Wok Express: Small price change yields big results
The smallest change in the product pricing strategy can make a big difference in food retail business. Wok Express, a Mumbai-based Asian food QSR, realized within this few months of launching its Indian operations.
Aayush Agrawal, Director, Lenexis Foodworks told Retail Networks that initially the dishes on Wok Express’ menu began with INR 150. But it soon understood that customers don’t just buy on price; they also place lots of emphasis on value.
The brand, accordingly, tweaked its pricing strategy. Once the menu had options starting from INR 55, Wok Express could reach out to a larger consumer base, which resulted in significant increase in orders.
Building a brand from scratch
Lenexis Foodworks introduced the first Wok Express restaurant in Mumbai in May 2015. Talking about why they zeroed in on this segment, Aayush said, “Our research found that Chinese food was available in fine dine or casual dine restaurants where customers had to pay significantly higher rates. The other option was to eat at street side kioks, which were not very hygienic. The data also pointed out that after Indian fare, most people preferred Chinese cuisine.”
Seeing this gap, he decided to introduce Wok Express as a QSR brand offering Chinese rice and noodle bowls that consumers could have on-the-go. What also made this a compelling proposition for him was that the QSR segment has been registering rapid growth and is expected to touch 22% CAGR by 2021, as per IBEF.
What’s even more interesting is that 90% of this business is dominated by unorganized players, and a company like Lenexis Foodworks can entrench its brand strongly by providing premium food at viable prices.
A path of stepping stones
However, in the early months of its inception, Wok Express did fumble when it came to its product pricing strategy – something that Aayush admits to. “We made a lot of mistakes initially, where we had leakages on the operational front. Our prices were also very high, around INR 150 for a dish. So, we were able to cater only to a specific customer base in the market,” he recalled.
However, the company nimbly tweaked it pricing strategy and started the menu offerings from INR 55 to appeal to a much larger consumer base. This shift helped it fetch significant amount of orders.
“The most important aspect at least for our industry is product and the pricing. The two combined have 90% importance,” Aayush maintained. “Our aggressive product pricing and marketing campaigns worked phenomenally for us and within three to four months, we saw 100% growth in orders.”
The other important element is manpower. Currently, Wok Express has over 600 employees who are involved across its 35 restaurants in Mumbai and Pune. As with any other QSR, it too deals with talent issues like attrition. However, Aayush stated that by undertaking proactive steps like describing job roles better, the company is able to stem it to a great extent.
Digging in deep into retail
Wok Express has expanded its menu to include various Pan-Asian dishes like soups, baos, dumplings, chicken wings, appetizers and coolers. In Mumbai, these are prepared in its dark kitchen that caters to customers within a 3-km radius to fulfil orders received on various food delivery apps.
Since this dark kitchen helped it reduce overheads, Wok Express launched its second facility in Mumbai recently. This move was also necessitated to increase its capacity to serve the food delivery market, since almost 30% of Wok Express’ business comes from digital platforms as compared to dine-ins.
“For the past three years, we have been registering 130% year-on-year growth and currently our revenues are around INR 40 crore,” Aayush claimed. Having tasted success in the Pan-Asian QSR business, Aayush now wants to launch 200 new restaurants across the country within three years.
“We have different restaurant formats with the smallest one measuring 150 square feet and the largest one at 1300 square feet. The small ones are ideal for food courts in malls, which incidentally comprise 33% of its existing portfolio, while the bigger ones are apt for high street areas.
Rather than opt for the franchise mode, he would like to keep the operations as company-owned moving forward. This, he believes, will ensure that the consistency in quality will be maintained. Having learnt the importance of maintaining pricing and product quality, this is one boat he is not willing to rock soon.