Adulteration of food has become a national problem in Bangladesh. It has reached to such a magnitude that many people named it as the ‘silent killer’. It is hard to come by food products, from raw vegetable and fruits to milk and milk products to fish, meat, and processed food, that are not adulterated.
We are eating all kinds of chemicals including carbide, formalin, textile colors, artificial sweeteners, DDT, urea etc along with our food. Consequently, all types of complex diseases are growing rapidly.
This problem has given way to a growing number of pure and organic food companies in the country. Although pure food products are comparatively expensive and hard to come across, the demand for these products is growing rapidly. A growing number of population is looking for alternative sources for their food products shunned by the rampant adulteration. This is where Khaas Food, a Dhaka-based farmer-to-table pure food company, comes into play.
Started in 2015, Khaas Food is one of the few pure food companies in Dhaka’s growing startup scene. Founded by three friends, all graduated from Dhaka University, Khaas Food started as a passion project. Today, the company is a team of 18 people, offers over 100 products, all pure and directly sourced from farmers, has collaboration with more than 20 producers/farmers and serves over 60 deliveries a day with a consistent monthly growth.
In the coming years, the startup aims to become the ultimate destination for all kinds of pure food needs in Bangladesh and plans to get into contract farming in order to provide organic food to a growing population at an affordable price.
We recently sat down with A.M.M Habibul Mustafa, Chairman, and Co-founder of the company, to know more about Khaas Food, how it operates, its business size and growth, trials and challenges and the future plan.
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BD Venture Limited-Investing in your growth.You can’t fully emphasis the importance of quality food, despite the fact, for a growing urban population, pure food is becoming an increasingly rare item. Since we are also sufferers of this problem, we thought why don’t we try to solve this problem. That’s how Khaas Food came into existence. The idea is to provide people pure food products, free of adulteration and harmful chemicals.
Future Startup
Briefly tell us about yourself.
A.M.M Habibul Mustafa
I was born in Chakaria, Cox’s Bazar. My father was a government employee, so when I was a kid we used to move a lot from one place to another as his job location changed. As a result, I spent a large part of my childhood in different parts of the country and had the opportunity to make friends and see places.
I completed my School in Patiya, Chittagong and then went to Haji Md. Mohsin College in Chittagong. After that, I did my BBA (Finance) from Dhaka University and an MBA from IBA, Dhaka University, in Marketing.
I had this thing about becoming an entrepreneur since the early days of my university life. I wanted to do something of my own. I knew nothing about business back then but I realized that if I want to build a business it is important for me to understand how an early stage company works. I decided to join an organization that would allow me to learn how to build a team and how to grow a business and other nitty gritty of building a business. I joined Geeky Social, a digital marketing firm owned by my fellow classmates. My time at Geeky helped me to learn and understand digital marketing and many aspects of eCommerce business.
Future Startup
Why did you start Khaas Food? Why a pure food company?
A.M.M Habibul Mustafa
Food adulteration is a major problem in our society today. It has become so rampant that it is hard to find food products that are additives and formalin free. The system has, to some extent, failed to ensure food safety for a growing urban population. Although people often complain about it, there is not many viable solutions or alternatives.
This has become one of the biggest problems for us. It is more like a slow poisoning. We have already started to see an outburst of the diseases like cancer, diabetes and many other similar critical ailments that were not there just a couple of decades ago. I believe food has a big role to play here.
Not only that if you look at our older generation, they are still active and even healthier than us in many instances. Part of this can be attributed to the quality of food we consume. You can’t fully emphasize the importance of quality food, despite the fact, for a growing urban population, pure food is becoming an increasingly rare item.
Since we are also sufferers of this problem, we thought why don’t we try to solve this problem. That’s how Khaas Food came into existence. The idea is to provide people pure food products, free of adulteration and harmful chemicals.
In the past one year, we have been able to serve a small but growing community of customers who buy our products and in the coming years, our plan is to get into organic food that will be produced completely in a natural manner without any harmful fertilizer, pesticides or anything.
Started in 2015, Khaas Food is one of the few pure food companies in Dhaka’s growing startup scene. Founded by three friends, all graduated from Dhaka University, Khaas Food started as a passion project. Today, the company is a team of 18 people, offers over 100 products, all pure and directly sourced from farmers, has collaboration with more than 20 producers/farmers and serves over 60 deliveries a day with a consistent monthly growth.
Future Startup
Let’s go a little back, how did Khaas Food come into being? Tell us more about the company.
A.M.M Habibul Mustafa
We first started thinking about Khaas Food in early 2015 and started a small scale operation later that year but it was that - small. We finally got into full-fledged operation in early 2016 and have been doing well since then.
We are three founders, I (Chairman), Tauhidul Islam (Managing Director), and Abu Shahed (Chief Operating Officer), we are all from Dhaka University and working full time now, and invested our savings into this. We also took help from friends and families. Initially, we started with only BDT 0.20 million as capital.
The early days were interesting and difficult as well. We started using Tauhid's house as our first office and warehouse. In fact, it was our everything. After receiving an order, we used to pack the products and deliver ourselves.
Three of us have the experience of sourcing products, packaging and doing the delivery. Gradually orders started to pick up and our stock too. Then we realized that we couldn't afford to use Tauhid house anymore. We rent a single room as our first office in August 2015 and hired 02 new staffs to do the delivery and other things. Then we added another room in January 2016 as the operations continued to grow. Initially, we only dealt with Honey, dry fish, Black seed oil, Ghee and some other spice items. We moved to our current location in March 2016. Today, we are a team of 18 people with added locations for our operation.
Future Startup
What is Khaas food now? How does it work?
A.M.M Habibul Mustafa
We provide pure food products directly sourced from farmers that are hard to come by in an environment where adulteration is rampant. In the coming years, we plan to get into contract-farming and produce organic foods.
Organic food is a bit expensive compared to traditional chemical based cultivation because you can’t use artificial chemicals to increase the production. Our plan is to find ways to make organic food affordable to mass people at a reasonable price. Food is one the most important elements in our life. It affects everything in our life starting from our productivity, health to longevity.
We have a separate R&D department that tests every new item we add to our product line. A team of food experts runs our R&D department. We have a small lab setup here and we also take consulting support from experts from Dhaka University and Sher-e-Bangla Agricultural University. We are extremely meticulous when it comes to offering a new product to our customers.
When we decide to add a new item to our product line, we first eat it ourselves while our R&D team tests the product. Once our R&D team approves the products only then we add those to our product line. We don’t sell products that are not aligned with our brand promise even when they offer better profit margins. We offer replacement and full refund without asking a question if the customer is not happy with the product.
Future Startup
How many products do you offer now?
A.M.M Habibul Mustafa
We are offering around 100 products now and growing.
Future Startup
How does your entire business process, starting from sourcing to delivery, work?
A.M.M Habibul Mustafa
Most of the adulteration or chemical contamination in food is done by the middlemen in the supply chain. If we can replace the middleman, then the chances of adulteration come down to almost zero. Most of the farmers do not use chemicals or preservatives, even if they use it they do it without proper understanding.
For example, different types of honey are cultivated in different seasons. The farmer sells those upon harvesting. They hardly store as they need cash to run the cycle. They usually sell the products to the Mahajans, who store them for years. They sell it in the off-season with a higher price tag and add additives, sometimes, to increase the quantity.
We never buy from the middlemen. We work directly with the farmers and source the products from them. Our two manned sourcing team works jointly with our R&D team. The process is quite rigorous. When we decide to buy a product, we first bring the sample and test it in R&D and ourselves, if we find it okay then we formally do the buying.
Our sourcing team works extra hard, stay with the farmers, to collect the foods from sources.
The early days were interesting and difficult as well. We started using Tauhid's house as our first office and warehouse. In fact, it was our everything. After receiving an order, we used to pack the products and deliver ourselves. Three of us have the experience of sourcing products, packaging and doing the delivery. Gradually orders started to pick up and our stock too. Then we realized that we couldn't afford to use Tauhid house anymore.
Future Startup
Do you have partnerships or any kind of collaboration with farmers?
A.M.M Habibul Mustafa
We usually get into agreement with farmers who are fine suppliers. Before the agreement, we usually test run several times and when we are confident about the supplier, we make an agreement for a longer period of time.
Even then, all the incoming products are checked for quality. If any product fails to meet our standard, we return them to supplier immediately. The suppliers are inclined to maintain the quality, as we pay them the premium price.
Currently, we have over 20 farmer partners who are our regular suppliers and we are finding more partners. We have plans to move to contract farming in near future.
Future Startup
How do you reach out to your customers? What are the channels and mediums you using?
A.M.M Habibul Mustafa
Word of mouth has been one of the key growth drivers for us to date. Our customers often refer us to others. It has helped us immensely in reaching new customers. Our customer retention rate is also quite high.
Our Facebook page and website are our outlets to communicate with the customers. We are also spending on Google, FB, youtube and local ad networks for a while now. We send a complete products list with every order we ship. And then when there is a new offer or product, we send SMS to our regular customers.
We are very careful about making sure that our customers experience the best customer service possible. We make a call to every customer two days after the delivery of the order to take feedback about their shopping experience and product quality. If they complain about anything, we try to solve those problems immediately. This extra focus on customer service has helped us a lot to build lasting relationships with our customers. At the same time, it helps us to get genuine feedback from our customers.
We have been largely focused on Facebook for the past months, in fact, FB is our biggest order source to date, but we are now trying to take our audience to our website. To drive our crowd to the website, we are offering up to 15% discount on website orders. We are also planning more offline campaigns in the coming days.
Word of mouth has been one of the key growth drivers for us to date. Our customers often refer us to others. It has helped us immensely in reaching new customers. Our customer retention rate is also quite high.
Future Startup
How big is your business now? How many orders do you serve daily?
A.M.M Habibul Mustafa
We are serving 50 to 60 orders per day of an average basket size of BDT 800 per order. Our growth has been consistent and we are growing at 8-10% every month.
Future Startup
What are you doing to push the growth?
A.M.M Habibul Mustafa
We are doing two things: adding more items to our product line which is increasing our basket value. When a customer gets almost all the food items from one place they tend to order more items at once. At the same time, it is also helping our repeat purchase. We are pushing growth aggressively for the last 3 months and we spending more on Google Display Network and other channels.
Future Startup
How do you manage your logistics? Do you use third party delivery partner?
A.M.M Habibul Mustafa
We are not using any third party logistics service at this point. We have a small delivery team that manages our home delivery. Food products are perishable and most of the time glass jar are used for packaging which is breakable.
Moreover, it is hard to rely on third party logistics for on time delivery whereas we promise our customers 24 hours delivery, which is a key promise from our end to our customers. Managing delivery ourselves allow us to maintain greater control of the overall experience of our customers.
Future Startup
What are the key challenges for you now?
A.M.M Habibul Mustafa
One of the key challenges is investment. Grocery is an investment heavy business. In order to add more products to our product line, we need to invest more. Moreover, you have to stock food items if you want to give adulteration free food to your customer.
We purchase directly from farmers since it is impossible to ensure adulteration free food otherwise. When we buy from the farmers, we have to pay the price upfront, which may not be the case with middlemen that we can’t avail. Which means we always get to invest upfront for ensuring a regular supply of products. We are reinvesting our revenue into the business which sometimes makes it difficult to scale.
Future Startup
Are you planning to raise investment?
A.M.M Habibul Mustafa
We are currently in talk with a couple of VCs. We plan to raise investment in the near future.
Future Startup
What’s your plan going forward?
A.M.M Habibul Mustafa
For now, we want to make Khaas Food the ultimate destination for adulteration free, pure food products. We plan to add more items in the coming days so that our customers can get all their food products from us.
After that, we plan to get into contract farming for high demand products. Our plan is to manage end-to-end of product value chain in order to ensure the best quality and also affordable prices so that we can take organic food products to the mass people.
Future Startup
What do you think about competition, there are a couple of large to small companies working in your space?
A.M.M Habibul Mustafa
I would not say there are not companies offering food products. But I would not also say that there is not a growing demand for pure food products. There is a demand for pure food products and there is a demand for the work we are doing.
People, more often than not, feel helpless since there are not many options where they can get pure, organic food products with a superb customer service. We have taken the opportunity, found out an alternative medium to reach out to a growing urban audience and targeted a niche who are seeking pure products.
While it is hard to understand the process how your product came into being, what are the ingredients and other vital information, we make sure that we disclose everything related to the products you buy from us. This is where we stand out from the crowd. I think this is also helping us to differentiate and grow.
How we operate is also very different from other e-commerce companies who are dealing with food items. While we go to the sources to procure, directly work with the farmers and the producers, most of the e-commerce companies buy items from the local market.
I think we are trying to solve an entirely different problem which is adulteration and the likes. Our value proposition is simple: we make sure that you only consume the pure food products and we ensure the best possible customer service experience for our users.
For now, we want to make Khaas Food the ultimate destination for adulteration free, pure food products. We plan to add more items in the coming days so that our customers can get all their food products from us.
Future Startup
What are the key lessons from your last one year of entrepreneurial journey?
A.M.M Habibul Mustafa
Building a company takes an endless supply of passion and hard work. You will face a lot of hurdles and then there will be social and peer pressures. Our parents and relatives often ask ‘what are we doing after getting a BBA degree from Dhaka University. But if you are passionate, then hard work will not be painful for you in shaa Allah. And then make sure that you are working as a team. Create an environment where your people will feel at home and love to work.
We are not in this business for money alone. We are solving this problem because we are passionate about this problem and we understand the magnitude of the importance of pure foods in our lives. We believe this to be a noble act and important work for our next generation.
Being said that, there will be challenges and hardships but if you continue working hard and stay true to your customers and yourself things should get better.
For now, we want to make Khaas Food the ultimate destination for adulteration free, pure food products. We plan to add more items in the coming days so that our customers can get all their food products from us.
Note: Nezam Uddin and Ruhul Kader contributed to this story
