“is chaat business gaining momentum? – a case study of...

INTERNATIONAL JOURNAL OF RESEARCH IN MANAGEMENT AND BUSINESS: VOLUME 1 ISSUE 1

Published By: Universal Multidisciplinary Research Institute Pvt Ltd

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“Is Chaat Business gaining momentum? – A Case study of Pani Puri Sales at Davangere City”

Dr. Laxmana P1 and Smt. Kavitha S2

Abstract The current study is an effort to study the status of Pani puri business in Davangere district of Karnataka state. Broad objective of the study is to examine the functioning of Panipuri business and level of success in Davangere district. To know socio economic status of Chaat vendors background information has been collected along with the financial information such as working capital required for the business, daily turnover, profitability of the business and problems faced by the vendors in the district. At the same time information is collected from customers also to know the preferences of customer and spending of the customer. Overall study concluded that Panu puri chaat business has become a bread earner and livelihood for few families. And it is set to flourish in the coming days as the craze of the customers towards chaat items is ever increasing. Key words: socio economic status, working capital, profitability, turnover, livelihood Introduction Growing economy and changing life style of consumers have changed Indian food market drastically. Reports indicate that Indian food market is set to double by 20253. Study by Mckinsey (2008) on Indian food market has revealed that food consumption in India is expected to grow from $155 billion to $ 344 billion4. Study highlighted that urban consumers consume 10 times more snacks than rural counter part. Among the regions, western counterparts topped and loved snacks more followed by northern region counterparts. Organized Indian snack market is expected to grow at the rate of 15-20% by year; and caters to the tune of 50% of the market share. However unorganized sector is worth $1.56 billion and is growing at the rate of 8%.

1 Chairman, Department of Commerce,Davangere University, India 2 Assistant Professor, Manipal University, Bangalore, India 3 The times of India, (2008),”Indian food market set to double by 2025”,29th July, available at <>last access on 26th, may 2009) 4 Ibid



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Estimated total snack market in India is worth $ 3 billion5. From the data monitor survey (2008), Indian savory snack market has grown with CAGR of 4.4%, and grew by 4.5% in 2008. Further, entire snack market in India is segmented in to 5 types i.e. popcorn (0.6%), nuts and seeds (3.30%), processed snacks (0.80%), potato chips (9.30%) and other savory snacks(85.90%). As per the survey, Japan dominates snack market with market share of 60%, while India has a share of 12.40% of total Asia specific snack market. Among the several savory snacks, Pani Puri chaat happens to be one of the popular snacks in India

With increasing working population across the globe, people have developed the so called habit of eating outside. Food products which can be prepared and served quickly have started gaining importance. In the modern context, such foods are termed as “Chaat or junk foods” which are normally served along the street side. Chaat has become buzz word among teenagers and others as it waters mouth and is available at affordable price. It is so popular that it has been tasted in one form or the other by every Indian. It acts as a substitute for intake of evening snacks. The purpose of consumption is to enjoy the taste and is not meant to be consumed as a main meal of the day, rather a food that supplies brief energy. This is an era research has proved that there is an increasing trend of consumption of such items and consumers have started spending more. Though such items are not conducive for maintaining a balance diet, yet there is demand as it triggers the taste buds of consumers. These chaats are perceived to be of low quality and unhygienic. However, mixture of sweet, sour, spiciness, crispiness and availability of different flavors make the chaats more popular. Moreover, researcher has found out through preliminary observation that there is a good opportunity in Davngere city for street vendors’ pani puri chaat business and researcher conducted survey in the month of February 2015 to know the prominence of pani puri chat business in Davangere city.

Different items under pani puri chaats include Maslala puri, Sevpuri, Behlpuri, Kachori, Alupuri, Kachori double, Dhaipuri, Samosa, special pani puri, Mixture. Among the chaats, pani puri is found to be more popular when compared with other chat items of pani puri. All these items are prepared by four main ingredients i.e. pani, puri, sev and masalas. Using these four ingredients different variants are made available to customers

5 ibid



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Table 1: Varieties of Pani Puri Chaat

Items Number of customers

Panipuri 21

Masala 15

Sev 10

Bhel 10

Kachori 10

Alu 9

kachori.double 8

Dhai puri 8

Samosa 6

Mixture 1

Others 2

Total 100

Source: Survey Data

Chart 1: Varieties of Pani Puri Chaat



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21%

15%

10%10%

10%

9%

8%

8%

6% 1% 2%

Customer preference towards itemsPanipuri Masala Sev Bhel Kachori Alu

k.double dhai puri Samosa Mixture Others

Background Street foods have always been prevalent and through out the country. As these food items are inexpensive and somewhat nutritious, play a significant role in catering consumers who feel hungry in the evening. These consumers however may belong to different social economic strata and longer commuting distance between their residence and office gives an opportunity for such businesses to flourish. Once upon a time Davangere was known as Manchester of Karnataka as cotton textile mills were booming in Davangere city. Big players such as Davangere Cotton Mill, Chandrodaya Mill, Anjaneya Mill etc., were found to be very productive during 1970’s. However, due to internal management problems and lack of competency, companies could not continue their business. Of late, Davangere city is known for good educational institutions and running small businesses. Among the small businesses, pani puri business is slowly gaining momentum.

After interacting with pani-puri vendors in Davangere city it has been found that there are around 128 chat vendors. Majority of the vendors are coming from local Davangere city and a few are from interior Rajastan. These vendors are from a very poor family, and chaat business is the main source of income and livelihood. Being lowly educated, they belong to macro sized families in the range of 3-6 members and have settled in Davangere for more than 6 years.



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Table 2: Educational background of Pani Puri Chaat Verndors

Educational background

No. of vendors

Illiterate 4

1st – 5th standard 28

5th -10th standard 74

10-15th standard 22

15th and above standard 0

Total 128 Source: Survey Data



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Chart 2: Educational background of Pani Puri Chaat Vendors

Illiterate3%

1st – 5th standard

22%

5th -10th standard

58%

10-15th standard17%

15th and above

standard0%

Educational backgroung of vendors

Table 3: Family Size of Pani Puri Chaat Vendors

Size of the family

Number of Members in the family

below 3 members 5 3-6 members 71 6-9 members 51

9 and above 1 Total 128

Source: Survey Data



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Chart 3: Family Size of Pani Puri Chaat Vendors

Table 4: Residential Status of Pani Puri Chaat Vendors at Davangere

Resident of Davangere

No of vendors

Less than 2 years 11

2-4 years 21

4-6years 29



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More than 6 years 67


Chart 4: Residential Status of Pani Puri Chaat Vendors at Davangere

Further, initial survey feed back reveals that 80% of the vendors are undertaking chaat business on full time while 20% consider this part time business. Along with the chat business, part time vendors are found to engage themselves in businesses such as running milk parlors, news paper agencies, vegetables vending etc., they work in a group, which consists of minimum of 2-3 members who normally belongs to same family. Outdoor activities are executed by men, who are involved in procuring ingredients from the near by markets such as new Davangere market and old Davangere city market. However, indoor activities such as preparing sev, puri, pani, masala items are done by men or women at home. Chat vendors residence are normally located 1 or 2 kilo meters away from their place of business, so that they can come in time (4.30PM) and go late night (11.00PM). Vendors are in the age group of 30-40 years and these people actively participate in purchase, preparation and distribution of chaat items. During daytime, preparations such as pani, puri and masalas are done at home. As these chaat items are popular through out the week, chaat vendors witness no holidays. In case of emergency holidays are availed by internal adjustment.

Table 5: Type of work and Pani Puri Chaat Vendors



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Type of work

Number of vendors

Full time 103

Part time 25


Chart 5: Type of work and Pani Puri Chaat Vendors

Table 6: Age details of Pani Puri Chaat Vendors

Age of the vendors

Number of vendors

10-20 0



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20-30 49 30-40 63 40 and above 16


Chart 6: Age details of Pani Puri Chaat Vendors

Investment and Profit Chaats vendors are found to be wide spread in prominent areas of Davangere. They are seen in places such as Ram & Co circle, gundi chowtry, mandi pet, PB Road, PJ extension, anjaneya lay out, old market Road, New market road, Moti circle, lawyer road, MCC colony, SS layout, dental college road etc., Such business are started using own personal finance or raising funds from private money lenders. It was also observed that majority of the chaat vendors are mobile and invested on an average of Rs. 15,000-Rs. 20,000 as set up cost. This cost includes ingredient carrier (mobile), plates, cups spoons, stools, stove, bucket, polythene bags and vessels etc. However, working capital is ranging from Rs 1,000-Rs 2,000 per day. Working capital is used for procuring vegetables and provisions. Daily turnover is in the range of Rs.2, 000 to Rs.3, 000. Mobile chaat vendors generally tend to earn a profit of 10-15% on their investment. The unit profit varies from Rs. 2 to Rs.3.

Table 7: Investment details of Pani Puri Chaat vendors



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Investment (set up cost)

Number of chaat vendors

Rs.5000- Rs.10000 12

Rs.10000- Rs.15000 31

Rs.15000- Rs.20000 74

Rs.20000- Rs.25000 9

More than Rs.25000 2


Chart 7: Investment details of Pani Puri Chaat vendors

Table 8: Working capital Details of Pani Puri Chaat vendors



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Working capital per day

Number of Chaat vendors

Rs.1000-Rs.2000 84

Rs.2000- Rs.3000 25

Rs.3000- Rs.4000 18

Rs.4000- Rs.5000 1

> Rs.5000 0 Total 128

Source: Survey Data

Chart 8: Working Details of Pani Puri Chaat vendors



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Table 9: Daily Turnover of Pani Puri Chaat vendors

Daily turnover


Less than Rs. 1000 5

Rs.1000- Rs.2000 38

Rs.2000- Rs.3000 66

Rs.3000- Rs.4000 12

Rs.4000 and above 7


Chart 9: Daily Turnover of Pani Puri Chaat Vendors



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Table 10: Pani Puri Chaat Vendors Profit Margin Details

Profit Margin per annum


Less than 10% 1

10%-15% 79 15%-20% 23 20%-25% 20 More than 25% 5


Chart 10: Pani Puri Chaat Vendors Profit Margin Details



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Table 11: Type of Vending Shop

Type of shop

Number of vendors

Mobile 101 Non Mobile 27 Total 128

Source: Survey Data

Chart 11: Type of Vending Shop

Ingredients Required ingredients to prepare pani puri chaats includes, puri, boiled potato, green lentils, tamarind chutney, masala items, pudina water, sweet water, Black pepper powder, Black Salt , clove powder , Cumin powder , Lemon juice masala paste etc., these ingredients vary based on the choice of the customers. However, the base item/ingredient remains to be the same across all the items of pani puri chaat that is masala.



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Operational Activities Chaat providers are expected to focus on quality and varieties to attract customer. It is found that minimum of 3 people are required to execute the task of preparation and distribution of chaat to customers. One is required to take the orders, 2nd one is required for preparing the chaat , 3rd one for serving ,cleaning and washing the plates. Waiting time observed is 1-5 minutes. Normally pani puri chaat business starts from 5.30 PM till 11.00PM. On an average vendors cater to 50-75 customers per day. Very few vendors were found providing catering services. Procurement of vegetables, Masalas and puris for the day is prepared in the morning. On demand of the customers parcel services are also provided. The ratio of spot/parcel order is in the range of 10:2. Non-mobile vendors are found to occupy space 150 -250 sq feet by paying rent in the range of Rs. 500-Rs. 800.

Chart 12: Frequency of Catering

How often catering is provided

Number of vendors

Daily 0 Weekly 30 Fortnightly 45 Monthly and more than that 53


Chart 12: Frequency of Catering



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Table 13: Spot and Parcel Order of Pani Puri Chaat

Shops Spot order/

Parcel

Market Road 10:2

Mandi pet 10:1

Ram & co Circle 10:3

Gundi choultry 10:3

Source: Survey Data

Table 14: Daily Visitors to Pani Puri Chaat Shops

Daily customers

Number of vendors

Less than 25 3



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25-50 27 50-75 58 75-100 38 More than 100 2


Chart 14: Daily Visitors to Pani Puri Chaat Shops

Consumer Profile Many of the customers go for pani puri rather than any other chat items. Individual chaat consumers are very few however most prefer to go with family members or friends. It is observed that target consumers belong to the age group of 18-30 and most of them come from middle class. Irrespective of occupation, all classes prefer chaats. During weekdays, it is found that working people dominate chaat centers while weekends family members are found dominating. It is observed that weekend business is more when compared to week days. And found that 25% of business comes from weekends. On an average consumers are found to spend Rs.100-Rs.200 every month and their frequency of visit is restricted to once in fortnight at least and it is also observed that many of the customers try new items.

Table 15: Average sales in a week (Week days and weekends)



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Shops Average sales per day,

per shop

(Monday – Saturday)

Average sales on

weekend, per shop

(Sunday)

Market Road 75 (plates) 100(plates)

Mandi pet 50(plates) 75(plates)

Ram & co Circle 90(plates) 120(plates)

Gundi choultry 100(plates) 130(plates)

Source: Survey Data

Table 16: Daily Spending of the customers on Pani Puri Chaat

Amount

Number of

customers

Less than 100 10 100-150 80 150-200 80 more than 200 10 Total 100

Source: Survey Data

Chart 16: Daily Spending of the customers on Pani Puri Chaat



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Inventory Maintenance Most of the business require inventory for their operations and pani puri is not exceptional. This business of pani puri calls for inventories such as sev, Puri, maslals and vegetables. The survey feed back has prompted us that vegetables are procured once in a week and leafy vegetables are procured daily basis and stocked in refrigerators. Special care is taken for inventory such as sev and puri to stock them under air proof polythene bags to maintain crispiness and crunchiness. These factors are vital for delivering quality chaats to customers. Other ingredients procured on monthly basis. Strategies It is found that each vendor has unique and distinct strategy to attract customers. Prices are found to vary among vendors. However, the variation observed is small and is in the range of Rs.2- Rs.4 and spot orders are more than parcel orders. By buying ingredients in bulk and through better negotiations, vendors are able to control cost and improve profit margin. Some vendors stand tall themselves from others by providing quick services, thereby reducing waiting period while others back on hygiene perspective. Even size of the puri and stuff that goes into puri becomes discerning factor for some of the chaat vendors. Some vendors even try new assortments to attract customers. Welcoming guests providing seating arrangements, extra poori’s for kids and loyal customers, forgoing changes are some of the strategies adopted by smart vendors. And also pani is given as complementary for the entire customer. Vendors are also found to target prominent places of public and book their places to cater to customers.



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Table 17: Rate Details of Pani Puri Items at different places at Davangere

Items Price at

Market

Road

Price at

Mandi

pet

Price at

Ram &

co Circle

Price at

Gundi

choultry

Price at

Nituvalli

Pani Puri 5 5 7 6 6

Masala Puri 7 7 10 10 10

Sev Puri 8 8 12 10 10

Alu Puri 8 8 10 10 10

Dahi Puri 8 8 10 10 10

Tamoto Puri 8 8 10 9 9

Kachori (single) 7 10 12 11 11

Kachori (double) 14 - - - -

Bhale puri 8 9 12 9 9

Mixure 12 11 12 10 10

Source: Survey Data

Competition Competition is all pervasive, and hence pani puri vendors are not spared. Other small busines such as mirchi, vada, mandakki (pava), samosa, chips, rajstani chaats, dosa’s ,idli’s gobi manchuri specials, fish fries, omelets, noodles etc.,. Are also into the business of providing brief supply of energy during evening time. As hunger can be met in different ways all generic businesses eye on the valet of customer. However, it is learnt that competition is not so stiff between the players of Pani Puri. Simple reason is that two same vendors do not converge at the same location. It may be a lobby to send the other similar vendor to different locations so that their businesses are not hampered.

Some Problems faced by Pani Puri Chaat Vendors Unavoidable Roll calls: Local area police demand unceremoniously each day commission/haftha from chaat vendors.



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Biting Competition: Now-a-days many mirchi-mandakki shops are coming-up in Davangere and the items are available at cheaper rates than pani-puri items. Many people are tempted to purchase and eat mirchi mandakki than pani puri chaats. Problem of Nomads: Mobile chaat vendors are not allowed to keep their mobile tripods/easels in front of any shops. Since people jam their places and shopkeepers feel like their places get polluted, mobile chaat vendors always forced to search for new places to run their business. Conclusion From the above discussion it can be concluded that pani puri chaat businesses has become a bread earner and livelihood for few families. It is set to flourish in the coming days as the craze of the customers towards chaat items is ever increasing. As working women population is on the rise, affordability of the family has increased giving an opportunity for such businesses to flourish. Moreover, chaat business can be enabled with low investment and low skills. Though quality and hygiene factors are of at most importance, pani puri businesses in Davangere is yet to realize these aspects in totality. Meanwhile variants are many; it can be targeted for all segments of the population. As evenings are some sort of get together for youths and working population, it has become a trend to hang around chaat centers. References: Guptha, R. (2008), ‘Indian food market set to double by 2025’ The times of India, 29th July, p. 5. Makgosa, R. and Mabalane, N. (2011) ‘Fast food purchase behaviors in Botswana- an exploratory study’, Indian Journal of Marketing, 41, pp. 23-30. Pani Puri, http://www.eatoutzone.com/PaniPuri.htm (Accessed 4 February,2015) Street Food in India, http://www.bharatonline.com/travel-tips/street-food.html( (Accessed 2 February,2015)

Appendix: Research data through questionnaire Phase 1 (for vendor) Name: Sex: Age: Education: Address of the shop: 1. Items prepared by vendors?

a) Panipuri b) Masalapuri c) Sevpuri d) Bhelpuri e) Kachori f) Alupuri



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g) Kachori double h) Dhaipuri i) Samosa j) Mixture k) others _______________

2. Which one sold more? Rate the above items? 1st, 2nd, 3rd, basis

a) Panipuri b) Masalapuri c) Sevpuri d) Bhelpuri e) Kachori f) Alupuri g) Kachori double h) Dhaipuri i) Samosa j) Mixture k) others _______________

3. What is the initial investment?

a) 5 – 10 K b) 10 – 15 K c) 15 – 20 K d) 20 – 25 K f) 25K >

4. Daily turnover?

a) <1000 b) 1 K – 2 K c) 2 K – 3 K d) 3 K – 4 K e) 4K and above

5. What is week day’s turnover in each day? And what is week ends turnover? Average Week days turn over _________

Average Week ends turn over _________

6. What is the average %age do u keep as a Profit margin? a) < 10% b) 10 – 15% c) 15 – 20% d) 20 – 25% e) > 25%



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7. Job of vendor full time or part time?

a) Full time b) Part time If part time please mention what other occupation u do in day time ____________________

8. Details of the inventory stock?

a) Puri b) Sev c) Chat masala’s d) Vegetables e) Others

9. What are the precautionary measures do you take for your inventories to keep in

taste? a) ------------------------ b) ----------------------------- c) ________________________ d) ________________________ e) __________________________

10. Whether do you buy the things or you only prepare which is required for pani puri preparation?

If you buy please mention the name of the things and from where _________________________________ How often do u buy items which is required for chat _______________ If u prepare please mention the name of the things____________________________--

11. How many Number of customers daily visit to shop?

a) < 25 b) 25 – 50 c) 50 – 75 d) 75 – 100 e) > 100

12. What is the ratio of existing & new customers?

a) 1:1 – 5:1 b) 5:1 – 10:1 c) 10: 1 – 15:1 d)15:1 – 20:1

e) >20:1



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13. What is the community of vendor? ________________--

14. You are from which place? ______________

15. What made you to start this business? ___________________

a) Less investment b) interest c) support from somebody b) Other__________

16. What are the unique strategies used by the vendor to sell their items?

a) Taste difference b) Quantity c) Cleanliness d) others 1._________ 2.___________ 3._____________

17. Business started individually or partnership? If in partnership, then with whom …………………

18. Vendor has only one shop or more than one, If so, where is the location & why? Please mention the location of the shop__________ What is the reason for choosing this place? _____________ If you have more than one shop, please mention the name of the streets______________ and why that particular place is chosen___________________

19. Did they choose any other place before starting their business?

a) Yes b) No

If yes in which place you were having your shop ___________ Reasons for changing the shop __________________

20. Do they provide catering service, If so how frequently you get order & for what are

the items he gets usually?

a) Daily b) Weekly c) Fortnight d) Monthly



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Please mention the name of the items you get order usually for catering ________________________

21. When is the rest day for vendor?

22. What is the ratio of on spot order and parcel?

23. What is your daily working capital?

a) 1000 – 2000 b) 2000 – 3000 c) 3000 – 4000 d) 4000 – 5000 e) >5000

24. Working Times ___________________

25. Number of employees in the shop?

a) Service___________ b) Service______________ c) Service ________________ d) Service______________ d) Service___________________

Phase -2 (For customers) 1) Please mention your name : Age: _________ Sex: ____________ Occupation: _____________ 2) Which items do you like most? ___________ And why? __________ Please give rankings for below items as per your preference a) Panipuri b) Masalapuri c) Sevpuri d) Bhelpuri e) Kachori f) Alupuri g) Kachori double h) Dhaipuri i) Samosa j) Mixture k) others _______________



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3) What is your average waiting time to get your ordered item ______________ 4) Please mention your frequency of visit to chat? a) Daily b) weekly c) fortnightly d) monthly e) Occasionally 5) Please mention your monthly expenditure for chat (PP)? a) <300 b) 300-500 c) 500-700 d) 700-1000 e) >1000 6) How often do you offer new items? a) Daily b) weekly c) fortnightly d) monthly e) Occasionally 7) Please mention(tick) your opinion about services a) Clean b) taste c) quality d) others ___________________ 8) What more do you expect from the vendor? _________________________

“is chaat business gaining momentum? – a case study of...

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