In December of 2013, two brothers – Yeshwanth Nag Mocherla and Ashwin Mocherla – founded Thickshake Factory (TSF), a grab-and-go beverage company. By 2017, TSF’s revenues had grown by over 180%. The TSF brand had become so popular that the company had grown to 45 (40 franchised and 5 owned) outlets in South India. It was projected that the company would have annual revenue of USD 5 million by the end of 2017. In order to sustain business popularity, profit, and longevity, the Mocherla brothers felt that they needed to explore other locations for expansion. 

After the success of the product in South India, the brothers tested other geographical Indian markets and found promising results. However, the brothers could not help wondering whether it was viable to go global and explore the international market. And, if they did, which country should be first on their list for expansion? Should they extend operations to other developing countries in Asia, or should they set out to enter developed and powerful markets, like the United States? 

How The Idea Became a Business While traveling across Europe, Yeshwanth and Ashwin noticed that a lot of people walked the streets with a thick shake in their hand. This drink consisted of milk, nuts, fruits, ice cream, and other ingredients. Thick shakes could be used to quench thirst and satisfy hunger. The brothers bought a shake and ate the fruits and nuts in it with a spoon. When asked about the experience, Yeshwanth stated: “About five to six years ago, I don’t think people in India knew what an actual milkshake was. When you go to a typical multi-cuisine restaurant in India, somewhere on the menu, there is a milkshake, which is always more like flavored milk.”

Yeshwanth envisioned a great business idea in selling authentic, high-quality milkshakes, or thick shakes, in India. His hypothesis was that in a country like India, where people love sweets, the product would easily gain acceptance. Yeshwanth explained that: “The idea behind calling it a thick shake is to change the perception people in India have about milkshakes.” Thus, the Thickshake Factory (TSF) was born. It was determined that a thick shake had to consist of milk, ice cream, and other ingredients like fruits, nuts, syrup, chocolate, cookies, etc. Upon further contemplation, it was also determined that a medium-sized drink would be 16 fluid ounces, and consist of roughly 700 calories, depending on mixins selected, and the starting price would be USD 2.10. While TSF initially bought ice cream from a high-quality supplier, the brothers quickly realized that if they produced their own ice cream they would get a competitive advantage in the market. 

Additionally, Ashwin had a fair idea about how ice cream was manufactured, based on his internship in the ice cream department at Amul, one of the largest producers of milk and milk-based products in India. The brothers spent six to seven months manufacturing the perfect ice cream for their thick shake. All ingredients were sourced through local suppliers. Ravi Kumar (the brothers’ father) headed ice-cream production, while Yeshwanth Nag Mocherla and Ashwin Mocherla managed the major functions of the Thickshake Factory.

In December 2013, the first TSF store opened in Hyderabad, India. It was founded on the concepts of a milkshake and smoothie shop that focused on the use of local ingredients. The menu had more than 40 drink options, with the additional option to customize one’s own drink. The brothers’ ultimate goal was to bring about a change in lifestyle and drink presentation in India. Yeshwanth recalled, “I used to be at the counter every single day talking to customers, understanding what they liked and what could be made better. This really helped us understand how the customers thought and what mattered to them.” Initially, and to their delight, they were able to generate sales of nearly USD 400 daily. 

The hard work had paid off. With a large consumer market across all age groups, TSF did daily sales of USD 385–460 in the first two months. Additionally, TSF was witnessing 200% growth year-onyear, with no external funds being raised. In comparison to other western fast food restaurants in India, such as McDonald’s, Subway, and Burger King, TSF sold no other product besides shakes. Furthermore, they were the only premium milkshake chain in India that managed its entire value chain end-to-end. Subway and other restaurants sold thick shakes, but due to the vast food range they could not offer many thick shake varieties. Due to economies of scale, western restaurants claim higher buying power over the distribution channels, hence their shakes have lower prices. Growth Considerations The family agreed that, since the product was so successful, exploring new markets was viable. There were several options to consider, but they felt strongly about the opportunities that presented themselves in the United States, where the Mocherla family had family friends in California. 

The Mocherla brothers were excited about the prospect of entering a challenging, yet fascinating, market such as the United States. Smoothies and milkshakes were already popular there, and Ashwin felt that, like in India, they would not have to work towards introducing new concepts. They knew, however, that there would be other challenges, like competing with well-established companies already selling good quality milkshakes in America. 4 Competing with those companies would require significant resources. Ashwin thought that instead of investing a lot of time, money, and resources in setting up several stores at once in the United States, TSF could adopt a less aggressive strategy. They could test the market with one store by investing USD 45,000. Depending on the performance of that store, the family could think about investing further. By establishing one international store the TSF brand would become global and the company could use it during promotions to create higher customer engagement levels in India. 

Ashwin felt that the United States was a far superior market and would have greater consumer interest for their thick shake product. It was the world’s biggest economy and was considered the “land of opportunities.” It also had the largest economy and boasted plentiful opportunities for the expansion of TSF. Again, the question that TSF leaders had to answer was whether the United States was the right move for growing the company globally. A lot of businesses were looking at emerging markets like India to increase the sale of their products or services; very few companies were thinking the other way around. Furthermore, the thick shake product was not unique in a market like the United States, as it was a product that was inspired by U.S.-based companies like Subway, Starbucks, and Wendy’s. These restaurants were present in most suburbs all over the United States. The cost of a medium-thick shake or smoothie in the United States was roughly USD 2.5–3. Many small restaurants and large chain diners offered good-quality thick shakes and the market was highly saturated. Substitute products like iced coffee, smoothies, and juices were also easily available.

Thickshake is considering further expansion into the United States as a potential avenue for company growth. First, discuss and explain Thickshake’s potential for success in the new international market. Based on your analysis, which entry mode (if any) should Thickshake use to enter the United States market to increase its strategic competitiveness?