Bhelpuri Economics

Every evening during my last term break, I used to go on a long walk round South Bangalore, and used to top it off by eating somewhere. Being too impatient to sit at a table and order, I would typically saunter into some fast-food places and make good all those calories burnt in the walk. Roti Ghar on most occasions; Upahara Darshini on a few other; Adigas; Cool joint; Chat house; Kakunje’s corn outlets; and a lot of street bhelpuri.

It was around ten years ago that I first started getting pocket moeny. Just enough to pay for my bus fare to and from school. And I used to count my paisas and once a week would allow myself a treat at Sundar’s. Sundar was this Bhelpuri-walla near my school and used to make ordinary Bhel for Rs. 3 and special bhel for Rs. 5. Those days, a plate of special bhelpuri at a half-decent restaurant would be around Rs. 10. Twice as expensive as on the street.

Ten years down the line, there seems to be a convergence in the price of Bhelpuri. In the various places I had the bhelpuri, a cone of special bhelpuri would cost between Rs. 8 and Rs. 10. And believe it or not, UD serves bhel at Rs. 8. A sit-down restaurant serves bhel at around Rs. 10 a plate. In other words, bhelpuri costs as much on the street as it does in a restaurant! What could be the reasons behind this seemingly stark “inconsistency”?

What is it that differentiates a restaurant bhelpuri from a street bhelpuri? For one, you are assured of a higher level of cleanliness in the restaurant. And if the restaurant is something like UD, you know that the quality will be good. Then, the restaurant will have the additional cost of real estate, maintenance, utensils, etc. Why is it that they are not charging higher then?

One thing I’m sure of after my eating exploits is that bhelpuri from a street-corner cart definitely tastes better than the one at restaurants. My mom might add that that the taste is due to the bhelpuri-walla’s sweat and the dirt in his hands. Whatever it is, you simply cannot compare the tastes of the two bhelpuris. And this is probably proved by the fact that despite the inconsistency in pricng, the general demand for street bhelpuri is much more than that for restaurant bhelpuri. So much for cleanliness and ambience!

Now let us look at the margins. The bhelpuri-walla near BDA complex in Banashankari (near the park) makes Rs 300-350 a day, working six hours a day. He says that his margin in that is around Rs. 100-120. Similarly, a guy on Residency Road (near the erstwhile Galaxy Theater) makes around Rs. 120-150. Note that these people are making a cool 33% profit margin. And people are happily allowing him this margin.

Now, note that most restaurants which serve chaat are multi-cuisine (chat house, which is an exception serves bhel at Rs. 12 and special bhel at Rs. 14). They probably have the chaat section “for the sake of completeness”, positioning chaat as starters. They typically don’t have dedicated guys to make the chaat and orders are few and far in between. Given this scenario, they may not be looking to make money from the bhel! They might be running the chaat division with low margins hoping to make that up from other divisions. They probably hope that the chaat division would contribute through increased profits in other divisions. So they price chaat at cost so as to compete on price with the street vendors.

Then, there is this other thing that bhelpuri has been seen traditionally as a street food. Not too many people are used to the idea of eating bhelpuri in restaurants. This, once again means that if someone wants bhelpuri they would rather go to the street guy than a restaurant. Once again, this tilts the balance in favor of the street guys!

The above are only plausible explanations to this conundrum. I am sure they might be better explanations for this “inconsistency” in pricing. If you know of any, please tell me.

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