Advisory Sep, 27 2014

How to start a sweet doughnut business

Doughnut business is being touted as the next big idea for potential investors. After pizzas and burgers, it is time to welcome the doughnut business in India. Time is right to invest in the biz which is selling like hot cakes!

By Sandeep Rana, TFW Bureau
Senior Copy Editor
How to start a sweet doughnut business

Though there is no separate category for Doughnut market but it is falls under the organised Quick Service Restaurants (QSRs) and Café market in India and is pegged at Rs 10,000-12,000 crore. This industry is growing at 10-15 per cent year-on-year.

Thai-brand, The Donut Baker introduced doughnuts to the Indians in 2008 with its Bangalore store by Global Franchise Architects (GFA). Following this, Singapore brand- Mad Over Donuts made its entry into this segment.

Going further, arrival of American brands Dunkin’ Donuts, Krispy Kreme and Indian brands like Super Donuts have opened a plethora of business opportunities along with choices to the consumers.

Glazing the sweet biz via franchising

All the foreign brands selling doughnuts are hooked on to the franchise model. This is further offering many opportunities to the entrepreneurs here.

Dunkin Donuts, known world over for doughnuts, baked goods and coffee, has launched 36 Dunkin' Donuts restaurants across 12 cities in India till date through its Master Franchisee, Jubilant FoodWorks Limited.

Ajay Kaul, CEO Jubilant FoodWorks Limited, says, “We plan to steadily expand through the year across North, West and South India. With the evolution of the young adult Indian consumer, we feel very confident that Dunkin’ Donuts will resonate very strongly with its unique positioning in the Indian Food Service Industry.” The brand is present across Delhi NCR, Chandigarh, Punjab, Uttarakhand, Haryana and Maharashtra.

On Indians having taste buds to try all delectable Western cuisines, Ketan Kalra, CEO, Super Donuts, says, “All thanks to the great adaptability of Indians and also the crave to try new food products especially sweets or desserts. Moreover, Doughnuts have the traits and taste close to basic bakery products or desserts, hence having a mass target audience.”

Super Donuts has set an ambitious target planning to open 12 stores every year. It has already opened two stores in Chandigarh and third one is under construction in Solan

Also, Krispy Kreme is looking at 80 restaurants by 2017. It presently has 12 restaurants in Bangalore, Chennai and Delhi. Bedrock Food Company Pvt. Ltd is a licensed franchisee of Krispy Kreme Doughnut Corporation for the North India region.

Opportunities:

All brands in this segment are offering umpteen opportunities to the entrepreneurs. Owning a franchise of any of the doughnut brands could prove fruitful. On the existing opportunities, Dev Amritesh, President and COO, Dunkin’ Donuts India said, “Our research shows that the evolved young adult consumer finds the QSRs in India as infantile and the coffee shops as somewhat formal and not an ideal option for food occasions. Dunkin’ Donuts in India is as an Adult QSR brand that responds sharply to the life and consumption context of the young adult consumers.”

Challenges:

Not being popular like Pizza, Burger and Coffee chains and being new to the Indian market, this new sector has many challenges too. Though several foreign and Indian brands have forayed into this segment but challenges continue to stare in the face.

Purwa Sinha, Director, Krispy Kreme, feels, “The biggest challenge is supply chain and providing value to the discerning Indian consumer. For supply chain, we work with our partners to improve the infrastructure and also look at locating stores close to each other so we can control supplies and costs when restricted to a smaller geographical region. Regarding value for the customer, we are constantly looking at new products that we can offer from which our customers derive more value.”

Whereas, Ketan feels, “Majority of people are not aware of doughnuts. Few mistake it for a bun or even a muffin, small and untrained bakeries spoil the taste of it and hence discourage revisits or the spread of word, finding the right baker for it, restricted respect, fear to experiment and lack of ordered or framed investment.”

The doughnut industry is crawling towards the success ladder. 

As there are a few brands in India, but the opportunity to cash on the dividends it is offering is huge. Taking a franchise of a doughnut brand is surely going to set a swift pace for your business.

Related: India the land of prosperity for western brands

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