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MTR business model

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mtr business model

On 25th of June 1975

the Indira Gandhi government officially declared a

nationwide emergency.

The fundamental rights were curbed,

the press was censored and within a fortnight

the livelihood of 620 million Indians was at stake.

Little did they know that the next 21 months of their lives

would be known as the darkest chapter in the history of

Indian democracy.

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And all of this was happening during a time

when India was already witnessing a socioeconomic crisis.

During this time, let alone business prosperity

even survival was considered to be a miracle.

And the story that I’m about to tell you today

is the story of one such miracle wherein

amidst this economic nightmare

while most businesses were shutting down

there was one incredible businessman

who turned this very same emergency into an business

opportunity

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and built a business empire that now has a revenue of 1000

crores.

This businessman is Mr Sadananda Maiya

and the company that I’m talking about is Mavalli Tiffin

Room

which is popularly known as MTR.

The question is- What was so special about MTR

and how was it able to turn an economic nightmare into a

business opportunity ?

The answer to this question lies in the rich history of MTR

that dates back to 1924.

This is when the Maiya family started the MTR restaurant

with the vision to serve the most authentic,

hygienic and the tastiest South Indian food to its

customers.

And the entire family was so dedicated to their profession

that even during the post-independence time when the country

was witnessing a political turmoil

they still served the most authentic, hygienic

and the tastiest South Indian food in town.

Within a few years the restaurant became so popular

that it became a hotspot for tourists

television personalities and even film stars.

But after 5 long decades of prosperity; in 1975

when the emergency was imposed

the family hit a dead end due to the socio-economic crisis.

During this time, apart from the emergency

India had already seen 2 bad agricultural years

and due to the formation of OPEC

the oil prices had quadrupled

and the inflation in the country had skyrocketed to 15%.

The situation was so bad that the government had to stop all

new construction work

they froze the wages and salaries in the public sectors

And imposed compulsory savings on income tax payers.

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And this meant that every single rupee was a lifesaver for a

middle class person

and it obviously meant that rarely anybody ever went to a

restaurant.

On top of that, the government required every restaurant

to conform to prices set by the government

and it was practically impossible

to run a profitable restaurant business with those given

prices.

For example, under the President’s rule, the price of Idli

was clipped to 10p from 25p

while a cup of coffee

which costed one rupee was to be sold for just 25p.

Now, people, when something like this happens most of the

restaurant owners

do either one or many of these 3 things to survive.

And this is something that you would’ve seen even during the

COVID-19 crisis.

Number one, they do extreme cost cutting and fire all of

their employees.

Number two, they indulge in adulteration

and serve extremely low quality food to their customers

which eventually leads to health hazards.

Or number three

they just shut their shop altogether

and wait for the situation to get back to normal.

And this is exactly what the restaurant owners did in 1975

because they saw no other option to survive.

But you know what ?

Even during this time

MTR foods still served the most authentic,

hygienic and the tastiest South Indian food to its customers

without compromising on their quality.

And not just that

They retained most of their employees

and built a supply chain that was so robust

that when the emergency was lifted

MTR went on to become one of the most successful food

companies in the country.

The question is- What exactly was this strategy and what was

so special about it ?

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As it turns out,

when the government imposed the prices the MTR restaurants

started bleeding.

They were loosing out ₹25,000 on weekdays

and lost upto 1 lakh rupees during weekends.

But even during that time

Sadanand Maiya sir was not willing to compromise on his

family business values.

At the same time

he did not want to fire any of the employees because they

had stayed loyal to the business for decades

So you know what ?

He took a bold step to shut down the restaurant altogether

and made 3 strategic changes to it’s business.

Number one, he realised

that inspite of the emergency, the demand for food did not

go down.

It’s just that the purchase power of the customers had

declined drastically.

And the supply chain of the restaurant was too costly to

actually cater to their demands.

So, to reduce the cost he moved from cooked food to packed

food.

Because of this the heavy cost and loss due to perishable

items was completely eliminated.

On top of that

instead of adulterating the costly ingredients

he changed the ingredients altogether.

For example,

they moved from rice idlis to rava idlis

to make idlis cost effective.

And even today, Rava Idli is one of MTR’s signature dishes.

Number two

since he could not comply by the prices imposed by the

government

he turned the same restaurant into a grocery store

and started selling food mixes via grocery sales.

And last and most importantly

he trained his entire staff

to build an efficient supply chain to make packed food

and sold it at an affordable price.

In the corporate world this is what we call as reskilling.

And that is how ladies and gentlemen

MTR was able to survive the emergency

without compromising on its business values.

And guess what ?

As soon as the emergency was lifted

MTR restaurant reopened but this time

along with the restaurant

they had a ready to fire manufacturing chain

which produced nothing but high quality products.

Soon enough it extended to multiple food mixes

like pickles, like spices and even special spice mixtures.

Fast forward to today

MTR has emerged as one of the finest food brands in the

country

with a revenue of almost 1000 crores.

And MTR exports its products to 21 countries

including US, UK, Australia and Japan.

And most importantly

it has successfully stood the test of time for 97 years

without ever compromising its values

And even during the COVID crisis,

10 years after Maiya sir stepped down

The company is still setting very high standards for change

management in the industry.

While most companies were clueless

and struggled to keep their supply chain intact during the

COVID crisis;

MTR foods had already doubled their inventory level

from 14 days to 30 days capacity.

And while the first lockdown was imposed on 25th of March

MTR rigorously started preparing for the crisis way back

from 10th March itself.

And this is when

none of us had a clue that our lives were about to change

forever.

And that is how time and again

by turning a business threat into a business opportunity

MTR has consistently set a benchmark for other brands to

follow

Now there are 3 very important lessons that we need to learn

from this iconic case study.

Number one and this is something that

has been followed by Dhirubhai Ambani sir better than

anybody else

wherein his policy was

everytime you see a market crisis you need to realize

that your competitors are facing the exact same crisis as

you are.

The question is

are you going to see it as an obstacle and succumb to it or

treat it as a business opportunity and get way ahead of your

competition.

Number two,

money can build a company

but it takes guts, quality and values to build a brand.

And last and most importantly

as much as the Internet is filled with American and European

business case studies

we often fail to realise the fact that

India has had a long history of political and economic

crisis

and the adversity has been so much

that let alone business, even staying alive was considered

to be a big deal.

But even during these times we have had some incredible

entrepreneurs

who were able to build a business empire

and have established a golden legacy for us to follow

and we being in the Indian markets need to pay very close

attention

to these lesser known goldmines

because they have got nuggets of wisdom that can turn us

into extraordinary business leaders of this country.

I spent hours in researching about startups.

Please share this among your friends and relatives.

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