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INTERVIEW

“This fiscal, we are targeting growth of at least 70%”
Monday, 28 August, 2023, 08 : 00 AM [IST]
Bakingo is an online-based bakery shop that delivers bakery products such as cakes and desserts throughout India. The brand ensures to spread happiness and satisfaction to customers with the best quality cakes at every doorstep with on-time delivery.

Himanshu Chawla, founder and CEO of Bakingo, shares his views on the Indian bakery market, challenges, delivery apps, bakery products, and much more, in an email interview with Kimberley Almeida. Excerpts:

How has the Indian bakery market changed in the past few years?
In the past few years, the Indian bakery market has undergone significant changes with the emergence of new players and changing consumer preferences. The market has become more organised and is witnessing an increasing demand for premium and healthy bakery products. Technology and innovation have also led to the introduction of new products and flavours, which have attracted a broader consumer base. Additionally, the growth of e-commerce and online delivery platforms has further boosted the market by making it easier for consumers to access bakery products.

Which are the popular product types in the Indian bakery market?
According to a recent market analysis report, the Indian bakery market is experiencing a surge in demand for new experimental products when it comes to different categories of bread, biscuits, cakes, and pastries. These new and popular product types are driven by increasing urbanisation, changing consumer preferences, and the growth of organised retail. The report also highlights a trend towards healthier and premium baked goods, as consumers become more health-conscious and willing to spend more on high-quality products.

Tell us about your products and which are the most popular ones.
Our wide range of products caters to the diverse needs of our customers. They’re made with high-quality ingredients and are available in various sizes and flavours to suit individual preferences. Among our range of products, some of the most popular ones include the Biscoff Cheesecake, German Blackforest, Choco Nutella Hazelnut Cake, Belgium Chocolate Mousse Cake, and of course our various types of Cheesecakes wherein the Blueberry one is loved the most. Our Brownies and Truffle pastries are also one of the bestselling products.

What are the key driving factors and challenges in the Indian bakery market?
The Indian bakery market is constantly evolving and being driven by factors such as changing consumer lifestyles, increasing urbanisation, and the growth of organised retail. Rising disposable incomes, a growing young population, and the influence of Western culture are also contributing to the market's growth. However, challenges such as fluctuations in raw material prices, high competition, and changing consumer preferences towards healthier options are hindering the growth of the market.

What are the factors that set you apart from competitors?
As a company, we pride ourselves on various factors that set us apart from our competitors. We have built a sophisticated supply chain and logistics system, which starts from our state-of-the-art 15,000 sqft central kitchen. This gives us economies of scale and higher production capacity during peak seasons. Most of our processes have been automated, resulting in less than 1% wastage, and we have 24 fulfilment centres through which we deliver using our own delivery crew and aggregators. Additionally, we have 40 dark stores dedicated to food aggregators like Swiggy/Zomato. Our supply chain has helped us achieve a maximum fill rate with only 1-day inventory holding. This is why we are the preferred brand of choice on Swiggy/Zomato and online across multiple locations.

Another factor that sets us apart is our superior unit economics. We have focused on building a business model that is efficient and sustainable in the long run. We offer convenience to our customers by providing a seamless ordering and delivery experience. Our consistency in delivering quality products is reflected in our wide assortments of quality products at value pricing. We have exceptional service with multiple locations, and we offer late-night and early-morning deliveries. Our consistent customer experience is demonstrated in our customer satisfaction (CSAT), which is above 90%, and 99% of our complaints are closed within 24hrs.

We have adopted superior technology to enhance our customer support experience by enabling chatbots that resolve the majority of our complaints promptly. This has resulted in aggregate ratings across Swiggy, Zomato, and Google of 4+. Our business model and capital efficiency have allowed us to focus on building a sustainable and profitable business while maintaining high-quality standards.

In summary, our sophisticated supply chain and logistics, superior unit economics, convenience, consistency, wide assortments of quality products at value pricing, exceptional service, multiple locations, late-night and early-morning deliveries, consistent customer experience, superior technology, and sustainable business model and capital efficiency are some of the factors that set us apart from our competitors.

What are the profit margins in the Indian bakery industry?
The profit margins in the Indian bakery industry depend entirely on the target audience or customer segment that the business is focusing on. If the bakery is a premium business targeting high-end customers who are willing to pay more for quality products, then profit margins can be expected to be in the range of 20-25%. However, if the bakery is a value-driven brand with a focus on scale, the profit margin can be anywhere between 15 and 20%.

It is important to note that the bakery industry is highly competitive, and profit margins can be impacted by a variety of factors, including raw material costs, labour costs, rent, and other overhead expenses. Additionally, factors such as location, brand reputation, and marketing strategies can also impact profit margins.

Therefore, it is important for bakery businesses to carefully analyse their target audience and customer segments and tailor their business strategies accordingly. By understanding the needs and preferences of their target customers, bakeries can better manage costs, optimise pricing strategies, and ultimately achieve higher profit margins.

How has your company faired since its inception?
Our company has been bootstrapped and profitable since inception, with a focus on good unit economics and high capital efficiency. We are proud to have achieved over 100% growth since the last financial year, which is a testament to the effectiveness of our business model and the hard work of our team.

What was your last fiscal year like and what are you looking at this fiscal?
We are pleased to report that our last fiscal year was a resounding success, with over 100% growth driven by our superior business model and efficient operations system. Looking ahead to this fiscal year, we are targeting a growth of at least 70% compared to the year '22-'23. Our focus will be on expanding to tier 2 and tier 3 cities, which we believe presents a significant growth opportunity for our business. Leveraging the strong foundation we have established and our successful replication of models in tier 1 cities, we anticipate faster expansion with lower capital requirements. We remain committed to our mission of providing high-quality products and exceptional service to our customers, and look forward to another successful fiscal year ahead.
 
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