Railway catering is a lucrative business story

Travel has been very frequent these days, mostly after my marriage. Its so much at times that we are on the wheels almost every alternate weekend. Indian railways should be paying me some rewards back for being so loyal to them. Not that I like them too much, I’m not denying the fact that almost all the recent journeys have been an enjoyable experience. In my earlier post I had written about the eventful journey in a crowded train. This one highlights one more facets of the Laloo Yadav army, the railway catering (or food they serve).

I boarded Lashkar Express, which travels between LTT (in Mumbai) and Agra Cant, last Friday afternoon. As most of us would expect from Indian Railways, it got delayed. We were just about 2 hours away from Mumbai and the train took an abrupt halt at a very small station. It was just about time for the sun to set. Being alone and with no body else on my adjoining seat, I had nothing to do. So I decided to take a walk to the door and get down on the low platform on the station. On the door I met this guy Sundar Prasad (I read from his name plate). From the dress he looked like a waiter in the catering services and from the partially grey hair he looked like a man in his mid forties. He was taking orders for dinner. I registered mine as he went inside our coach to ask if anybody else wanted the dinner as well. He returned in 5 minutes with a dejected face. On my enquiry, he said since the train was not running to the capacity, there were very few orders for dinner tonight, about 15 in our compartment. 15 is a pretty good figure, I said to myself, considering the quality of food they serve. 🙂

“So how much do you normally sell each night?’ I asked. “At least 20-25 per compartment. That too when we are not serving the one’s on waiting ticket.” Oh, cool. Thats a pretty big number. Considering that on an average an express train has about 10-12 second class coaches and 4 air conditioned coaches. So as a sales guy, there are 15 coaches as Sundar’s target. meaning about 1000 passengers to aim at. And he manages to sell 300 dinners at Rs. 40 each, an income of 12,000. My brain had already started doing the math. I prodded him more on other things, say what else do they do, where they earn more and how do they manage. He said they manage to sell about 200 lunches and 300 dinners every day (add another 8000). They could sell more but are not allowed to give to those on a wait listed ticket. Apart from that, they also serve snacks, about 800-1000 plates every day priced any thing between Rs. 10 to 20 (15 was the obvious average. It makes the income to further up by 13,500). Not forgetting the tea, it alone adds to a major portion of the total earning. Besides you also have the wafers, namkeen, cold drinks, mineral water bottles on the menu. Add the income from every thing I mentioned and you could be earning a whooping 50,000 per day per train if you were a railway contractor. Wow! That too without maintaining a proper restaurant and/or spending on over heads.

But of course, there are some obvious problems associated with it as well. Sundar rightly pointed out that the biggest problem was maintaining and replenishing fresh inventory. They had to depend on vendors that we outside their perview. For example, the caterer Sunder was working for was from Ghaziabad. So when the train came to Mumbai, they had to depend on the local supplier for fresh stocks of food. They had cold storages, however it was not always reliable. Moreover the apathy of Indian government in managing a decent kitchen often makes the contractor face the public wrath. Moreover the train delays only add to the wows. Another bad thing is to go through the hell hole of the Indian railway’s tendering process. Even though your performance was good or bad, the contract expires after an year and you need to bid again. Plus, as an owner there is no monitoring your team. SO this is subjected to lot of frauds unless you are a company and have deployed your employee in every train.

Anyway, the train halted for almost 40min on that small deserted platform. It was almost dark by the time we ended our conversation. I told him that I edit a forum with 23,000 members and said I’m going to write about him. Thankfully, he was pleased despite the low orders and the waste of time we did (rather I did). But it gave me a story to write here and a new (read yet another) business idea. May be I’m not going to bid for it, but railway catering is surely a lucrative business.


3 thoughts on “Railway catering is a lucrative business story

  1. That is roughly 32000 per day per train. Profit must be atleast 30%, and think about the number of trains. Thats a big working capital as well Mayur. Money begets more money. So true!!

  2. Yeah very much. And what are these guys spending on infra? nothing. All they have to do is pay a small portion to Railway as a rent for using the facilities (there aren’t any by the way) and thats it. Every thing else is gold money 🙂

  3. In the food business the operating profit is one hundred percent plus. The major problem in what you did not get access to is the kickbacks that the contractor has to give to a number of interested and capable of screwing up your happiness, types! It reaches right upto the top most echelons! Why would anyone in his right mind want to be a railway minister?

    You should have asked Prasad how he got the job and what his problems were! Would have been mind blowing.

    In our country, we need to scratch and we will find wheels within wheels.

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