From sharing gifting space with mithai to a KitKat collab, MOD CEO on making doughnuts a staple

With over 150 stores across Mumbai, Delhi, Bangalore, Ahmedabad, Chandigarh, and Chennai, the 16-year-old Singaporean company Mad Over Donuts (MOD) is synonymous with doughnuts in India.

But has the American breakfast dish become a commonly known item in this country? It is on its way to becoming a staple, feels Tarak Bhattacharya, ED and CEO, MOD.

He was speaking to afaqs! after the doughnut brand teamed up with Nestlé KitKat for a limited-edition range of three doughnuts and a shake.  

Several millennials will remember seeing or visiting a MOD store for a takeaway of their boxes for a birthday treat or a Secret Santa present at their offices. Bhattacharya considers them (now aged 30-35) his core consumers and believes they’ll help make doughnuts a staple.

MOD competes with Krispy Kreme, Dunkin’ Donuts, and many independent brands for doughnut supremacy in India. But Bhattacharya welcomes competition because it will help expand the category.

One’d assume people opt for takeaways or order boxes of doughnuts but the CEO says MOD’s revenue is split 65-35 in favour of dine-in against takeaway and delivery.

He talks about evolving consumer tastes, expansion plans, and whether doughnuts have started replacing Indian sweets.  

Edited Excerpts:

What insight led MOD to collaborate with Nestlé KitKat?

It was not just consumer insight but people wanted it. Every four weeks, we do a flavour festival like a 'Caramel festival'. When we did research, people asked for a Biscoff doughnut, a KitKat doughnut, and a 5 Star doughnut.

It took some time to get Nestlé KitKat on board with their norms but now we are on board with them, and they are with us. If you listen to the consumers, it only helps because they then relate to the brand and the product right away.

Consumer tastes have matured. McDonald’s was once a novelty, today it is an everyday meal. There are indies and cloud kitchens and whatnot, how do you appraise the competition?

India is a vast country. We have so many people, so many cultures… especially that class of 30- to 35-year-olds who have travelled the world and experimented with food. It can be anything. It's not about only savoury or a particular dessert.

This cohort are here to stay at least for the next 20 years. Till they turn 50-55 years of age and say ‘enough is enough.’

We (doughnuts) are in the niche and staple category. So, the day we become a staple, I will have been in this business for many years. That's how I look at it.

Even after all these years, why are doughnuts still a niche?

I will not put it as a niche anymore. We have grown into many parts of the country and are well-established with over 150 stores.

But we are still only at the tip of the iceberg. We are between a 10%-12% quality penetration. And there is like an 80%-85% penetration remaining in the country.

We're still there and not there.

Do you plan to expand wider or go deeper?

I think we will go on both sides. We are opening in Hyderabad and Kolkata this year. We are getting into newer cities but at a slow rate. And we will go deeper into existing cities with an estimated 40-odd stores.

Are people still dining in or are takeaway and delivery bringing in the bulk of your revenue?

No. We are dining in. Yes, post-Covid, delivery and takeaway have taken better shape. We are still in that 65%-35% category in favour of dine-in whereas before Covid, we were between 10%-12% of delivery and takeaway.

Has this increase in delivery and takeaway revenues influenced your store sizes?

Not really. We are always at a 365-square feet store size.

Coming to advertising, you are a digital-first brand. What channels do you prioritise?

I'll not put it as digital at this point in time. 65% of revenue comes from MOD’s physical stores which reach around 2.5 lakh monthly customers.

I want to put it as 'phygital'. We are not into ATL, we are not into TVCs. The engagement online has to offer helps us big time. So, our engagement ratio is quite high.

There are no investors or sharks sitting on my head. So, it's better that I spend my money wisely and go deep into engagement with people so that they talk about the brand instead of me talking and actually forcing it into them. I think that's the way I look at it. And it has helped all the way.

What’s your take on food influencers?

They help us during specific occasions like Raksha Bandhan, Diwali, Holi, and Christmas but not throughout the year.

Are we at the stage where consumers are replacing Indian sweets with Western treats like doughnuts? Starting with corporate gifting perhaps…

We observed it specifically during Raksha Bandhan and Diwali especially post-Covid – people taking doughnuts to their near ones. Sometimes, along with mithai.

For Raksha Bandhan, we did almost 10,000 boxes of bites (bite-sized doughnut boxes) from the usual 6,000-7,000 boxes which has never happened in our life cycle.

What are the challenges you see for your industry right now?

So, I think getting the right real estate is one big concern. The second is that people are very difficult to retain. They just shift places, shift shops. When a new customer walks in and asks, ‘Hey, what is this? What's the difference?’ You need someone to explain that.

How do you appraise the competition from fellow doughnut brands?

We want competition because it will help take doughnuts from the niche to the staple category quickly. In the West, you have doughnuts throughout the day. Here we have become a dessert company, which we are not.

So how do you do that? Unless some good brands come from abroad or come internally. Then people listen that we are not a dessert brand. We are an every-hour brand.