Ashish Kapur on how the Yo! China chain came about

Ashish Kapur spent months researching the fast-food business before launching his Yo! China chain.

Birth of an idea: When the first Yo! China restaurant opened in May 2003, it was sometimes shut for a few hours during the day. The reason? The restaurant would run out of food. "The response was phenomenal. We were stumped," says Ashish Kapur, managing director of Moods Hospitality which started the Chinese fast food chain.

Kapur was working with GE in the US as part of their global leadership programme when in 2002 the idea of starting his own enterprise struck him. "I really wanted to give entrepreneurship a try. Since I was young and well qualified, even if my venture failed, I could go back to a job. So I took the risk," he says. The instant success of his first restaurant was the result of a lot of planning and hard work.

First, of course, was being sure that being an entrepreneur was not a passing fancy. Then he had to zero in on the business he wanted to create. The Indian economy was booming and after exploring business opportunities in India (he even considered a low-fare airline), Kapur decided on a fast-food chain.

Ashish Kapur, 31

Education: BE, McGill University, Quebec, Canada

Last job: GE Capital, US

Last salary: $35,000 a year

Time spent as employee: 4 years

Age at starting business: 26 years

No. of years as entrepreneur: 5 years

Initial investment: Rs 70 lakh

Sources of fund: Angel investors

Company: Moods Hospitality

Turnover: Rs 50 crore (estimated for 2007-8)

No of employees: 600

The organised retail sector was about to take off and food seemed to be a sound choice. No one else, apart from McDonald's and KFC, were even attempting it in India. The best part, says Kapur, is that he is a foodie: "I love food and was bound to love doing business in food."

Working on the idea: The choice of Chinese cuisine was based on facts and gut instinct. Kapur rattles off statistics. Chinese is the second most-ordered cuisine by families across various types of restaurants. Among youth, it is the top choice for eating out.

"Between street hawkers and fine-dining restaurants, there was nothing that offered wholesome Chinese food at reasonable prices. That was my market," he says. Quality food at budget prices, quick service, trendy ambience-that's the combination that distinguishes Yo! China restaurants from the competition.

After eight to nine months of working on the idea alongside his job, Kapur finally quit GE Capital in 2003. No one in his family had ever ventured into business. "They were appalled by my decision," recalls Kapur. Worse, in a few months Kapur was getting married. Thankfully, his fiancee was working so running the household wasn't a major issue. Moreover, she supported his idea.

Out of job, Kapur continued to study the profitability of food chains, the business models of the successful ones and how they functioned. He worked in the kitchen of a restaurant to get a feel of the food business. Alongside, he prepared a business plan. Then began the round of visiting investors.

"My first plan was unceremoniously dumped. In fact, in the course of meeting with investors, the plan was revised many times," he says. Kapur's business required so much money that financing it personally was out of question. In the US itself he had met a number of investors for financing his idea. Though he did not succeed, their inputs helped him fine-tune his plan.


Tips for starting a fast food chain

Research: Kapur spent months studying the restaurant business. It is important to know as much as you can

Get better people: Kapur hired people who knew more than him about aspects of the business

Don't compromise on quality: Cost cutting should happen everywhere. But Kapur made sure that the quality of the product did not suffer

Setting up: He struck gold in 2003. Three angel investors decided to pool in about Rs 70 lakh for the first restaurant and scale up as the chain grew. He also offered a stake in his company to a hospitality sector ace and a marketing professional from an airline company so that they could bring in their experience to his start-up.

From the beginning, Kapur bet heavily on getting the right people in his team. On a visit to a trendy Delhi pub, he was impressed by the way it was run and hired the manager-in-charge. Professionals were hired to design the decor, display kitchens, name of the chain and its tagline.

All through, the vision of a food chain was kept in mind-the design had to be simple, yet sophisticated, for it to be replicated across outlets and have an international feel. "We were aware that customers would be drawn not only to the food but also the ambience," says Kapur.

Finding the right chef turned out to be extremely difficult. Kapur sat through numerous kitchen tests till he found the one of his choice. About 40 people were hired for the first restaurant. The cost of equipment- sourced locally-was about Rs 10 lakh.

Dream start: The first Yo! China opened in Gurgaon in May 2003. Any memory of an early crisis? Kapur recalls: "We had invited 200 people for the trial run. About 600 turned up. Even Kapil Dev had to queue up for food."

To the promoters' delight, the situation repeated itself many times after they launched. Yo! China's first restaurant broke even in its first month. The second opened in December 2003. But not all restaurants were immediately successful. "In the beginning we would open an outlet in new malls. But that didn't necessarily result in footfalls. Now, we are more circumspect," says Kapur.

He and his partners study in detail the demographics of a neighbourhood before choosing a location. "The thinking behind such rigorous research is to be close to a catchment area. We don't want our regulars to drive for hours to find a Yo! China outlet. Instead we should be closer to them," he says.

With 20 restaurants (of which 11 are franchisees) in 12 cities, Kapur is still fine-tuning his strategy for expansion. "The requirements for scaling up are so different from starting a new restaurant. I've become an entrepreneur all over again," he says. He knows that retaining customer loyalty is difficult. But he hopes that a combination of good food and good experience will keep Yo! China a step ahead of the competition.