Cosmic Cuisine: How an Astrologer's Advice Fueled a Global Restaurant Phenomenon!

Not long ago, a friend of mine from Chennai, India, came to visit me. One distinctive trait of people from Chennai is their strong passion for food. When I asked him what he wanted to eat, his immediate response was, “Dosa from Saravana Bhavan.” I was taken aback, but as a good friend which I am, I set out to find this restaurant to order food for him. After placing the order, I visited their website out of curiosity and was astonished to discover that Saravana Bhavan has over 80-90 outlets worldwide! Intrigued, I delved deeper into its story and quickly realized that this restaurant chain is worthy of a comprehensive business case study. So, here we go!

Tracking back the roots: A little History!

Saravana Bhavan was founded by P. Rajagopal, famously known as the “dosa king”, in 1981. He began his entrepreneurial journey in 1968 with a grocery store in KK Nagar, Chennai. After working there for some time, a pivotal moment came when an astrologer advised him to pursue a business related to “fire“. This led him to explore the restaurant industry and he bought a dying restaurant, Kamatchi Bhavan, and gave it a new name and look.

In December 1981, Rajagopal launched Saravana Bhavan in KK Nagar. The restaurant initially faced challenges and operated at a loss for the first five months. However, it gained popularity after offering an anniversary promotion of 23 dishes for INR 5, attracting large crowds and establishing its reputation.

The Growth Phase

India:

After a steady growth phase and opening multiple outlets, by the late 1990s and early 2000s, Saravana Bhavan had expanded significantly within Chennai, becoming a staple dining destination for many middle-class families. The chain grew to 47 outlets in India by the mid-2000s, with 22 locations in South India and 3 in North India.

A unique feature of Saravana Bhavan that guided it to the popularity it had was its commitment to consistency across locations. The same dishes, such as sambar and chutney, taste remarkably similar whether served in Chennai or overseas. This level of standardization is a significant achievement in Indian cuisine, known for its diversity.

International Expansion:

In 2001, Saravana Bhavan opened its first international outlet in Dubai, UAE. This location was chosen due to the high concentration of Indian expatriates. The decision to open international outlets was partly influenced by requests from loyal customers who had moved abroad. This grassroots approach helped Saravana Bhavan gauge interest and ensure a warm reception in new markets. The menu focused on traditional South Indian dishes like idli, dosa, and sambar, resonating with the cultural preferences of the Indian community while also appealing to curious locals.

Following the success in Dubai, Saravana Bhavan adopted a franchise model for its international operations. This allowed local entrepreneurs to manage outlets while maintaining the brand's standards and quality. And as of now, it operates in around a hundred outlets across 28 countries including North America, Southeast Asia, Middle East and Europe. As a matter of fact, they recently inaugurated their 101st outlet in Kenton, London on 29th September with many more in progress.

Business Model: The not so secret sauce to success

Saravana Bhavan's business model is a comprehensive framework that has enabled it to grow from a single restaurant in Chennai to a global chain with over 100 outlets across 28 countries. This model is characterized by several innovative strategies and operational practices that set it apart from traditional dining establishments.

1. Franchise-Based Expansion: Saravana Bhavan employs a franchise model for its international operations, allowing local entrepreneurs to manage outlets while adhering to the brand's quality standards. This approach has facilitated rapid expansion and reduced the financial burden of opening new locations.

2. Consistency across Locations: One of the key features of Saravana Bhavan is its commitment to standardization. The chain serves over 350 dishes, ensuring that items like sambar and dosa taste the same whether served in Chennai or Singapore. Achieving this level of consistency in Indian cuisine, known for its diversity, is a significant accomplishment.

3. Focus on Expatriates: Well, this deserves to come on 1st place when it comes to international expansion. Saravana Bhavan strategically targets Indian expatriates who seek familiar tastes from home. The restaurants often serve as cultural hubs for these communities, providing a sense of nostalgia and comfort.

4. Employee welfare: For Saravana Bhavan, not just the customers but the employees are also very important. It’s management philosophy emphasizes on employee welfare, offering benefits such as provident funds, medical care, and housing loans. This focus on employee satisfaction has fostered loyalty among staff.

Saravana Bhavan's business model combines elements of fast-casual efficiency with the authenticity of traditional South Indian cuisine. Its unique strategies—focused on franchising, standardization, employee welfare, and community engagement—have allowed it to thrive both domestically and internationally.

Challenges faced

1. The dramatic life of founder: Well, for me this is the most interesting part of this entire case study. This significant challenge came from the legal issues surrounding P. Rajagopal. the founder of Saravana Bhavan. In 2001, he was involved in the murder of his employee, Prince Santhakumar, due to a personal dispute over Santhakumar's wife. Rajagopal was initially sentenced to 10 years in prison in 2004, but this sentence was later increased to life imprisonment in 2009 after an appeal. Read the entire story here. I found this most interesting because for many years to come, the brand’s reputation did not get affected despite the controversial life of it’s founder. In fact, the very time Rajagopal was being convicted of the murder, Saravana Bhavan was spreading its wings worldwide.

2. Market competition: As the restaurant industry evolved, Saravana Bhavan faced increasing competition from other Indian restaurants and chains like Anand Adyar Bhavan, Udupi etc, both domestically and internationally. Competitors began to emerge with similar offerings, challenging Saravana Bhavan's market share.

The challenges faced by Saravana Bhavan—ranging from legal troubles involving its founder to increasing competition—have tested the brand's resilience over the years. However, through strategic adaptations, a focus on employee welfare, community engagement, and an unwavering commitment to quality food, Saravana Bhavan has managed to sustain its operations and maintain customer loyalty both domestically and internationally.

So this pretty much about Saravana Bhavan. And now comes our favourite part of this issue, the Business Lessons that this peculiar case study teaches us.

The Lessons Learned

To be honest, story of Saravana Bhavan teaches multiple lessons, but some of my personal favorites are below:

1. Founder’s identity is not equal to Brand’s identity: Today, a brand’s identity is often closely tied to its founder’s personal image, even long after the business has been established. As the founder's profile evolves, the brand’s positioning tends to shift alongside it. However, this dependency isn't ideal for the long-term success of a business. A brand should stand as its own entity, with a strong identity independent of the individuals running it.

2. Consistency is still the key to success: Consistency remains one of the most crucial elements of long-term success. It is this quality, combined with other smaller but important factors, that can take a business a long way. Take the example of Saravana Bhavan—by maintaining consistent quality in its food, the brand was able to deliver a unique and reliable customer experience across all its locations. This consistency fostered a strong, loyal customer base that continues to patronize the restaurant to this day. The lesson here is clear: businesses that commit to maintaining high standards, no matter their size or scale, are the ones that earn lasting trust and loyalty from their customers.

3. A traditional business story with a touch of drama makes for an excellent case study! 🤪: On a more serious note, this particular case offers a unique blend of real-life business challenges and insights. It covers all kinds of twists while delivering some of the most fundamental lessons in business management. These lessons are so basic, yet so critical, that they hardly need repeating. But if you still want me to dive into them, feel free to let me know by leaving a comment or replying to this email!

Well, that’s it for this issue of some refreshing coffee scented case study. Keep following me for such interesting cases studies and subscribe to my newsletter if you haven’t already done so.

Below are some of other recently added very interesting case studies:

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I hope you liked this issue. Keep tuned for more such interesting case studies.

Until then,

Keep Thinking!