From Shutting down His First Restaurant to Building Up a 200% year-on-year Growth Business - Here's Why He Made it to Entrepreneur India's 35under35
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Karan Tanna, Founder CEO of Yellow Tie Hospitality, started his entrepreneurial journey in the Food and Beverages Industry with the Gujarat-based chain “Kutchi King”. It grew to 200 stores in a course of time. But the growth of “my brand was not sustainable”, admits Karan Tanna, “and there were a few mistakes that we had made”. Despite being the second largest populated country in the world, India didn’t have any home-grown brands with over 1000 stores – the fact struck Karan. “This drew my attention to a huge gap in restaurant franchise management. This particular fact and the opportunity to disrupt it formed the basis of my company, Yellow Tie Hospitality,” says Karan Tanna.
The Highs and Lows of Karan Tanna’s Entrepreneurial Journey
The 31-year-old’s entrepreneurial journey was no cake walk. He opened his first restaurant Goodies in Ahmedabad, Gujarat. “I had to shut down Goodies as I had certain troubles in my partnership. That was probably one of the low phases of my entrepreneurial journey,” says Karan Tanna. Because of his ‘never-give-up spirit” Karan continued his entrepreneurial journey in the F&B world and opened Kutchi King, the brand that took to 200+ stores in India, the Yellow Tie Hospitality followed later.
Yellow Tie Hospitality was launched in January 2016. It began with signing up an American brand Genuine Broaster Chicken. Within one year of its inception, the restaurant franchise management company grew to a team of 20 and 25 stores of Broaster Chicken across India. Karan’s past experience in the restaurant business gave the fruitful results in the expansion and growth of the franchise management company. He designed a scalable model for Broaster Chicken - engineering the menu, having a centralised production warehousing and a supply chain partner, focusing on recruitment, and training of outlet-level resource.
Initially, in the first two years, Karan Tanna focussed business incubation and brand acquiring process. “Now, we are looking at scaling all the brands at a rapid pace as we see the foundation of Yellow Tie has been built quite well and we have made mark across the country which gives us a basis to grow all the other brands in our portfolio in the same speed and making them sustainable at the same time,” says Karan.
What Makes Yellow Tie Hospitality Stand Out?
Speaking about the USP of his business, Karana Tanna says, “We have a very strong backend infrastructure in terms of experienced teams, supply chain and warehousing, R&D centre and a state-of-art turnkey software to manage our franchises.” Yellow Tie Hospitality manages everything related to a franchise - right from location and premise search to building the restaurant stores, recruitment, training, time-to-time new product introduction, social media and brand marketing; this leaves the franchise owner/entrepreneur to focus only on delivering the last mile consumer experience. This entire eco-system and partnership makes the franchise stores, and, hence, the brands sustainable.
“We focus on doing what we are best at, which is providing the brand support, background and the standards, SOP, recipe cards as a tool for franchise owners to follow, and they do what they are best at doing which is managing the store in entrepreneurial spirit which is best in that region. This makes our brand very different as well as sustainable,” adds Karan.
Catering to the Emerging Markets in India
Over the last three years, Karan Tanna’s Yellow Tie Hospitality has served more than 3 lakh customers and had sold 90 franchises, till date. Out the 90 franchises, 35 are under development. The franchise management company has its footprints across 20+ cities in India - Mumbai, Delhi, Chennai, Bengaluru, Hyderabad, Kolkata, Imphal, Lucknow, Patna, Pune, Gurugram, Surat, Ahmedabad, Vadodara and more. The brand has worked with 200+ entrepreneurs and successfully launched 60+ restaurants in 20+ cities, so far.
2018, A Pivotal Year
From the first fiscal year, Yellow Tie Hospitality was very healthy on EBITA. “We had re-invested in the company from the profits earned,” says Karan. Though the company has not raised any external funds yet, it will go with the external fundraising for the next phase of expansion.
2018 was a pivotal year for Yellow Tie Hospitality. “We kept on growing Genuine Broaster Chicken and took Dhadoom that was launched in 2017 to 20 outlets by end of 2018.” The company grew its portfolio to over 10 brands and now has a mixed bag of portfolio starting from international brands like Genuine Broaster Chicken, Just Falafel, Wrapchic and newly tied-up Taiwanese brand Chachago to the home-grown brands like Dhadoom, Twist of Tadka and BB Jaan.
The Growth and Expansion Plans
With a vision of producing the first home-grown international brand, Yellow Tie Hospitality launched its incubation centre in 2018. It aims to be a 100-store company by the end of 2019.
Yellow Tie Hospitality has seen 200% growth year-on-year and the EBITA remains constant between 22-25%. In the fiscal year 2018-19, Yellow Tie Hospitality will be doing revenue of 200% more than the previous year by maintaining the EBITA to approximately 35%.
Speaking on the growth plans Karan says, “This year we will see six brands from Yellow Tie Hospitality portfolio getting traction and hitting multiple outlets. A bit chunk of growth is going to come from Franchise owned, company operated outlets where we will be a couple of casual dining or bar concepts. We are very excited to operate the stores on our own (not franchise operated) and give adequate value to franchise investors.”