TN’s iconic A2B chain dishes up an ambitious growth plan

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A trip to Tamil Nadu is incomplete without a visit to A2B (Adyar Ananda Bhavan) to taste some of the best vegetarian foods, sweets and savouries. What started as a small sweet shop in Rajapalayam five decades ago by a farmer, KS Tirupathi Raja, today does annual business of ₹1,400 crore. If the veg fast-food restaurant chain’s plans fructify, its turnover could swell to ₹10,000 crore within the next five years. An initial public offering (IPO) is on the cards.

A2B is a household name, today boasts of 170 outlets — mostly in Tamil Nadu and Karnataka but with some strewn around in the US, the UK and Australia.

The A2B team 14,000 employees is working towards making A2B a global brand of Tamil Nadu origin, says KT Srinivasa Raja, Managing Director, A2B.

For sure, A2B’s rise has been nourished by two other veg restaurant chains vacating space due to problems of their own. The iconic Saravana Bhavan, which pioneered innovations such as centralised kitchen for consistency of taste, multi-coloured multiple chutney dips and expanded range of dishes, including North Indian and Chinese, has been losing ground after the death of its founder, P Rajagopal.

For a while it looked like the Sangeetha chain would grab Saravana Bhavan’s market share — -it did for some years–but Sangeetha has had a franchisee split, with one branch going away under the name ‘Geetham’. Sangeetha is still a big draw but by many accounts, but the underdog, A2B, is fast becoming the hot favourite.

A2B restaurant in Triplicane, Chennai.

A2B restaurant in Triplicane, Chennai. , Photo Credit: BIJOY GHOSH

how did it begin

A2B had its humble origins in 1960 in the form of a small sweet shop named Sri Guru Sweets, set up in a small township called Rajapalayam in southern Tamil Nadu. KS Thirupathi Raja, who started the shop realised that Rajapalayam was too small for growth — he shifted his business to Bengaluru, under a new name, Sri Srinivasa Sweets. “That was when my brother Venkatesan and I discounted school to support our father,” recalls KT Srinivasa Raja. And, in 1988, the family set up Adyar Ananda Bhavan, selling packets of sweets and snacks – the business grew but the name shrank to ‘A2B’.

In the mid-1970s, the business doing daily sales of ₹1,000. In the 2000s, A2B decided to bring in dining — transfoming the business from a seller of sweets and snacks to a fast food restaurant. In due course, business expanded, as the management added presence on the highways and other cities. In 2005, it increased to ₹500 crore; today, it is around ₹1,400 crore. A venture that started with just four employees (our family members) today has 14,000 employees, he said.

Margins are very tight with employee, transport and raw material costs increasing and putting pressure on margins. “We change the price of food items in the menu only once in six months. Volume is critical for our business. A few years ago, we were getting around 10 per cent profit, but today getting 5 per cent is considered to be good,” he said.

Third generation is also slowly coming in to the business. “My brother has two children and I have four,” he said.

A2B has continued to sell ready-to-eat snacks and pickles, which are now sold in 125,000-odd retail shops.

Food aggregators like Swiggy and Zomato are helping A2B a lot. Three years ago, sales through them were very low. Today, they provide additional sales of 18-20 per cent, he said.

“Our target is to reach ₹10,000 crore in 5 years and would be happy if it happens earlier,” he said, adding that an IPO could around that time.