34% of startups fail due to lack of product-market fit. Learn how to avoid it for only $15!

❌ Failed startup
✅ Successful startup

The Punjab Kitchen: Failing to Overcome Competitors Prices

Amit is a hard-core sales professional, who decided to set up a home-made food business with his wife. They started investing $1,200/month to set up the startup and get the first customers. However, once running they had to confront a big problem: the prices of their competitors were much lower. After some pivots, they decided to shut it down.

India
Food & Beverage
Competition

Amit Gogia

August 30, 2018

Sponsor Failory and get your business & product in front of +20,000 CEOs, startup founders, entrepreneurs, developers and marketers every month.

Do you want to grow your business? With GenM you can get free marketing from an apprentice as part of their training. The student will work 40 hours per month creating content, increasing SEO rankings, carrying out advertisement campaigns...

Want to take ownership over the growth of your business, but don't know where to start? Get 1-on-1 advice from vetted growth experts about your business.

Feeling stuck with your startup and not sure what to do next? Join to get free personalized advice every week from the CEO at Headway. Sign Up for the Live Stream

A 5-minute read that's informative, witty and free? That's Morning Brew — the daily email that delivers the latest news from Wall Street to Silicon Valley.

Hi Amit! What's your background, and what are you currently working on?

I’m a hard-core sales professional and, although I have never worked in the food & beverage sector, I was able to utilize my skills from healthcare in building a new F&B brand.

At the back of my mind was the assumption that if the fundamentals were correct, then the industry didn’t make a difference.

The main idea came into place mainly because my wife is a fantastic cooker, and she was constantly receiving numerous feedbacks from family and friends who had tasted her cooking, telling her she should try to commercialize her passion.

We started brainstorming a few ideas. But we could easily identify a gap in the regular homemade food market, which most of the migrants living in our city (Gurgaon) were missing the most. It is perhaps impertinent to inform you that North Indians usually consume homemade meals including bread, lentils, vegetables, chicken, and meat.

So, after a few weeks, we started The Punjab Kitchen. As the name says, we were specializing in the cuisine from the state of Punjab, which the majority of the people in Delhi NCR are familiar with.

The business model initially was B2C with the intention of pitching to corporates (B2B) in the later stage. We wanted to cater to direct consumers who wanted to buy homemade measl, so our tagline was: “homemade food that fits your lifestyle”.

What motivated you to start The Punjab Kitchen?

Our motivation was to cover a missing solution in the market. Considering the gap, we identified, we had little doubts that we would face any difficulty (first error!).

As my wife shared the real passion for the sector, she was in charge of the main operations of the whole business. Instead, I was the marketer and the logistics in charge (which was the backbone of the whole business).

Prior to TPK, I had held numerous positions within the corporate sector either as head of sales, marketing, or business development. But in either consumer or healthcare sectors, I did not ever have anything to do with F&B. I had little clue on what kind of challenges we would be facing there.

How did you build it?

Once we have decided that we were getting on this new project, I carried out a market research and found that it was completely fragmented between a few big organized players.

Anyway, we went ahead with the idea and created an online menu and got into contact with a few professionals from the F&B sector. One thing that was tricky to carry out was the design of a good packaging. It took me a lot of time to sort with multiple vendors.

We also designed some assets to promote our business, such as flyers, posters, banners and stands.

With the positive feedback on the sample tasting and menu, we were clearly ready to go. You can check our website here, and our marketing efforts on this Zomato article and this Facebook Page.

This whole process took us 3 months of intense preparation. This included the following steps:

  • Incorporation of the company.
  • Hiring a creative freelancer for branding.
  • IT outsourcing for the website.
  • Photo-shooting of food.
  • Menu finalization.
  • Building marketing assets (packaging, brochures, carry bags, posters, banner standees).
  • Outsourcing delivery and cook. We hired one for each.
  • Preparing a dress code for the delivery boy.
  • Negotiation with food platforms such as Zomato and Swiggy. Both websites are discovery platforms which help the customer find and order food from thousands of food shops.
  • Shortlisting influencer marketing partners for social media.

The whole process listed above lead us to the launch stage, which was clearly the fun part. The real challenges surfaced only afterward.

The pricing of our food was the biggest puzzle to solve. We were clearly not close to the market benchmark, the current price consumers were paying to get a meal, which was around 1$ (70 RS). Our competitors were selling the meals much lower than we. The only 2 ways we could solve this big problem was by achieving economies of scale, which meant to have thousands of customers so that our costs of producing a meal reduced, or to re-use the packaging of the delivered food. Both of them were not possible options.

After working out a basic profit margin, we decided to price our product at $2.5 (150 RS) the vegetarian meals and $3.5 (200 RS) the non-vegetarian meals.

GenM icon

Hire digital marketing interns. 40 hours for $49/month.

Learn More!

AD

Free Product Strategy Assessment for Your Startup

When was the last time you talked to a customer about your product or startup idea? A strong strategy is key to startup success. Get a free product strategy assessment and get access to actionable advice from the startup experts at Headway.

Free Startup Strategy Assessment 👉

Reach +20,000 Startup Founders!

If you are looking to get your product in front of founders, CEOs, VPs, web and mobile developers, makers, consultants, marketers, bloggers, product managers, and many other thought leaders, then we can help you.

👉 Sponsorships

Which were your marketing strategies to grow your business?

Publicity was another challenge as we had wasted much of our resources. We were only hoping to get traction either via newspaper inserts or Zomato AD inserts. Additionally, we created some banner stands for placements on corporates who had started taking our products. These are some of the marketing strategies we carried out:

  • Mass emailing: It obviously didn’t work.
  • Newspaper inserts: They didn’t work.
  • Our AD on Zomato brought some customers, but the ROI was not justified. We ran lots of campaigns making permutations and combinations with various categories under the Zomato platform for a year, but the results were still not justifying the costs.
  • Facebook Ads didn’t work. We did get likes but they did not convert into customers. Within the first year, we reached 9K likes on our page.
  • We invested the most on food bloggers by sampling them free food to ask for genuine reviews and ratings on Zomato platform. This definitely worked for us in spreading the word around. Within the first year, we had reached 4.3 rating out of 5 on Zomato.

Which were the causes of The Punjab Kitchen failure?

Price was our biggest barrier to dominate the market. The competition was available at half of the price. We didn’t have a much better product. And the packaging was good, but the customer perhaps didn’t care too much about it.

We wanted to get some benefits from the economies of scale, but we couldn’t scale up instantaneously to drive the pricing down.

The signs were clear within the first year. The numbers were not growing the way we thought they should and the monthly payouts started to hurt us.

We tried several attempts to get a breakthrough on B2B. We tried to become vendors to corporates which bought the food for their employees but here we found that established restaurants were already hooked on.

It was indeed a sad moment to close as the plan was to grow internationally. But then, we couldn’t continue to bleed. The resources were minimal and after the first 12 months, we hadn’t even achieved break even.

Which were your biggest mistakes and challenges you had to overcome?

The major challenge was to create acceptability for our product at the price point. We could have overcome this challenge if we had the financial capability to run a campaign to educate the customer about the differentiated product.

The market is really price elastic, especially for the kind of cuisine we were offering. We could not have been successful at the price point at which we were playing without making some kind of changes either by on products, packaging or elsewhere in the value chain.

GrowthMentor incon

Grow your business. Get 1-on-1 calls with +100 mentors.

Learn More!

AD

Which were your expenses? Did you achieve some revenue? In the end, how much money did you lose?

We could not break-even after running for almost 18 months of the venture. Our expenses were more than revenues in short.

At the time of closure, we had only got $800 (50K RS) in revenue while we were burning $1,200 (75K RS) every month which included salaries of 2 full-time employees, marketing cost and other expenses. You have to consider, dollars in India are much more valuable than in the United States.

If you had to start over, what would you do differently?

To be honest, I would only jump into the game again if I had enough financial resources to start big and cover the expenses.

Although I had several thoughts at the time of closing that we might have succeeded in the B2B model, I now really doubt about that. Where I would now spend much less time and money is on branding exercise (we changed logo twice). Perhaps this was not given much weight by our customers.

Which are your favorite entrepreneurial resources?

I read about other entrepreneurs on various platforms, such as LinkedIn, YourStory, VCCircle and Tie.

Where can we go to learn more?

If you want, go and visit my LinkedIn profile.

✉️ Subscribe to our newsletter!

Invite us into your inbox and get immense learning and 80+ deals on tools to help you scale your startup (worth up to $50,000)!

Your subscription could not be saved. Please try again.
Your subscription has been successful.

👇 Other Interviews

How this Postcard Marketing Internal Tool became a $54k/mo Co
By 
Jordan Crawford
  •  
July 16, 2020
United States
Marketing
$25k-$100k/mo
Building a Growth Agency that Doubles in Size Every Year
By 
Mostafa ElBermawy
  •  
February 17, 2021
United States
Marketing
No Data
Swoop: Turning a problem into a transportation startup
By 
Amir Ghorbani
  •  
July 2, 2020
United States
Transportation
No Data
Bugfender: Scaling an Internal Remote Logger to €9,000/Month
By 
Jordi Giménez
  •  
February 21, 2019
Spain
Software & Hardware
$10k-$25k/mo
Dick At Your Door: Making $25k/month Selling Chocolate Dicks
By 
Adam Elliot
  •  
February 21, 2019
United States
e-Commerce
$10k-$25k/mo
MealSurfers: Exiting a $7K/Month Food Startup
By 
Ali Jiwani
  •  
November 3, 2019
Canada
Food & Beverage
$0-$10k/mo
Haptly: Failing to Build the Technical Product after 10 Months
By 
Nelson Shaw
  •  
December 18, 2018
New Zealand
Software & Hardware
Lack of Experience
Phez: Losing $29,014 Creating the Bitcoin-Rewarding Reddit
By 
Shanti Braford
  •  
June 24, 2018
United States
Social Media
Bad Business Model
Burning $125k building a gaming content site
By 
Kyril Kotashev
  •  
June 10, 2020
Bulgaria
Entertainment
Bad Market Fit
Teamometer: $3k invested, 2 years gone and a HR SaaS no one needed
By 
Sergio Schüler
  •  
March 19, 2020
Brazil
Software & Hardware
No Market Need
From $20k/mo to 0 - How incorrect market focus killed the encrypted Google Doc alternative
By 
Justin Hunter
  •  
October 1, 2020
United States
Software & Hardware
Bad Business Model
WedMap: From $100K Jobs to Failed Airbnb for Weddings
By 
Tauras Sinkus
  •  
May 30, 2019
Switzerland
Software & Hardware
Lack of Funds