Food and beverage Jan, 27 2016

Frothy formula for franchise fraternity

By Rashi Mathur, TFW Bureau
Feature Writer
Frothy formula for franchise fraternity

Indian café market has become an important segment of the F&B industry. The industry, which stood at Rs 25,166 crore in 2013; is expected to touch Rs 41,800 crore by 2017. The taste and inclination of time-pressured consumer is giving way to convenience-based option, which is primarily driving the growth of cafes. The market has witnessed high growth in recent times. Let us have a sip of this growing market. Franchise opportunities in India for café chains are swirling high with leading brands coming forward, offering business opportunities. International brands have helped in bringing the café culture to the forefront in franchising. According to Technopak report on ‘Indian Café Market’, there has been an addition of 1,250 stores over last five years.

Hot trends

The total number of organised cafe chains currently stands at 3,500 and is expected to touch 6,200 by 2020. The coffee chain business is expected to grow at a Compounded Annual Growth Rate (CAGR) of 20% in value. The café chain market stands at Rs 1, 820 crore, growing at 20% in value and constitutes around 27% of the overall café market. The market is ripe, brimming with opportunities for the investors. Barista, Gloria Jean’s Coffee, Costa Coffee and Coffee Bean Tea Leaf have been the predecessors in Indian café market.

What it takes to open a café in India?

Investment: Rs 30 lakh onwards

Area

Small format: 500-800 sq. ft onwards

Large format: 1500 sq. ft onwards


Café potential in Indian market

After ending ties with India, Australian café chain, Di Bella re-entered Indian market last year. Another Australian brand, Gloria Jean’s Coffee is revamping itself in India. A brand of Retail Food Group (RFG), it is currently recruiting master franchise partners. Andre Nell, CEO, RFG said, “With opportunity for at least seven licenses across India, we are confident that our business model will be a point of difference for potential partners. The country’s retail and F&B sectors have evolved over the last decade, leading to a high level of consumer interest in specialty and gourmet brands in particular. Reports show that market is expected to value around $35 billion by 2020.”

Emerging tea industry

Coffee chains occupy a principal share in the Indian beverage market. However tea being the staple drink of people, tea cafés is also emerging. The brands are coming up with exclusive cafés, lounges or bars that are offering a unique business proposition to prospective franchisees. Brands offering opportunities in this sector are Wagh Bakri Tea Lounge, Tea Trails, Chaayos and Chaipatty among others. Uday Mathur, Co-Founder, Tea Trails said, “The tea production in India grew 7% last year. The market for tea lounges, the space in which Tea Trails operates is nascent. If the coffee cafe growth seen in the last few years is to be the benchmark, the market is expected to double from the current levels by 2017 and reach a value of Rs 2,000 crore.”

Why invest in tea-cafés?

•Low rental, low risk

•Strong cashflow

•Low initial cost

•Low working capital

•Early breakeven

•Large consumer base

•Perennial product mix

Related: Basket of Benefits

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