When Mad Over Donuts (M.O.D.) made its appearance in India, a few years back, doughnuts as a food category were largely alien to Indians. The only form of doughnuts which we would have eaten was the sugar-sprinkled bun that was sold in packs of two at the local bakery. But, with its innovative flavors and good looking donuts, MOD now occupies a special place in our hearts. YourStory met the man behind the brand to understand the mechanics of building a new food category.
A love so great
Lokesh Bharwani is the founder of Mad Over Donuts (M.O.D.) and this is his first entrepreneurial outing. Lokesh took a course in entrepreneurship in US and then did 2.5 years compulsory military service in Singapore, before turning an entrepreneur. Talking about starting out, Lokesh says his education in the US introduced him to donuts. “In the US, donuts are eaten as a breakfast or anytime snack. And I just love them. However I also realized that as a food category it was absent in Asia,” reveals Lokesh. While other Western food items like burgers and pizzas had made a good impact on customers here, donuts were still nowhere on the radar. Lokesh’s love for the product made him decide to take the plunge and that was the beginning of the journey.
Lokesh says, he did not do any market survey or opportunity assessment, but directly dived into product and brand development. “After college, when I came back to Singapore, I realized that donuts were absent not just in Singapore, but even most parts of Asia. So I thought it was a good opportunity to introduce the concept, and in case it didn't work then at least I would have good donuts to eat,” says Lokesh candidly. He also says that if he would have invested time to understand and evaluate the market, then it was likely that he would never have done it.
The product development took good one-and-a-half years; and, despite having expert chefs to make the doughnuts, Lokesh himself learnt the craft by doing a five-day course from the US. Top specialists in bakery and brand consultants in Singapore were brought on board and the initial one-and-a-half years were spent in developing the product and brand identity for MOD. “We had a donut ready within 3 months of starting, but we didn’t want to launch an average or better than average product. We wanted to launch the best product and that’s why a lot of time and effort was spent to make it possible,” says Lokesh.
The Indian connection
Lokesh’s family had moved to Singapore immediately after India’s partition. Originally from Sindh, his grandfather had businesses in Indonesia and other parts of Asia, and Singapore was chosen for its central location. While he had the option of any country in Asia, he decided on India for the launch.
Since its official launch in 2008, MOD today has 50 outlets across various metros in India; and, according to Lokesh, metros will continue to be the focus for some more years as there is still a lot of ground to be covered. Currently, they are present in New Delhi and NCR, Mumbai, Pune and Bengaluru. His choice of Indian market for launching MOD was because he wanted to deal with a difficult market like India first, before going into other markets. And difficult it was, at multiple levels. “In Singapore we are used to doing everything online, but here to even get a local SIM card they needed so many documents and there was such a lot of paper work, it was tough,” recollects Lokesh.
Despite the problems, the market opportunity India presented was much bigger compared to any other Asian country; and Lokesh says, from a personal point of view, that he wanted to deal with the difficult market first. His partner in demystifying the Indian market was his wife – also a Singaporean citizen – who was also among the earliest employees of MOD. “We both moved to India, to set up the business and build the brand,” says Lokesh. Lokesh and his wife took care of the operational part of the business, while product development was handled out of Singapore.
MOD mostly has outlets in high streets or malls and Lokesh says the reason for this choice of location was because of the customers they were targeting the product at. “Reasonably well travelled, experienced customers who would be exposed to the product category were out target. And the locations were also chosen according to that,” he says. While MOD has not invested in traditional mass-media, they are great believers of the digital space and most of the brand communication and customer engagement has been in the online space. Another important tool in brand building has been product sampling and education. “Whenever we go to a new location, many people come to us asking what is a doughnut. We encourage them to try the product, because we believe our product is so superior that people will not have any questions once they try it,” says Lokesh confidently.
Another innovation they did very early in the day was to make MOD doughnuts eggless – thereby making sure the vast majority of Indians who prefer eating vegetarian fare automatically turn customers.
While donuts continue to be the main focus for MOD, plans are also afoot to introduce cup cakes into the menu, says Lokesh. The option of home delivering the product is also in the offing. Geographically, Tier 1 cities in India continues to be the focus for the brand and Lokesh says there is still a lot of ground left for them to cover in India, before they can look abroad. “If we were to turn on the franchising option, we will grow numbers in no time, but we want to be sure that the quality of product we offer is always top class,” he reemphasizes. Therefore looking at international expansion for MOD is still sometime away, he says.Lokesh says that brand is growing very well, but refuses to share revenue figures with us. Couple of years back, MOD tied up with Mirah Hospitality in Mumbai to help tackle the local market challenges they were facing. “The partnership is more of a strategic partnership, because it helps us understand and deal with local market problems in a much better way,” admits Lokesh. He says they should probably have brought onboard people who understand the local market better much earlier into the team, because that would have helped eliminate a lot of goto market problems that MOD faced in its early days in India.
Talking about the challenges he faced in the business, Lokesh says there have been many along the way. From hiring the right people, to getting the store location right, every step was a challenge. “Entrepreneurship is never easy, but taking the right lessons out of every challenge is the most important thing. It has been a very challenging and exciting journey for me, which has improved me both as an entrepreneur and a person,” he says.
He is happy about the entry of brands like Dunkin Donuts and Krispy Kreme in India, which he says will help improve customer awareness of the food category and held grow the space. “For any food category, there is always room for 2-3 brands to operate and grow well and I hope the entry of these international brands will help improve awareness of donuts as a category among Indian customers,” says Lokesh.