Inspiring Personality - Mr.P.Rajagopal - Hotel Saravana Bhavan

12^th July’12:
 SARAVABHAVAN – P.RAJAGOPAL

A man who, through sheer hard work and perseverance, rose from humble beginnings to become a person who is almost worshipped by his employees. A man who brought security and hope to the lives of his 4000 odd employees, and great tasting, yet cheap food to millions of people in Chennai. The man who set up Saravana Bhavan – P. Rajagopal, affectionately known as “Annachi” (elder brother) Rajagopal.

THE EARLY YEARS

For those who are still in the dark, Saravana Bhavan is a vegetarian restaurant chain that specialises in high quality South Indian food. Saravana Bhavan today has 14 branches in Chennai, one branch in Kancheepuram and one has recently been opened in Dubai. The chain has a total turnover in excess of 50 to 60 crores, and employs over 4000 people.

All this, of course, could not have been foreseen by the worried young man who sat on the floor of his little grocery shop in Kodambakkam (now within Chennai precincts) circa 1970. P. Rajagopal, born in Punnaiadi in Thirunelveli district of Tamil Nadu, had good reason to be worried. After a succession of jobs as a cleaner in a restaurant, attendant in a vessel shop, grocery shop attendant etc., he had finally set up his own grocery shop, with some financial help from his father and brother-in-law. He had started the shop with his brother and his cousin. Unfortunately, the shop was located near a harbour, which meant that the bulk of his customers were drunken harbour workers, who would heap filthy abuse on them and demand loans. Rajagopal would bear it all with a smile, because the financial obligation to his father and relatives made him dread to think of the consequences of closing down the shop. His brother and cousin were not so patient, however, and one fine morning he found himself alone in the shop.

Rajagopal faced his first true challenge with characteristic grit. For more than a month, he ran the shop alone, doing everything, from sourcing the items to manning the shop himself. He then talked to his brother and convinced him to come back and join him. Soon his cousin also came back. Slowly but surely, business began to improve. He soon set up a chain of grocery stores called Murugan Stores, which quickly acquired a reputation for high quality goods.
As he was talking to his employees one day, a chance remark sowed the seeds of the success story that is Saravana Bhavan. One of his employees requested him to finish the meeting early, since “there was no good restaurant in the locality, and they had to go all the way to T-Nagar for lunch.” Ever alert, Rajagopal sensed the opportunity, and resolved to set up a restaurant.
Overcoming various financial difficulties, Rajagopal started the first Saravana Bhavan in 1981, in K.K.Nagar, with two partners. The first cloud on the horizon came in the form of a disagreement with one of the partners, who thought they should use cheap quality foodstuffs in order to maximise profits. But Rajagopal was adamant- he had a burning desire to set up a restaurant that would be reputed far and wide for the excellent quality of food provided. Having been in the grocery business, he had good discernment when it came to the quality of foodstuffs. This disagreement soon led to a parting of ways.

Initially, it seemed that the partner was right. Rajagopal says in his book that in the first few months, he used to incur a loss of Rs. 10,000 each month. But he stuck to his guns, and soon his gamble began to pay off. Saravana Bhavan slowly gained a reputation for excellent tasting food, and traffic began to increase. The hotel turned profitable. Rajagopal celebrated the first anniversary of his hotel by having a scheme whereby customers got 23 items for just Rs. 5. The resultant buzz was huge, and made them the talk of the town. Saravana Bhavan had arrived.

THE TRIPOD APPROACH

One could cover the story of the next 20 years by putting just a couple of ditto marks. But behind the ditto marks lies one of the great retailing stories of all time.

It was very simple, really. Rajagopal boiled the situation down to its basics and realised the following : retailing is essentially a service business. Service business means there is one set of people (employees) serving another set of people(customers), and helping them to buy a product. Three parameters. Success depends on doing a great job on all three fronts.

The product is in many ways the easiest. Rajagopal ensured only high quality ingredients in all his kitchens. He assiduously took down all customer complaints, and suggestions regarding food taste, and constantly strove to improve the taste of his food. He spoke to various specialists at length to determine ways to improve the taste of his food, and spent hours in the kitchen with his chef, experimenting and trying to find the perfect balance of ingredients. He would take his experts along with him to the best restaurants, and eat there, so that they could figure out how best to get that taste.

But the customer, of course, wants more than just the product- it is the entire experience that counts. Rajagopal ensured the highest standards of hygiene in his hotels. All employees had perforce to have a bath before they reported for work. Rajagopal introduced the system of having banana leaves cut to a round shape, and placed on the plates, on which the food was served. This had the dual advantage of assuaging the customers’ natural queasiness regarding eating from plates on which someone else had eaten, and making it much easier to wash the plates. Service was also quick, and the staff, neatly dressed in uniforms, was courteous. Even in the case of abusive customers, they would only go and report it to the manager, who would then discreetly speak to the consumer, and gently but firmly tell him to behave in a civilised manner, or leave.

Easy enough so far. But what most people miss out on is the third cornerstone – the employees. It is in many ways probably the most important, since the first two are ultimately dependent upon the employees for their successful implementation. Rajagopal had a mind that recognised this fact ; remembering his early days, his heart, overflowing with genuine concern for his employees, made him take employee care to unprecedented, almost philanthropic heights. Says he “Our employees who have laboured day and night, sweating, are the mighty pillars of our huge establishment.” No empty words.

First and foremost, he gave them job security. The norm in those times was for employees to be periodically terminated. In his own words, “We removed the words periodic breaks in the employee’s service from our vocabulary.” He then increased their pay substantially. He provides accommodation to employees and their families near their place of work. Employees holding responsible positions are given telephones at their house- entirely at Saravana Bhavan’s expense. Employees with families in villages receive annual grants to go visit them.

He provides for the education of the children of the married employees – two children per family, irrespective of their position, are educated from nursery to post graduation college, entirely at Saravana Bhavan’s expense. This includes their uniforms, books, and all other associated costs. All employees are given uniforms by the establishment, and receive new clothes during festivals like Pongal. Wives of married employees also get new clothes.

For those who have put in ten years of service, LIC policies of 50,000 to 1 lakh, depending on their position, are taken. The premiums are paid entirely by the establishment. Medical insurance policies, under the Employee State Insurance scheme, are taken for each and every employee. The employees’ contribution component is paid entirely by – you guessed it- the establishment.

It doesn’t end there. If any member of the employee’s family falls sick, two boys are sent to the hospital to look after them. Food for the patient, and one more family member, is sent every day, till the patient recovers. If the patient has to undergo treatment at a private hospital, all expenses are borne by Saravana Bhavan. Vehicles, ranging from cycles to mopeds to even jeeps, are given to employees depending on their position. There is an incentive scheme every year, wherein employees can win durables like fridge, TV etc.

It still doesn’t end!!

Parents of each and every employee, who live in villages, are sent Rs. 200 each month by the establishment. Every two years, a certain number of employees, selected on the basis of certain criteria, are sent to Singapore to attend an exhibition of hotel and kitchen equipment, as part of their training. The entire costs of travel stay, and even buying some items, are borne by – Ho hum – the establishment. Similar inland trips are also conducted to different places like Bangalore, Mumbai etc., as part of the employees’ training.

But the scheme that he is most famous for is the Mani Ammal Marriage Scheme (named after his mother). This scheme is for the daughters of employees who have put in a certain number of years of service. Under this, Rs. 10,000 is invested on a long-term basis in the name of each daughter of the employee (up to 5 girls per family). The amount accrued over a number of years is of substantial help when the girls reach marriageable age.

What are the reasons why .the owner of a chain of restaurants takes such incredible steps for the welfare of his employees? One is, of course, that it makes sound business sense. Rajagopal says, “As we give these facilities to our employees, they have a zest in their lives and a confidence in their future…many come seeking jobs to us…their basic problems in life being solved, they are able to work with dedication….It is no exaggeration to say that because we have workers with us who are dedicated and devoted, Saravana Bhavan has grown from strength to strength.”
This magnanimity also made business sense in a more indirect way. Rajagopal was shrewd enough to realise that in retailing, the staff is the key medium of communication to the customers. A great deal of consumers’ perception of the restaurant was dependent on the staff. Rajagopal was like a benevolent godfather to his employees, and that also allowed him to be strict with them- which he was. Employees had to have a bath every morning, or else they were not allowed to report for work. They were supposed to have a haircut once a month, so that chances of customers complaining that they had found hair in the food was minimised. No employee was allowed to drink. They were not allowed to watch late night cinema shows, since that may affect their performance next morning. All this led to associations of extreme hygiene with Saravana Bhavan, which in the South is a huge advantage.

The other reason has more to do with the personality of Rajagopal. Having come up the hard way himself, he decided that no one under his employment should have to face the same problems, ever. Says he “My profession is business…..Business is one of society’s activities….if society will prosper, my business will prosper……my goal is not simply to get profit from my business.. there should be honesty and justice in my business…out of my earnings, I should help others to the extent that I can. That is why we don’t throw away any leftovers in the kitchen.. we distribute it everyday among the poor.”

And therein lies the secret mantra. Across the world there are good companies, and then there are great companies. What distinguishes the great companies from the merely good is that they raise their sights from ground level agendas like profits and growth to a much higher level, where they look at business as a social activity, with a social purpose. With this perspective, profits become no more than a necessity to fuel the true purpose of the business i.e. social development, rather than the purpose itself. Legendary companies like 3M and Merck are examples of such organisations. 3M’s mission statement – “To develop products that will make people’s lives easier.” No profits, no turnovers, no market shares. The irony of course, is that such companies are, incidentally, hugely profitable – they last for 50 or more years, and are legends in the business world.

It’s simple, really. When you truly aim for the skies, you don’t even notice when you clear the Empire State Building. Today Saravana Bhavan is a landmark for an autodriver in Chennai – as it becomes more well known, it may well become a landmark in the retailing world itself.