3 Things that I learnt today

1. Tea QSR business in India

1. The concept of “Fatigue” is important in a QSR product. Fatigue is a major factor (other than factors such as price point and accessibility) that drives repeatability of QSR product. Tea is a perfect example of a low fatigue QSR product - a person can have tea 3 times a day every day
2. In India, QSR Tea category is growing at 20% and in metros the category is growing at 25%+ yoy
3. The order value for Tea delivery is 30% higher than walk-in orders. Looks like a good strategy to push for more delivery orders and cut down the rent cost of running a large format tea store, which pushes rent expense to as high as 30% of the total cost

2. Impact of Railroad construction on US geography

The railroad in US defined the US geography beginning in 1850s, with the tipping point in 1869, when the east and the west coast got connected via the rail road. This led to burst of settlements on the west coast The 2nd phase of accelerated migration and settlements happened with Interstate Highways construction that started in 1980s. The stages of evolution can be observed in the adjacent and below maps.

3. Movie Production business

1. Global box office market is US$ 43Bn market and Disney had 35% market share in 2019

1. Predicting box office collections has become highly unpredictable, much to do with disruptions from streaming services – convenient consumption, plenty of options to choose, and good content. The movie Joker made US$1.2Bn in box office collection against the total production cost of US$ 55M. It earned US$ 300M in US against expectation of US$100 M
2. Rise of streaming behaviors has made production studios more cautious. The studios are betting mostly on established sequels and franchises, which have dominated the box office in the past. Last year, Disney launched such established franchises - Avengers, The Lion King and Toy Story 4, which helped it in acquiring higher share of the market. Another risk mitigation strategy that the studios adopt is to bring in co-financiers for the production. Bron Creative and Village Roadshow, the 2 co-financiers for Joker movie, financed 40% of the production budget
3. Related to point #2 and #3, the big studios are releasing fewer movies. The number is lesser for movies that are not established franchises

An interesting shift in the industry is that – the correlation between the top earning movies and the best movie awards has come down as per the chart below

END.

Sources:

https://prime.economictimes.indiatimes.com/news/73970930/consumer/chai-cafs-are-the-hottest-pick-among-vcs-can-they-become-profitable-ventures-in-the-long-run

https://www.forbes.com/sites/scottmendelson/2019/11/04/box-office-joker-tops-300-million-us-and-900-million-worldwide/#7813a1fb7779

https://www.ft.com/content/cdfd594c-48ff-11ea-aeb3-955839e06441

https://www.ft.com/content/4aa78a38-d50d-11e9-8367-807ebd53ab77