Hello friends, I'm Faisal, and have you ever heard of a cafe that sells lassi? No, I'm not talking about a cafe that sells coffee, I'm talking about a cafe that sells lassi. This is unbelievable. And that's why, friends, today we will study this unique and successful business model in detail so that many aspiring entrepreneurs can get a lot of learnings, strategies, and ideas from it. So, let's start the article without wasting any time.
Engineering to Enterprise:
In November 2017, from a small city in Karnataka, Ballari, an engineer boy, Yashwanth Jagarlamudi, left his good profession and started working at this unique cafe. A lassi-selling cafe, Lassi Day Cafe. Within just two years, his unique business idea became so successful that today, he has opened more than 150 outlets in the entire country. And that too, the interesting part is, without any mega marketing campaign. How is this even possible? I mean, in today's day and age, this unique model of Lassi Day Cafe is becoming so profitable that I was studying the case study of his franchisee partner, Shyam Raman. Now, he wanted to open only one Lassi Day Cafe outlet, but after seeing its profitability and successful business model, he bought the entire franchisee of Lucknow alone. Now, this is also his very interesting offering, that he has opened only one Lassi Day Cafe outlet, you can buy district franchisee, which is quite unique, and with the help of this, a common person can become a successful entrepreneur.
If you look at the menu of Lassi Day Cafe, then their rates start from Rs.35, and go up to Rs.130 max-to-max. And if you buy any other cafe, then their prices start from Rs.100 to Rs.150. So, even after having such low rates, how is it possible to track profitability? What is the secret behind this? The second most important thing, is that by buying the Lassi Day Cafe franchisee, the person will be able to understand who are they talking about, another franchisee, BurgerPav, is only available at the cost of one franchisee. This concept is called Joint Franchisee Model, which is being used for the first time in India. This is unbelievable. And that's why, friends, today we will study this unique and successful business model in detail so that many aspiring entrepreneurs can get a lot of learnings, strategies, and ideas from it. So, let's start the video without wasting any time.
Unique Business Model
When we did some detailed research on them, we understood the main secret behind their business. Actually, Yashwanth directly attacked the 5 flaws of the cafe market which, according to me, no cafe brand has ever seen. So, this story begins in 2012, when Yashwant got the idea of this entire business when he was only 15 years old. So, this is from 2012, when Yashwant's village was continuously dry for 2 years, and farmers were unable to farm due to the drought; that time, Yashwant asked his father, "why are you still farming even after 2 years of drought? Even if we don't farm this year, it won't make much of a difference." On this, his father said, our house will be fine, but what about those whose daily bread is dependent on our fields? The main thing is that, by that, there are many people who are associated with us. Like, daily labourers comes to work. They DO need food. What about them? And this incident It hit Yashwanth very hard Because, this, believe it or not, changed Yashwanth's life forever. He, at that very moment, at the age of 15, decided that after growing up, he would do something which would help at least 100 people to earn a living. And fast forward to now, Currently, his idea is so successful that, today, his 150 plus franchise outlets are providing work to 600 plus people. And now, as with other people, Yashwanth will reach this level, many people didn't believed that! In fact, at the beginning, people were laughing at the idea of opening a Lassi Day Cafe, that you will be an engineer and sell lassi. But these taunts did not stop Yashwanth from solving the 5 biggest problems of the cafe industry through Lassi Day Cafe.
Let's start with the first and most important challenge, which is Initial Investment. 16 crores for McDonald's and 1 crore 20 lakhs for Starbucks. This is the cost of opening their franchise. Now, if we look at the brands with a little less range, then the cost of the cafe franchise of this famous coffee and tea brand goes up to approximately 15 to 20 lakhs. But in the case of Lassi Day Cafe, it is the opposite. They establish a business-ready setup franchisee purchaser at a cost of just 8.5 to 9 lakhs. Which is important for the business of a cafe to be ready. But now, you may all have a question, that all the local tea vendors open their shops in just 5 to 6 lakhs?! And well, that is true, but at this price range, the setup that these people have and what LDC is providing... is way different! You get a proper cafe setup in almost the same investment. But apart from this, the most unique strategy of Lassi Day Cafe, like I said earlier, is that... along with Lassi Day Cafe franchise, you get the franchise of a different brand, BurgerPav, without having to pay a separate penny LITERALLY FREE OF COST! That is to set up a joint franchisee model. Now, I know you must be getting a lot of questions. How is it profitable for a company to distribute two franchises at the cost of one? And what is this Burger Pav? Actually, in the beginning of Lassi Day Cafe,
Lassi, Falooda, milkshakes, and healthy juices were the only beverages that were served. But they observed that the customers who used to come there often demanded snacks along with the beverages. So clearly, a natural demand was being created here. But Yashwant Ji did not want to serve common snacks like sandwiches, pizzas, burgers, and pasta. He wanted to serve something unique. And that is why, in the COVID pandemic crisis, when all the businesses were closed, he started doing research and development on snacks. And finally, he came up with a unique idea. He combined Western Burger and Indian Vada Pav and made an Indo-Western fusion. And not only did he make a fusion and sell something unique, but also this fusion, he sold to his customers at a very cheap price. Now, what happened is that his entire cafe model was completely differentiated from the rest of the cafes. Meaning, all the customers who used to come here, like other normal cafes, they did not get coffee, pizza, or pasta at a very high price. Instead, they would get to eat Indian and local things like Lassi and Burger Pav, which no other cafe was offering. And this became his biggest Unique Selling Proposition, or simply 'USP'. Which not only made his customers want to buy his products, but also attracted people who were interested in purchasing franchises. Simply because this was something new, unique, and interesting in the market. But, with this, looking at his growing sales, Yashwant saw another very interesting pattern. He saw, "what is it that a normal franchisee owner wants? Only this, that in the early phase, his outlet should be opened in the least amount of places. So that the risk of loss in his mind can be minimized. And then later, when he proves to be profitable, that is, the proof of concept has been established, then he can start expanding his shops. Now, noticing this pattern, he brought another big change in his model.
Franchise Model:
To start other franchise cafes, you should have a minimum shop area of 800-1000 sq. ft. But in Lassi Day Cafe and Burger Pav, you get the option to start a cafe in 85% less, that is, in a place of 150-250 sq. ft. And this actually saves the initial investment cost of the franchisee owners. Which ultimately, increases the scope of earning early profit for the investors. Now, if you have understood the business of Lassi Day Cafe so far, then I am sure you must have guessed the third biggest change that he brought. And well, that change was to make the menu ultra-affordable. So, number 3, affordability. If you look at the menu of Lassi Day Cafe and Burger Pav, then products of a very premium range, like Mojito, Muds, Milkshakes, Momos, Wedges, and Cheese Mar Burger Pav, you will get these products for just under 50-100rs Whereas, if you have these same products in a franchisee cafe, or even in a normal local cafe, the rates directly starts from Rs. 150. Now, LDC kept such low rates because Yashwant knew that he was targeting India's tier 2 and tier 3 cities. wherein he wanted to target customers of all economic backgrounds, and even more importantly, of all age groups. And so, if you look at their cafes, you will get from lassi to health drinks, everything... and that too, at affordable prices. Because of this, there is a wide range of customers in their cafes. From kids to elders, there is something or the other available for everyone. And with this new change that they brought at that time, the footfall in their outlets started to increase drastically.
Revenue Maximization Techniques:
Let's move on to the next strategy, which was actually a very dangerous move. 0% Royalty Fees. Look, if you take any other franchisee, you have to pay a minimum of 6-8% royalty every month. The amount of which, sometimes, is up to 40% of the profit. But in Lassi Day Cafe, it's the complete opposite. Here, 0% royalty is charged, which is actually a game changer for all investors. Because with this, every month, the franchisee partner, the brand founder, doesn't have to pay any money. Which means, the profit from the outlet goes directly to the investors' pockets. And now, last but definitely not the least change, which Yashwant and his team did together, was Constant Research and Development System. This move, maybe an Indian cafe brand, must have followed it so religiously. But, to introduce new products in Lassi Day Cafe and BurgerPav, that's why, there's continuous R&D going behind it. Like, their cafe's best seller, unique ice cream, Kerala Puttu Ice Cream. In which, they used a famous Keralite dish, Puttu, in ice cream. And it became an instant hit in the whole of India. Also, according to Yashwant, their Research and Development Department is the main reason, because of which, they are able to bring their products from the sub-premium segment to the affordable segment. And all their outlets, basically, are able to serve the items according to the market trend. For example, their department observes that, bubble drinks are trending in the market, and are available on average, at Rs 200-250. So, their department will try, that the same drink, at a very low price, can be served in their outlets, as soon as possible. So, like, right now, in Lassi Day Cafe, the same drink is easily available, at Rs 90-100. And with this strategy, they are basically, taking advantage of the market trends as well.
These were the 5 shortcomings, that Lassi Day Cafe saw in the market, and they were beautifully solved in their model. And this is the reason, that in a Franchisee analyst's news report, you can clearly see, even after investing Rs 15-20 lakhs, other famous Cafe Franchisee models, monthly on an average, only provide you with an expected profit of just Rs 20,000. But, in Lassi Day Cafe, Franchisee owners... earn Rs 10-15,000 per day. Because their gross profit margin, is directly, 40-60%. And with this, your ROI period, is only 6-12 months. Because if everything is fine, and your DAILY profit is also regularly maintained to minimum Rs 10-15,000, per month; then according to this, your investment of Rs 8-9 lakhs, you can cover in 6-12 months. Whereas in many big brands, this period, can span upto 3-5 years. Actually, behind this entire Cafe model, Yashwant Ji's idea is, that he should deliver the Cafe concept, and all the premium food, to every person in the country, whose pockets.... do not harbour much money In fact, in our research, we found out about two of their franchisee owners, whose outlets in India, are so successful, that today, they have taken the Master Franchisee, of Lassi Day Cafe, and BurgerPav. Due to which, today, they are planning to take these two brands, internationally. Master Franchisee, means basically, you get a franchisee, from a particular, big area, like a whole district. And in that district, you can sell this franchisee, to others. That authority, is reserved with you. So, the first Master Franchisee owner, is Shyam Raman, who does an IT job, in Switzerland. He had taken the Master Franchisee, of Lassi Day Cafe, and Burger Pav, of the entire Lucknow district. After which, today, he is planning to take it, to Switzerland. Similar story, is of Aditya Pandey, who had taken the Master Franchisee, of Gorakhpur, And after this, seeing this success, today, he is planning to develop, a Master Franchisee of entire Nepal.
Expansion and International Ventures:
His intention is, that this Indian brand, and Indian origin foods, whose essence is also, very local Indian, i.e. Lassi, BurgerPav, etc. which carry a lot of demand in foreign countries. See this demand gap, as an opportunity, and grow your business. And because of this, many NRIs, and foreign investors, are also showing interest, to invest in this. In fact, because of this, as of now, Yashwant Ji is saying, that he is also getting, offers from many NRIs, to set up outlets, in foreign countries. Which also, actually is, the next step, for any business, which has become successful, in India. And because of this, Yashwant has started, Cafe and Fast Food, Retail Entrepreneur Program, under an Entrepreneurship Promoting Program, has started offering franchise of Lassi Day Cafe. Because see, what happens in normal businesses? first of all, You have to, from scratch, thoroughly understand, that industry. You have to do research. Then, you have to position your products, according to the market's need. You have to brand them. And then, those products, consistently, systematically, you have to maintain, that quality, and deliver it. For that, you have to, train them. And most importantly, you have to build, successful, and reproducible, systems, which are, time-tested. And even after that, don't think that, the work is over. There are 10 more things, like, looking at sales, marketing, branding positioning, R&D. Because, the market, is constantly changing. People's needs, are constantly changing. So, you have to, keep doing R&D. And that's why, in the franchisee model, if you look at an already established franchisee; then if they are already successful, that means, the franchisee has already taken all the necessary steps.
They have made a product according to the market's needs. To make it, consistently, they have set the required systems, SOPs. They have a good experience in marketing. And they regularly do the R&D just for you. Meaning, basically, if a franchisee, is successful, then you have, a proof of model, a proof of concept, that that business, will be successful, and the chances of, its failure, are greatly reduced. But, because, all the problems, 95% to 99% problems, are all, considered, from the beginning, and the solutions, of those problems, those franchises, have already, set. So, the chances of, your business, being lost, are very low. And that's why, in such cases, doing business, is comparatively, easy. Because, the business owner, only has to focus, on the growth, and expansion, of his business. And that's why, you must have seen, many businessmen, with their main business, as a side business, run a franchisee business. And if we talk about, the scope, then in India, owing to huge population, there is a lot of scope, for the franchisee model. In fact, this mode, was also successful, in economic slowdown. But, once again, I would highly recommend, that in any business, you should enter, after doing, full market, detailed research. Because, at the end of the day, no matter how easy, driving a car is, it is still, but, you have to sit, on the driver's seat. And that's why, you must have, the basic, about that market, and the customer base, so that, you can maximize, your success. And especially, in food and beverage business, to be successful, you need, a lot of patience.
Every business, of course, is a good option, for investment. Because, there is no limit, of capital growth. But, for this, entrepreneurs, must have some qualities, like consistency, persistence, And patience all these ingredients, are added, to that mix, then a good, franchisee model, can give you, a lot of returns. And, friends, if we talk about, shining stars like, then he is, a shining example, of vocal for local. Because of, such young entrepreneurs, our country is, becoming a, startup capital. And, Yashwanth Ji's, franchisee, and master franchisee model, is making, even more entrepreneurs, in the country. In fact, looking at his success, he has been invited, to many business schools, in South India, like TEDx, and Jostalks, motivational speaking platforms, so that, he can share, his experiences, and advices, with young entrepreneurs.
