Rohan Mirchandani, Founder of Drums Food International and CEO, Hokey Pokey Ice Creams, speaks on building a brand and how to avoid making mistakes in the business, with Nivedita Jayaram Pawar
You were a banker much before you decided to enter the ice cream segment. What brought about the transition?
I always wanted to be an entrepreneur. But it was while working for S&P CVC (now Duff & Phelps investment bank), that I realised that a career in finance was not my thing, and that my core passion was brand building. But I didn’t start immediately with ice creams. In fact, my co-founder Milap Shah and I wanted to come back to India and do an Infosys-like venture in technology. But it didn’t pan out. However, a new idea began to brew. Around that time, the concept of ‘create your own ice cream’ was gaining credence in the United States and we thought of doing something similar in India. We opened the first outlet in Bandra (opposite Bombay Blue) with an investment of Rs 25 lakhs.
What’s the concept behind Hokey Pokey?
Hokey Pokey is about creative expression. Beyond just simply making your own ice cream, we believe that Hokey Pokey brings out the child in all of us as we mix and mash and make these gooey and fun creations. We want people to just have fun with ice creams. Apart from our own toppings, we encourage people to mix things up and come up with their own creations. We have a mix-and-match range, wherein the base is an ice cream flavour (for instance, chocolate, vanilla or coffee) and the toppings include cheese, cookies, brownies, Kit-Kat, fruit such as strawberry, or Indian sweets such as gulab jamun. We have a live kitchen counter format, allowing customers to create their own dessert.
You have had a few teething problems.
When we launched the brand in 2008, I could spend only a year in setting it up as I had to go back to the US to work in the family business, and I even went on to do MBA at Wharton, University of Pennsylvania. Hokey Pokey, in the meanwhile, continued to operate much like a side business; it was run by managers, and once a month I remote controlled the functioning from the US. Although we had expanded to 5 outlets, we had to close down some poor performing ones, and even considered shutting the entire business.
What made you sustain the business?
I started thinking seriously about Hokey Pokey whilst studying MBA. It was during a lecture by guest professor Sripad Nadkarni (former CMO at Coca Cola) that I had my Eureka moment. What he said resonated with me, and I realised that business wasn’t just about selling products but about building a brand. India, historically, is going through a transformation much like the US in the 60s and 70s when institutions like Burger King and McDonald’s exploded into brands. I spent my last semester understanding what it means to build a brand. I shifted base to India in November 2012, so, for me, Hokey Pokey is still a start up. Interestingly, the guest lecturer (who influenced me) has become an investor in the company.
What lessons did you learn from the initial mistakes?
We made every mistake that one could possibly make! Out of 10 fingers, I burnt nine! We were very young then and were driven more by passion than by business acumen. Just taking a huge and prime location and not knowing how the Indian system works was our first mistake. After the first year, the property’s owner asked for a 25 percent hike; now we are careful before signing long-term leases.
The other mistake we made was to focus only on the product. We never gave any importance to the brand or to the customer’s experience. We assumed that a fantastic product would sell itself. But it took a very expensive business school education to teach me otherwise. We learnt that branding is a big part of a product’s experience and execution of the business. Once we changed the visual exposure and experience of our brand, people began to enjoy our product much more.
Another mistake was that we were not involved actively – only as and when needed. It was not a full time business for us – a mistake that many make. What I learnt was that if you are going to build something from scratch you better be involved 100 percent in the process. Just having an idea and hiring someone to implement it does not work. Today, passion still drives me, but there is also a vision now.
What are the challenges today?
Staff is definitely the biggest challenge. But beyond the challenge of getting good people it’s about transforming the not-so-good people into a solid manpower. I believe that more than education or a skill set, it’s about passion, which is the ‘horse power’ of any business, and we try to bring in such people. People want a 50 percent hike just after a year; some move on as soon as they have our brand on their resume, which makes us a feeder for the industry. Initially, we invested in getting bartenders to train the staff to flip ice creams in the air, juggle, and do other things, but after being trained, they would leave us for bartending jobs!
Another major challenge is to be extremely innovative as a brand. Many brands in the ice cream segment can afford to spend Rs 45 crore a month on brand building, but we don’t have that kind of budget; we rely on social media to send across our brand message to consumers.
Hokey Pokey has a huge following on Facebook and Twitter, all of which is organic in nature. How did you achieve this?
We began by sharing a wonderful story on our Facebook page – every morning. These were positive stories that resonated with our audiences. We also started sharing cute and funny pictures with the idea of not only talking about our brand but also to bring some value to the people or at least put a smile on their face. On Twitter we did a much more scientific campaign. In the early days, we were keen listeners. If someone said they’d had a great dinner, we’d recommend an ice cream dessert at a Hokey Pokey parlour nearby. We also went a step ahead and identified influencers and started talking to them. Few of them were invited to try our parlours to create a personal flavour. Because it was an interesting concept, it got photographed, tweeted and shared. Today, we have 1.2 lakh followers on Facebook and 1,500 followers on Twitter. It’s all organically grown and we have not spent a rupee. No matter if you are a start up like us or a Rs 1,000 crore company, the owner of the brand has to personally play a role in the social media.
You entered the FMCG business recently.
Hokey Pokey is all about ‘make your own creations.’ People don’t come to Hokey Pokey to eat a plain vanilla scoop. They come for the mixtures – vanilla with Kit Kat, Oreos, Twix, fudge, fresh mangoes, gulab jamun, etc. The same creations that we make live at our parlours are now also being made at the factory and packaged for retail. Our parlour concept is inspired by the stone ice cream concept but our FMCG concept is inspired more by Ben & Jerry’s (a popular American ice cream company, founded in 1978 in Burlington by two friends named Ben and Jerry. The company was later bought over by Unilever in 2000). Cold stone concept is an interactive ice cream experience where customers can mix ice creams with a wide range of ingredients (mix-ins and not toppings) on a frozen cold stone. The ingredients are actually mashed into the ice cream to create the flavour.
We are the first Indian ice cream brand to be present at Godrej Nature’s Basket stores, and have also signed up with Foodhall. We work with four distributors to get our products to about 20 retail shops and some mom and pop stores. We will soon be available in about 250 retail outlets in Mumbai, Thane and Navi Mumbai. Currently, the parlours comprise 80 percent of our business and the rest 20 percent is food and grocery stores.
Tell us about your production facility.
Our 7,000 sqft facility in Kurla, Mumbai is ISO 22000 and HACCP certified, and there is an in-house lab for testing for contaminants and bio chemicals. Our ice cream brand is the first to be FSSAI certified. We source milk for our icecreams directly from dairies, and we have two company owned vehicles for transportation. Our natural fruit-flavoured ice creams are 100 percent vegetarian offerings.
Indian palates vary from region to region. How do you localise your offerings?
We encourage our customers to mix and match pretty much anything, and if it works we encourage other customers to try the mix and even include it in the menu. We have mixed mango ice cream with Gujarati pickle chundo and it tastes fantastic. Right now, we are focussing on fresh mangoes. We even have mixes like strawberry cheese cake and gulkand. Going ahead, we will select local and regional sweets depending on the outlet’s location. For example, we plan to mix Bengali sweets on the stone with ice cream when we open an outlet in Kolkata. In Delhi, we intend to mix halwa. In other cities, we may mix fresh fruits. The options are endless.
What is your retail presence currently?
We have 24 outlets in all. Our business model includes company-owned stores, partnerships and franchisees. Right now, six stores are company-owned; about 9 are based on the partnership model wherein we don’t pay rent but share revenue; and the rest are franchisees.
The plan is to expand in all these three channels. In places like Aurangabad and Nasik where we are doing phenomenally well, it makes no sense to have our own outlet. The local operator knows the market well and advises us about the local palate. We are brand experts, not local experts. In Delhi and Bangalore we will open own stores; but in markets like Sholapur and Kolhapur we will invite franchisees. Right now, we are present in Mumbai, Nasik, Pune, Aurangabad and Indore: Bangalore and Delhi will follow next.