CHAI MOTO HOTEL: Is the investor perspective out of touch with reality?

VilageA couple of weeks ago I was having a conversation with one of my friends within the entrepreneurship support ecosystem in Nairobi; and he gave me a story that I found fascinating.

Once upon a cup of hot tea..

30 years ago, he was a small boy growing up in a village somewhere around the Meru region in Kenya. His mother used to take him out once in a while to go shopping at the nearby shopping center; so that he could help her carry the shopping back home. During those shopping trips they would get into a nearby local restaurant to have lunch before embarking on their journey back home.

The restaurant was owned by a local business man with its name written on its wall in red capital letters “CHAI MOTO HOTEL”; which when translated to English mean “HOT TEA HOTEL”. My friend grew seeing the restaurant all through his primary and high school life until he left to come to the big city for his university studies. Fast forward, today my friend lives in the big city of Nairobi and he rarely visits his rural home due to his busy schedules. When he does go back home, his time is all spent catching up with his family; and in no time he boards his car and drives back to the city.

However, as fate could have it, Kenya had a repeat election in October and my friend took advantage of the break to go back to his village. Out of curiosity, he went to the same old shopping center where his mother used to take him some 30 years ago.

How do you keep a cup of tea hot for 30 years?

Just when he had gotten into the shopping centre, my friend saw the same old words in red capital letters “CHAI MOTO HOTEL”; on the wall of the same old restaurant he used to visit more than three decades ago. The paint on the wall of the restaurant had faded away and even the red words were now a pale shade of the former bright words from 30 years ago. Overcome by nostalgia, he chose to go into the restaurant and buy a meal to remember the old good days.

Inside the restaurant, the same wooden sits used over the years were still there, arranged in the same manner they were back then. They were however now old looking and weak, but still served the purpose for the restaurant. Typically, not very many people sit on the chairs on any given day since in rural settings eating in a restaurant is a luxury that is not quite tolerated economically. So the chairs seemed to have a few more useful years before they are depreciated fully.

When my friend sat down in his favorite corner, he looked to the serving counter in the restaurant and his eyes met with those of the same business man who has been running the restaurant over the past 30 years. He is now old with grey hair all over his head and is wearing a huge black jacket, may be to keep him warm.

As the old man rises to call a waitress from the kitchen to come and serve him, my friend realizes that his back is now bent. Apparently, wear and tear is eating into this old man’s former athletic stature. He obviously looks tired and sleepy with teary eyes, but nevertheless he is still at his business running it in the same place, the same way and serving the same community 30 years later.

The investor perspectives

CHAI MOTO HOTEL did not change anything in their business strategy over 30 years – except maybe adding a few more items to their menu list – but it still survived all those years. Never mind the fact that it did not expand to any other place or increase its internal capacity to handle more customers; the restaurant still has seen more election cycles than I have seen in since I was born!

This then brings me to my big questions as they would be asked by an investor analyzing the business:

CHAI MOTO HOTEL having been in existence for 30 years without any changes nor growth, how did it survive in the same village and shopping center to date? What happens next when the old man finally bows out of the business? How do we quantify the brand equity for CHAI MOTO HOTEL having lived through 30 years of dynamic economic and social environments without being floored? What is the valuation of the whole business today verses 30 years ago? What has been the impact of CHAI MOTO HOTEL to the local community, and can we quantify that in monetary terms? Finally, was the business worth the sweat and investment made to keep it running all those years anyway?

Ladies and gentlemen, is the investor not seeing the bigger picture about a cup of tea that has been hot for 30 years? Is the investor perspective out of touch with reality?

 

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