Gohar Iqbal is the co-founder and managing partner at Johnny & Jugnu. Gohar completed his undergraduate studies with a Bachelors in economics from LUMS in 2014 with a focus on law and marketing. Johnny & Jugnu is a fast-rising brand that aims to introduce Pakistani style of fast food to the world.
Following are the edited excerpts of a recent conversation BR Research had with Gohar Iqbal:
BR Research: Tell us the idea behind Johnny & Jugnu, and how did you start?
Gohar Iqbal: A year before graduating, I thought I did not want to enter the corporate cycle. So when I graduated, I started a few businesses. I don’t come from a business family, so these were tiny businesses. One was a marketing agency, and the other was a food delivery platform. My instructor at LUMS, Dr Adnan, who is also like an elder brother to me, was part of everything that I did after graduation because he significantly impacted my life. Over time, an opportunity presented itself when Dr Adnan wanted to open a restaurant for his cousins and asked me if I would be interested.
We decided to open a small, fast-food restaurant in 2014 with a budget of only around Rs50-60K, rented a shop in Krishan Nigar, bought second-hand supplies like cylinders, fryers, and cutlery from OLX, and started working on recipe development. It took us a few months to get the place we called Johnny & Jugnu up and running. We used to start at 6 pm after all of us were done with our other commitments. We sold burgers for eight months, but it was not a successful experience for us as we were burning monthly money. And we decided to shut the place down in early 2015.
However, it was that experience that also helped us to make a comeback a year later. The idea to start Johnny & Jugnu again just struck us one day when we casually discussed what to do next. We had no data to back our decision to restart Johnny & Jungu burgers because we had failed miserably during our previous experience. But we decided to go ahead with it.
Our budget this time around was Rs300,000 to Rs400,000. We had previous supplies and added another fryer, and this time we rented a small outlet in DHA Phase 4 that we still use. What we did differently this time was focused more on marketing. We started giving out attractive burger boxes to people, particularly those who were very active on various food forums and were seen as interested in burgers. I would say that this was an actual marketing activity as we combed through every food forum then and made an index of such people, not necessarily influencers but those who discussed and were passionate about burgers. This started creating hype, and we started getting noticed. And even though influencer marketing wasn’t a big thing back in 2015, the few influencers that existed at that time felt left out because we were serving invitation-only burgers, which helped us create pre-launch hype for our burgers.
BRR: so how did the launch go, and what was the initial impressing of the second launch?
GI: When we opened doors for everyone, we were still skeptical if we would succeed this time despite the hype and the surprise element we had created with our marketing. This was primarily because of how we had failed the first time only a year ago. We were still opening after 6 pm, but to our surprise, sales were going up daily; we were extremely short of people in the kitchen as we had not foreseen the increasing response. This meant that our burgers were selling not because of marketing but because of the taste we were seeing from returning customers. And new customers who visited us were mainly referred by their friends and family members. Since we worked in the kitchen ourselves, we noticed these trends. So, a month down the line, we started hiring people in the kitchen and retiring the friends and family who had been helping us voluntarily as we gained traction.
BRR: Is that how you spent the initial Rs300-400K budget?
GI: This and also some advertising later on. After the initial launch and the new hiring, we were left with some Rs40-50K. We had planned to advertise our burgers, but we also knew we wouldn’t get a quality made in that little amount. So we took a considerable risk, and instead of making the best ad with that money, we decided to make the ‘worst’ ad. The idea was to get a maximum number of people to view the ad, and people would watch an extra super bad advertising and get curious more than a regular lousy ad. Calling it a cringe-worthy ad wouldn’t be wrong. Everyone was very apprehensive when I pitched the idea, including Dr Adnan. Still, since the fear of failure wasn’t there anymore, we decided to go ahead with this unconventional approach to gain views ad attraction.
We got over 200,000 views and over 60,000 comments on Facebook within 2-3 hours of putting the ad up. People were tagging others; we were getting messages from across the country and also other countries. Had we launched with this ad, we would have failed miserably. But because we were already in operations with sales touching Rs80,000 a day, the ad strategy worked well for us as it became the talk of the town and increased the number of people coming in and trying our burgers.
BRR: How did the business progress after the launch and the ad campaign? What was your strategy after that?
GI: So basically, we got a lot of publicity, and the business started booming. We were still in awe as to how people loved Johnny and Jugnu. Crossing the Rs100,000 marker was a dream come true for us back then. The success was coming in, and we decided to hire more people. I had to make the tough decision of closing all my other ventures to give JJ full-time. I never thought I would be in the fast food business, but I decided to complete all my other ventures as I realized that opportunities are hard to come by. I wanted to give it my full time and operate it in the mornings.
Eleven months after the launch of our DHA outlet, we opened our second outlet in Johar Town, Lahore. I had to sell my car to open the new outlet. Life and business changed after the Johar Town outlet. The following year, we were battered by challenges like workplace politics, vendor problems, customer satisfaction, business ups and downs, management issues, etc. We had a clear idea of the business model, but we did not have a plan for the business in the long term. So we sat together to decide the future of our venture and where we wanted to be in life.
We concluded that it was not just the money, but we needed a scale that we were proud of. So we set two long-term targets for our business: One, we planned to run it as an organization, and it needs to be a company. And second, it has to be outside Pakistan to be a ‘Pakistani fast food” restaurant for it to have credibility.
We opened our Johar Town outlet in 2016, and our next outlet opened in 2020. We spent four years building the corporate structure and SOPs for the company with a corporate office and departments. We hired new people, trained them, and strengthened our vendors. We installed an ERP system. Gradually over four years, the business also started getting better. We are going to the best vendors in Lahore for our supplies. Because we believe we need the same quality of food and services if we want to compete with international players. This increased our per-unit cost, but we also became consistent, and the consumers rewarded us for that. But the more consistent we became with our systems and vendors, our volumes increased.
BRR: But then the pandemic hit. How were you affected?
GI: So in 2020, we had planned for expansion. By then, we had tested our supply chain from Karachi to Lahore to Islamabad. Multan was very successful, and we got good responses from Gujranwala, Faisalabad, and Islamabad. We had over 50 people in our corporate team with graduates from the best universities in the country, and we had food technologists on board in 2020. So we were at our peak after four years invested in internal growth and good business at our two Lahore branches. So we started looking for some investors and acquired sites for expansion in early 2020.
And in March 2020, the country went into lockdown due to the coronavirus pandemic – the worst time for us as we were sitting on zero as all were invested in sites. All the outlets were closed. And we did not have money to pay salaries. The restaurant business runs on daily cash flow. So we were in a very tight spot at that time.
However, businesses like ours survived because our government policy was reasonable. Though the sales were less, and people were scared to dine out. Our Do-it-yourself kits were a game changer for us during these challenging times. We started supplying and delivering uncooked but nicely packaged food to people. My entire team worked hard on this survival kit. When we launched this kit, it was an instant hit. It was a beautiful family experience for people, too, where people would cook together and enjoy their very own JJ.
After COVID, we opened new outlets, increased employee strength, and continued without the growth plans that we had planned.
BRR: Will you be expanding out of Lahore? And any plans to come up with a beef burger?
GI: Yes, we now want to expand out of Lahore. We have five outlets in Lahore, and we plan to have 14 outlets across Pakistan over the next two years. First, we want to cover cities between Lahore and Islamabad included. Karachi would probably be towards the end of the two years.
As far as getting into beef burgers is concerned, there is no proper supply chain for beef in Pakistan, thus there is no consistency. We have slaughter houses and processing facilities but little to none work has been done on cattle farms. We don’t do beef simply because we cannot offer good quality consistently.
BRR: So, if you could pinpoint a few factors that helped you succeed this time?
GI: One is that we spent a long time in the kitchen ourselves doing everything from cooking to cleaning to serving. I was inside the kitchen for a good year, and I still take a regular shift in the kitchen from time to time and do everything because I believe it has been fundamental to our success.
I would also like to message other restaurant operators that food delivery platforms can be the icing on the cake; they can’t be the cake. These days, restaurants are on food delivery platforms from day one of operations. But I believe that you first have to build a business that is viable on its own and has a unique consumer base that is willing to come to you.