 6-Rs.7 lakhs
is when the unit economics model will be made.
about sales numbers and how you are explaining things.
You are either not explaining properly,
or you haven't understood your business.
Even a 'paan shop' can make revenue of Rs. 10 lakhs.
Your sales per store is very low.
You can't grow your business like that. So, I am out.
You have received a feedback today.
The profitability of every outlet and every franchise.
Get into the depth of it and make a systematic business.
I am out.
Thank you.
They are asking you to generate Rs. 5 lakhs instead of Rs 2.5 lakhs.
That is impossible.
Because it is impossible.
Doubling the revenue is very challenging.
Receiving a footfall of 100 people each day
is too much.
The main issue here is that investing so much
in making a Rs. 70 coffee in a retail outlet format
cannot yield ROI.
There is only one way to get out of this.
To make the same revenue as you do on the counter
on Swiggy and Zomato.
If you cannot crack that
then your outlet will never break even.
But to do that you need a different skillset.
I am not sure that you possess
the necessary skillset to successfully run an online business.
So, this model is not investable. So, I am out.
Do you know that coffee
is cheap in every country
but in India?
Right? It is cheap in the US as well.
Why do you think that chains
in the US or Europe
sell a cup of coffee for ¤3-¤5?
Because coffee is a commoditized business. Right?
If you have coffee at the same place around 20-30 times,
that's when you get used to it and you want to go back to that place.
That is why people have layered it with providing a lifestyle.
So, coffee is sold as a lifestyle.
Whether it's Costa Coffee or Starbucks.
You want to sell it on cost-plus.
If you sell on a cost-plus basis, no one will let you make money.
Why? Because, you will do two things.
Either you will go on delivery platforms.
Delivery platforms will take their margin or commission.
There will be several people selling coffee there.
So, you will have to compete on price
Due to competition, they'll keep raising rent and finish your margin.
So, that's the problem with your model. I'm out, good luck.
- Thank you, sir. - Thank you, Sharks.
- Yes, thank, bye. - Thank you.
[tense music playing]
[theme music playing]
Hello and welcome to Ask the Shark.
You must already be knowing the format.
Your business-related doubts and questions are answered
by your favourite Sharks.
We ask them a question on your behalf.
So, today we have on Ask the Shark
the CEO and co-founder of Sugar Cosmetics, Miss Vineeta Singh.
Ma'am, welcome, and thank you so much
for giving us your valuable time.
Ma'am, today's question is by Mr. Yogesh Jain from Udaipur.
And, I think, growing up, I focused
a lot on numbers. I was good at Mathematics.
And, I think, every founder team
should have one person who is very good at numbers.
Because, very often, we get pitchers here
who are quite clueless about the numbers of their own business
and about the market numbers.