Fruits and Vegetables Sourcing at SMHC: Benefiting from Perfect Competition?
On August 24th 2015, Seetha Sivakumar (Seetha) and Malini Raj (Malini) – friends, ex-colleagues and partners in their new entrepreneurial venture – were sitting at Seetha’s residence in Hyderabad, discussing the plans of their upcoming food outlet – SeeMa’s Home Cuisine (SMHC). They had plans of launching their food joint on October 1st 2015. In the run up to the launch of their new venture, the two partners held meetings every day, discussing and debating on the various aspects of their business.
They visited several restaurants, met the restaurant owners and found out the business dynamics of restaurant business along with Critical Success Factors (CSF). The CSF on the cost side were the raw materials (fruits, vegetables, cereals, spices, oils, chicken, mutton, etc.) and the cost of chefs. The revenue side CSFs, they identified, were the quality of food and service and the wholesome experience. Accordingly, they planned out their investments and lined up people and resources.
While there was an agreement on everything else, they could not reach a consensus on procuring fresh and cost-effective fruits and vegetables. During their meeting on August 24th, the two business partners had an interesting discussion on the Rythu Bazars1, the source of fruits and vegetables........
1 Rythu Bazars are farmers’ market run by the State Governments of Telangana and Andhra Pradesh for small farmers with small landholdings.