Doing a drink, differently
How The Bar Stock Exchange sells rum for Rs16 a peg, and other secrets of the Mumbai chain that's now going international
It’s all about market share," says Mihir Desai, mildly distracted by a squeaky door. “We have 30% of the on-premise market share for bars in Mumbai with only seven outlets. So, if the volume on-premise in Mumbai is 1,000 cases, for example, we sell 300 cases."
Desai’s claim—believed by some liquor companies to be exaggerated—stems from the success of The Bar Stock Exchange (TBSE), his restaurant-bar venture that is a magnet for young professionals looking for a wide range of inexpensive alcohol. While the percentage might be overstated, TBSE’s significance in the bar business is widely—if reluctantly—acknowledged.
Less than two-and-a-half years after they first set up shop, TBSE has new openings coming up in the Mumbai suburbs of Malad and Borivali. To add to its Pune outpost, outlets are planned in Bengaluru and Gurugram, besides Dubai, Singapore, Auckland in New Zealand, and Frankfurt in Germany. Few in the hospitality business grow at such speed.
Desai and Amit Singh, partners in Corum Hospitality, clearly believe in volumes and in numbers.
The TBSE concept is borrowed from the stock exchange and from an old-school bar in New York where “a manager would open prices for the day and change with a paper board in the panel". Alcohol prices are listed on multiple large screens. Prices vary based on demand, and across outlets: the more the orders for a brand, the higher the price. For example, Old Monk rum started at Rs16 a peg at Kamala Mills in Lower Parel one evening; 2 hours later, it was around Rs90.
The fluctuating price gimmick worked. Young customers got a kick out of watching prices and switching accordingly, so their bill would stay manageable. Their use of technology, too, has proved to be a hit: The mobile application—developed before they even launched the business—has had more than 250,000 downloads; about 80% of customers use the app to place their orders, according to the owners.
To underline its accessibility, TBSE opened up in prime locations—from Saki Naka to (in no particular order) the prime suburbs of Bandra, Lower Parel, Colaba and Juhu, up the length of the city.
It is in Juhu that I meet Desai. He arrives more than an hour late for our meeting at Mr Baozi, their new Asian gastro-pub, located next to TBSE. Over its first week in December, people queued up for a toehold, drawn by promotional offers that included beer for Rs2 and Black Label whisky for Rs49.
In between getting distracted by the phone, the bustling staff and a creaking kitchen door that opens and shuts every few minutes, Desai explains his “volumes" game, which allows TBSE to keep prices low. “The more you purchase, the better discounts you get (from distributors). We wanted to bulk up in numbers—so (if) you open three-four outlets, the numbers go up. So my profitability increases in the existing outlets also."
Liquor companies benefit, he says, because TBSE “upgrades" a customer by selling him premium alcohol at lower prices. “So if someone drinks Black and White (whisky) regularly, we offer them Black Label at the same price," he says. “Someone driving a C-Class (Mercedes-Benz) can buy an E-Class in the future. But I am not offering a C-Class to a person with a Maruti."
They do not offer the free sampling that liquor companies conduct by way of promotions in association with bars and restaurants, says Desai. “Their sampling money comes as a discount to me. But I don’t give discounts to myself; I pass it on to my customers. My margins are fixed, because the company is taking a hit on it."
For Desai’s formula to work, TBSE needs large spaces. The Juhu outlet, including Mr Baozi, is almost 10,000 sq. ft, Lower Parel, 8,000 sq. ft—relatively unusual counts in space-strapped Mumbai—while Pune is 12,000 sq. ft. The Bengaluru outlet, on MG Road near the old Plaza Cinema, will occupy almost 11,000 sq. ft.
“The more the turnover, the more the people, the more the business is viable. If (the space is) 2,000 sq. ft, I can’t churn (the kind of volumes I need). How will the prices go up? It will happen only when there are people..."
It’s paradoxical, then, that in the first few days after the restaurant opened, Mr Baozi allowed men in only if they were accompanied by women (but not vice versa). It’s a policy that plays out at the other TBSEs too: Often, on busy nights, groups of young men thirsting for its prices are turned away. It’s a fine line the owners walk: their need for numbers and formula for accessibility conflicting with the discriminatory filtration process.
“There were 700 people at TBSE Juhu yesterday," says Desai, instructing a staff member to oil the creaking door. “Earlier, people used to sit at home and drink but I am giving them stuff at the same price or cheaper (than in retail). The place gets packed and sometimes we can’t take in any more."
The partners, both in their early 30s, have, in the past, run Big Bang Bar & Café, the Mediterranean restaurant Monza, Aziano, the nightclub, and suffered a blow with Kebashish, a Lucknowi restaurant, some years ago. It taught them a valuable lesson. “We got smarter, persevered and understood that there is a formula we must follow—keep the rent low and offerings affordable," says Singh.
If you have a trendy environment with affordable alcohol and a concept customers subscribe to, your space is bound to be popular, Singh adds, explaining how TBSE changed the game for them.
Desai is not afraid of Mr Baozi and TBSE cannibalizing profits (on an average, Mr Baozi’s fixed prices would be cheaper than TBSE’s fluctuating ones). He has a reason: “Anything next to a Bar Stock Exchange has to be powered well or would die."