CASE ON
APOORVA: A FACILITY
LOCATION DILEMMA
INTRODUCTION
This case is about facility location dilemma of Apoorva facaility. Apoorva started operation in
1993 as a single outlet in manipal. Manipal is a small suburb in the district of Udupi, Karnataka
with an area of 26 square kilometer and population of just over 37000. Srikanth Rao is the
Owner of the Apoorva Mess, Avinash Poojari is a Manager of the Apoorva. There main focus
was on Hygiene and Fast Food [Link] a result there customer base rose to 900 within short
period of time. But with change in time the competition has increased rapidly as local and
international players have entered the market and as a result the Apoorva facility has suffered
loss in sale. To overcome this challenge the owner that is Srikant Rao has looked for 6 location
to grow their outlet, because of which the facility location dilemma arises. There are various
factors which are needed to keep in mind in order to choose the best possibl;e location. He asked
the manger for the details of the locations so that a good decision can be made and as time is
running the pressure to make the decision is increasing. As a result they are in dilemma to select
best location to establish their facility.
FACTS AND FIGURES
Apoorva started operation in early 1993 with single outlet near Tiger circle, Manipal.
Manipal was a small suburb in the district of Udupi, Karnataka with an area of 26 square
kilometer and population of just over 37000.
Srikanth Rao is the Owner of the Apoorva Mess, Avinash Poojari is a Manager of the Apoorva.
Apoorva ‘s focus on Hygiene and Fast Food Quality.
Apoorva’s customer base rose to 900 within short period
Rao set up two more café near the Manipal Institute of Technology campus.
Srikanth Rao and his one friend partnered set up food catering to the students of TAPMI( T.A
Pai Management Institute)
Unfortunately in 2010 Rao suffered a road accident and was confined to bed for almost a year.
The contract with both of Manipal institute of technology women’s and men’s hostel were not
renewed.
Ninety percent Apoorva’s customers were under graduate and Post graduated student.
Manipal housed some of the leading educational institutes in the country, including the Manipal
Insititute of Technology, Kasturba Medical College and TAPMI.
The Student community constituted over 75% of the town’s population, with around 7000
international students from 60 different countries.
Manipal and Udupi had witnessed a surge in medical tourism as both of these towns attracted
mny patients India and the south Asian Association for Regional Cooperation (SAARC)
countries , who came for Allopathic and Alternative medical treatments.
Government and corporate businesses invested in infrastructure projects in manipal region,
which brought a huge migratory labour force from northern and eastern state of country.
Manipal was located near the western ghats and the western coat it witnessed tropical weather
condition, with a hot and humid summer and heavy rainfall from june to September. The rainy
season affected public transport resulting closure of schools and colleges.
Many domestic and international fast food restaurant chains such as Mavalli Tiffin Room,
Kentucky fried chicken, subway, pizza hut, domino’s pizza inc.,and café coffee day had opened
outlets in the region causing temporary dip in the business for apoorva,
Appoorva ‘s average ticket price for registerated members was Rs 135 and for other Rs 170.
Manager of the apoorva introduced innovation such as sponsoring food and beverages for
participants in social events which increased Apoorva’s visibility and brought in more
customers.
The ever increasing in competition in the fast food industry was taking its toll on Apoorva’s
business a fact that was reflected in falling sales figues over the past couple of month.
PROBLEM
The problem in this case is that initially Apoorva had enjoyed a district advantage in catering to
the manipal institution of Technology students and a monopoly with respect to TAPMI. But now
many domestic and international fast food restaurant chains such as Mavalli Tiffin Room,
Kentucky fried chicken, subway, Pizza hut , Domino’s Pizza inc and café coffee day had opened
outlets in the region causing a temporary dip in business for apoorva. The established brands had
better logistics, including home delivery and Online food aggregators too had entered into the
arena further harming that were denting apoorva’s business.
Rao had always always wanted to open a full service economical restaurant in a manipal- udupi
region but was unable to give shape to his dream as he was bed ridden from the accident. Now
rao want to change the business location because in manipal region competition is very high in
fast food sector.
Based upon his 20 years experience running the mess and café , Rao knew that the three most
important criteria for setting up a restaurant were space within the facility, parking space outside
the facility, and the ability to serve hot and fresh food to customer not only in the restaurant but
also but also through home delivery.
He believe that the good facility should have around 1000 square feet of carpeted area and a
parking lot [Link] approach a market research agency in manipal, Brandscan to help him to
identify the best location. Brandscan provide the report of survey on six location near he manipal
region.
He was facing a dilemma over selecting the best location for establishing his new restaurant\,
knowing that the wrong choice would spell the disaster for his business.
ANALYSIS
As this case about Apoorva which is a fast food industry is facing some problem such as falling
sales figure increase in competions, diversification, decision making.
Sales Figure
Apoorva began their operation in 1993 in Manipal there main focus was on hygiene food quality
which was highly appreciated by the student. As a result, there customer base increased rapidly
with in short period of time. As a result, apoorva experienced a steady growth in revenue and the
proof of that is given in the case under the exhibit 1 which states that their revenue which was
around 30 million rupees in 2004 increased to 75 million rupees in 2016.
With good growth of apoorva in 2009 apoorva relocated to a spacious facility of TAPMI (T.A.
Pai Management Institute) because of which 2100 in total new customers were added to the
customer base of Apoorva.
Customer Base
90 % of Apoorva customer were under graduate and post graduate of Manipal because of which
Apoorva came out a strategy to attract customers by offering 135 for registered member and for
others 170. As Manipal was a small suburb of Udupi where the population was near about 37000
and out of that the majority of the customers of Apoorva was students. So with the passage of
time the number of students in Manipal as depicted in exhibit 3 is between 20.6 to 20.9(in
thousands) from the year 2012 to 2015.
Competition
Earlier Apoorva has enjoyed a distinct advantage in catering food to the Manipal students and
TAPMI. but in recent years many new domestic as well as international players have entered in
the market like Mavalli Tiffin Room, Sagar Ratna, Kentucky friend chicken, Subway, Pizza Hut,
Dominos and Café Coffee Day because of which there is a dip in the sales of Apoorva.
Location
As competition was rising and willingness of Rao to open a full service economical restaurant in
a Manipal region lead to the need of a new location for Apoorva. Rao had already selected six
possible locations out of which he needs to select one. The criteria for new location was space
with in a facility, parking space outside the facility and the ability to serve hot and fresh food to
the customer in the restaurant as well as through home delivery.
SOLUTION
As the owner of Apoorva mess Mr. Srikant Rao always wanted to open a full time service
economical restaurant in the Manipal-Udupi region, as it was his dream to provide hygienic food
at cheaper rates which was easily affordable by lower middle class people. So in order to that he
need to open a new restaurant for which he has selected six possible locations. Out of which after
studying the case we can suggest that the best location to open a new Apoorva restaurant could
be a place where the area of the facility is good, there should be ample amount of parking,
infrastructure should be good, population should also be a considering factor, as well as road
network, number of competitors and distance from the market. So after analyzing the case the
result for best place out of the six locations is Kunjibettu.
Why Kunjibettu?
Demographic Factor: -
25% of tourist
35% of labor
10% of patients
20% of students
10% of locals
Other Reasons: -
Size of the facility in Kunjibettu is around 10.4 square feet, which is good for setting up a
new facility.
Parking space is also 12 square feet.
The time required to deliver the food to the customers is around 16 minutes.
Availability of infrastructure is the highest among the all 6 locations which is 9.5.
Size of population to establish new facility is also good which is around 16000.
Road network is great.
The number of competitors is 3 only.
And distance to market is 3.2 km.
RECOMMENDATION
As we know that the competition is common thing in the every business so we cant show back to
the competitors by changing the location of the business we can defeat our competitors by
effective strategy so according to our analysis following are the recommendation for Apoorva
facility to defeat there competitors as follows:-
1. To keep that staff which is customer friendly.
2. To make their menu keeping in mind the diversification of the locality they are doing
business in.
3. To use those techniques this could further reduce the cost.
4. To keep in touch with customer for their regular feedback.
5. To use their strong base of students to promote them in the new area.
6. Provide eye catching offers.
7. Should focus highly on the product and service quality being offered to the customers.
8. To establish such an environment where the customer is friendly with the staff.
9. To provide attractive offers to the customers.
10. To use effective strategies so that they do not lose the tender again
CONCEPT APPLICATION
The concept which are used in the case are as follows:-
1. Customization:- the Apoorva facility customize some of their dishes according to the
tast and preferences of their customers. This lead to one of the Apoorva’s signature
dishes “Bombay Tava Sandwich” which was popular with customer.
2. Quality:- As Apoorva’a focus is on hygienic and on the quality of the food. It shows that
they are providing good quality to their customers.
3. Pricing Strategy:- In Feb,2016 Apoorva was replaced with the daily plan that gave
students the power to choose from one of the four vendors for a day. Though they kept
the price reasonable Rs 140 compared to Madhuvan Serai Rs 180 and other vendor Rs
200, the daily plan affected Apoorva’s revenue.
4. Innovation:- To improve sales the manager of the Apoorva experimented with different
flavours and dishes on the menu. He ushered in some tactical changes all of which
translated into a steady growth in revenue. They further introduced innovations such as
sponsoring food and beverages in the social event.
5. Location evaluation: - in this case Mr. Rao evaluate the potential location and take the
help from Brandscan agency for survey to conduct a survey on customer segmentation
and set of criteria for evaluation of six potential locations before making the final
decision.
PEER RATING
Name Registration no Peer Rating Signature
Hardik Aggrwal 11710345 07
Gurpreet Kaur 11717871 10
Pushpinder Singh 11714908 10
Mohammad 11707136 10
Parvez
