How a Kenyan Coffee Roaster Is Scaling with Local Impact in Mind.

In 2016, entrepreneur Ritesh Doshi was burnt out and uncertain of what he wanted to do next. For the previous five years, he had devoted himself to running the Naked Pizza franchise in Kenya. The project of bringing 30-minute pizza delivery service to Nairobi had begun out of a personal pet peeve: Ritesh, used to the quick turnaround offered in the U.K., couldn’t get a pizza while it was still hot when visiting family in the Kenyan capital. Ritesh had experienced significant success, delighting customers with quality and speedy service. But after throwing himself so completely into this business, Ritesh’s involvement in the pizza business ended abruptly, when Naked Pizza was acquired by Pizza Hut.

Having split his childhood and adolescence between the U.S. and Kenya, Ritesh was aware of how economic prosperity in one country and the lack of it in the latter shaped quality of life for so many people. He had grown up hearing his family members — many of whom were also entrepreneurs — extol the value of keeping your own success and that of your community’s in mind. And he wanted his next venture, now that Naked Pizza was behind him, to pursue that vision of achieving individual and collective success simultaneously.

Despite this desire to create economic opportunities for other Kenyans while building a company of his own, Ritesh was not sure what kind of business would help him meet this goal. He did know that he wanted to have another co-owner or co-CEO for his next venture, having endured the long, hard, and lonely road of building Naked Pizza in Kenya from the ground up by himself. Beyond this, Ritesh was wrestling with the larger question of finding his purpose. “I’ve struggled for almost 36 of my 37 years of trying to figure out what that is,” he says. “I wanted to be doing meaningful work.”

To figure out what he should do next, Ritesh decided to take a few months off to reflect.

A few months soon turned into more than a year, and Ritesh was still looking for his next opportunity. Then, a friend sent him a report on how Kenyan coffee farmers receive only a tiny share of the premium coffee bags sold in the U.S. for $16 or more, even for fair-trade exports. Roasting, rather than growing, was the stage of production that returned the highest profit, and most roasting of Kenyan-grown coffee was not done in Kenya. It seemed like if more coffee was roasted in Kenya, Kenyan roasters and even Kenyan farmers would benefit financially from sales abroad. And as a secondary effect, a greater supply of roasted coffee beans in Kenya would create greater opportunity for ambitious Kenyans to set up small businesses as cafe or coffee cart proprietors.

When he began his reflection period, the last thing on Ritesh’s mind was to launch into another food and retail operation. After receiving the report from his friend, Ritesh asked the owners of Spring Valley Coffee, the roaster down the road from him, a place he would often stop while walking his dogs, if they would be willing to sell their business to him. To Ritesh’s surprise, they agreed to sell. “For me, it’s about creating possibilities for people. I think that’s what my purpose is,” he says.

Now, nearly two months into running Spring Valley Coffee, Ritesh is working to build a culture and staff at Spring Valley that will ensure that Kenyans reap more of the financial reward from sales of Kenyan coffee.

THE PROMISE OF ROASTING

Spring Valley Coffee’s reputation for excellence was a major factor in Ritesh’s decision to purchase the business. He felt confident that if tourists came to the roaster to “fill suitcases” with Spring Valley beans for their friends at home, the roaster’s business could be expanded to the extent that it began to have positive impacts on the local Kenyan economy. “There was a great story behind this business,” Ritesh says of Spring Valley. “It was started 9 years ago by people who were passionate about the coffee business. And you can see it in terms of who they were selling to before I bought the business, in terms of the coffee, who was consuming it. And it has an evangelical quality.”

Buying a coffee roaster was in some ways a natural choice for someone who wanted to do something that starts in his own “backyard,” as Ritesh puts it, since coffee is such a major industry in Kenya. According to recent data from the United States Department of Agriculture, the East African nation exported more than 50,000 tons of coffee, with nearly 9,000 tons going to the U.S. alone.

However, as Ritesh learned shortly before buying Spring Valley, most Kenyan-grown coffees are roasted in their country of import. This often means that coffee farmers will sell a pound of their green coffee beans to a roaster in the U.S. for a few dollars — fairtrade standards guarantee a minimum of $1.40 per pound. It’s a price that can seem paltry in comparison to the price those same beans, once roasted, will fetch in the American market. The price of coffee, roasted or unroasted, fluctuates like any commodity, but a pound of specialty coffee is sold for about $20 in the U.S. “In the export market, there’s nobody who’s actually selling Kenyan-roasted coffee,” says Ritesh. “There’s some amazing Kenyan coffee that’s being sold all around the world, but that’s being roasted in the global market.”

By roasting coffee in Kenya and selling the roasted beans domestically as well as internationally, more of the value is created in Kenya, allowing for higher prices to be paid to farmers for their coffee. Roasting domestically allows Spring Valley Coffee to share a higher percentage of profits with Kenyan coffee growers, and pay a better salary to roasters and baristas. Some of the single cooperative coffees Spring Valley Coffee buys receive a premium for their beans through forward contracts that guarantee the price and allow cooperatives to invest in their farms and inputs. This was an opportunity for social impact that Ritesh found quite appealing, particularly because Kenya struggles with staggering youth unemployment.

“You know one thing that my grandfather has always said to me, and he’s 91 now, is that there’s always enough for everyone,” Ritesh says. “I think there are parts of our society globally, that believe in a winner-takes-all model, in a zero sum game, which I absolutely disagree with.” Instead, Ritesh considers his entrepreneurial work from a more holistic approach. “Don’t we have the responsibility to improve the lives of those around us? I fundamentally believe that we do.”

TAKING TIME

Ritesh’s long dormant period before buying Spring Valley Coffee stands in stark contrast to his experience with Naked Pizza, a venture he started very quickly, and which he now wishes he had taken more time to think about before pursuing.

The idea for Naked Pizza came to Ritesh suddenly when he was visiting his in-laws in Nairobi. Nightmarish traffic is a fixture of life in Kenya’s capital city, so for many city dwellers, waiting an hour or more for a pizza delivery is typical. For Ritesh, who was accustomed to the shorter waits found in the U.S. and the U.K., it was an opportunity to make a difference in Nairobi. “I couldn’t get a pizza in 30 minutes a few days in a row, so I decided to start a pizza delivery business,” Ritesh recalls.

He quickly pursued this idea and for the next five and a half years, Ritesh worked to make his vision of less-than-30-minute delivery times a reality. “We delighted customers every day,” Ritesh says. Customers would tell him things like, “I can’t believe we got this amazing pizza in 20 minutes,” and, “You know, I’ve never experienced customer service like this in this market.”

Though Naked Pizza excited its customers and legacy pizza industry companies — the company was acquired by Pizza Hut in May 2016 — Ritesh found himself unsatisfied with his venture and its impact. “I wish I’d actually consulted with more people,” Ritesh says of his time leading Naked Pizza. “I wish that I’d taken some time out. I wish I’d listened to my gut instinct much earlier in the process.”

But running the East African Naked Pizza franchise was an important first step for Ritesh toward running a business that benefited everyday Kenyans. Having studied at the London School of Economics as a young man, Ritesh went on to work in investment banking and then private equity in the U.K., work he describes as having the trappings of success but that didn’t deliver him the emotional and values-based fulfillment he wanted. It also was a first attempt at entrepreneurship, a longtime goal of Ritesh’s. “I got bitten by the entrepreneur bug when I was very young. I was surrounded by entrepreneurs — my uncles, aunts, parents. And I figured that’s what I wanted to do for the rest of my life, at some point.”

Learning to slow down, to take time and clarify his vision before starting a new venture helped Ritesh settle on a business that truly has the potential to realize his goals for bettering his fellow Kenyans’ economic prospects, even in just a small way.

During his reflection period, Ritesh tried myriad techniques to encourage introspection. Some of his first attempts, like entering a long silent meditation retreat that he left after a few days, didn’t work. But eventually he found methods that helped him, like working with an executive coach for a number of weeks. He cultivated habits that encouraged introspection and kept him grounded. He solidified a network of mentors — his own unofficial “board” — and attended leadership training. He wrote in a journal each morning to focus his mind on his goals.

These daily practices, which he still uses today, along with concentrated time working with mentors helped Ritesh realize that he wasn’t actually averse to returning to the food and beverage industry. In fact, he realized that he was more interested in the outcome of his work, rather than the specific vehicle he used to actualize his vision. It was more important to Ritesh run a business with a social responsibility mission that defined the enterprise and guided it through major decisions.

REFLECTION IN ACTION

As Ritesh gains his footing as Spring Valley Coffee’s new owner, he has a number of choices to make that will shape the business’s future success and impact on the Kenyan coffee ecosystem. Ritesh uses the clarity he gained prior to buying Spring Valley Coffee to help him navigate crucial points like exchanging short-term profit for an investment in environmentally friendly practices, or identifying the aspects of the company that need more resources and where he might expand operations through new offerings.

Ritesh knows that he must hire well in order to expand Spring Valley’s Coffee presence in Kenya and abroad. He has decided to sink resources into the enterprise and nearly double Spring Valley’s team. He has hired more baristas to support the existing staff at Spring Valley’s on-site cafe and supported the staff by bringing in an expert coffee trainer to further develop their knowledge base. Realizing that successful wholesaling will be a crucial piece of Spring Valley’s future success, Ritesh hired someone to run the coffee farm’s wholesale arm. Additionally, he has invested in the roasting process by hiring another person to manage day-to-day operations, so that Spring Valley’s roasting team can focus on the roasting.

Beyond bolstering existing operations, Ritesh has decided that Spring Valley’s path forward will also mean creating new arms of its business, like a direct-to-consumer coffee subscription and a second retail location. Both projects are currently in the planning process, and Ritesh plans to hire another employee who will run the subscriptions business.

Though this round of multiple hires may affect the bottom line early on, Ritesh stays focused on his long-term goals and refuses to cut corners. “There are certain things, for example, that are not negotiable,” Ritesh says. “One is the quality of beans that we use today. Yes, can we make a better margin by introducing a slightly lower quality bean? Will people realize? Most consumers, probably not. Will we make more money? Yes. Will we do it? Absolutely not!”

In the first two months of running Spring Valley, Ritesh has also chosen to eliminate plastics and use returnable glass bottles. This choice, according to Ritesh, will cut into profit but is worthwhile since Ritesh strongly believes in preventing pollution. “It’s really important to me, as an individual, as a consumer, as a person who walks through a public place that’s littered with plastic bottles,” he explains. Ritesh has also begun the process of switching coffee packaging from a plastic foil-based material to entirely recycled paper.

Ritesh’s belief in “doing good while doing well” finds fertile terrain in his plans for opening satellite Spring Valley-affiliated locations. In thinking through how to arrange these partnerships, Ritesh is wary of traditional models for franchising, which he says are “punitive, in some cases, to the franchisee.” Spring Valley’s model, instead, should empower Spring Valley’s affiliates. “I think, with levels of youth unemployment that we have in Kenya there’s an opportunity to actually give people that are truly entrepreneurial, who really want to manage their own time and their own money,” to become a self-employed entrepreneur in their own right, albeit on a much smaller scale, Ritesh says.

STICKING TO YOUR VALUES

To ensure that he will maintain the values and purpose that he identified during his reflection period, Ritesh has since established a number of support mechanisms that will keep him on track. “It’s so easy to get distracted along the way,” Ritesh says. “I think if I ask myself every day, what is my purpose? Is what I’m doing aligned to that purpose? It’s very simple — it’s either I am or I’m not. If I’m not, then something needs to change.”

In the first 54 days of owning Spring Valley, he’s maintained his daily habits of writing in his journal — 10 minutes about what he’s grateful for and 10 minutes about what he hopes to achieve. But he also relies on others to help him stay on track. He has developed a network of advisors, to help him ensure that he’s taking meaningful step towards achieving his impact-driven mission for Spring Valley.

“It’s a really good question: How do I keep myself accountable?” Ritesh says. “I think I’m incredibly focused. I’m incredibly determined, but I have a personal advisory board of people around me that I check in with and that are holding me accountable.”

Ritesh sees being transparent among his broader industry community as an important mechanism for ensuring accountability. “If I go out there and say we intend to do one, two and three and we’re not doing that, then that’s egg on our face,” he says. “It’s important, I think to be moving in the right direction in the spirit of where we’d like to go. I’m biased towards action. I’d rather start taking action than talk about it. Words don’t mean anything to me, unless we’re moving in that direction.”

Now, with his mission clear and 14 employees to back him up, all that remains to be seen in Ritesh’s journey is whether or not he can execute on the economic impact he hopes Spring Valley Coffee can achieve.

REFLECTION QUESTIONS

What are the core values of Spring Valley Coffee?

Draw a three circle venn-diagram with one circle for each: purpose, passion and profit. First, complete the diagram for Ritesh using what you’ve read in the case. Then, think about your own pursuits. How could you use this venn-diagram to clarify your path forward?

At day 54, Ritesh has 14 employees working for him. If you were Ritesh, where would you expand your operations next? Why?

How is Ritesh staying true to his values and purpose during rapid growth? Would you use the same tactics as Ritesh? Why? Why not?

 

Watch the video on Ritesh’s journey to find his purpose.

 

 

 

 

eCorner

4 September 2019