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Food and Beverage 2012-03-04

Baking franchise profits

By Neha Gohil Feature Writer

With a vision ‘to help people express their happiness in a memorable way’ Khrorakiwala family bought Monginis in 1960. Since then the brand has made its presence all over India and overseas as well. In an interview, Zoher Khorakiwala, Chariman Managing Director, Monginis Foods Pvt. Ltd shares the inception and success journey of Monginis.

Neha Gohil (NG): Tell us something about the inception of ‘Monginis’?

Zoher Khorakiwala (ZK): Monginis as a brand traces its roots back, to early 1900s when it was a favorite with the Europeans in Mumbai. The shop, located in Mumbai's Fort area, run by two Italian brothers, Monginis was a must at every celebration. In the 1960s, Monginis was bought over by the Khorakiwala family and after that history was made. By 1971, the idea of having a nationwide franchise network and reaching out to customers in the neighborhoods was born.

Monginis now is the place from where all the yummy stuff emerges. It is the nationwide headquarters, to which all manufacturing and cake shop franchisees report. It is the fountainhead of ideas that are good enough to eat.

NG: What is the USP of ‘Monginis’?

ZK: USP of Monginis is ‘value for money’ products.

NG: Why and when did you take up the franchise route for expansion?

ZK: We started franchising way back in the year 1971. We opted for franchising because:

  • Our business requires 100 per cent time and commitment of the franchisee;
  • Franchising harnesses the entrepreneurial skills of a franchisee and at the same time Monginis gets a local familiar face behind the counter as its local representative.
  • With franchising brand reach can be increased rapidly. 

NG: How has franchising helped the brand so far in achieving its target?

ZK: Franchising has certainly helped a lot in growth of Monginis brand. Dedicated franchisees, spending all their time in promoting and selling its products has not only resulted in increased sales but also in spreading a positive word of mouth around in their respective neighborhoods.

NG: Presently, how many franchisees do you have? What are your future expansion plans via franchising?

ZK: We have 600 retail franchisees and 10 manufacturing franchisees. We want to take this number even further. For this we have devised very attractive proposal for those who are interested in becoming our manufacturing franchisees.

NG: In which overseas markets the brand has marked its presence?

ZK: Monginis is present in two cities in Egypt viz. Cairo and Alenxandria. But, through our e-commerce website we reach out to anybody in the World. One can place order from anywhere in the world for the cake to be delivered in any of the 37 cities in India, where Monginis is present.

NG: How much area and investment will a franchisee require?

ZK: For a manufacturer franchisee, Monginis begins with a ‘Bake Shop’ situated at the most prominent location in that city. A bake shop is a bakery shop, which retails the products manufactured in the backside of the shop. The shop must have a minimum carpet area of 75 – 100 sq. m; total investment of approximately Rs 30 lakh excluding premises.

However the retail franchisee must be able to make a total investments of Rs 10,00,000 excluding the shop premises; must have initial working capital of Rs 1,00,000 to finance the stocks of around Rs 80,000 and a market credit of Rs 20,000. The shop must cover an area of at least 200 sq. ft with a minimum frontage of 9 ft. with high visibility area – station, market, main road, next to a very reputed crowd puller (like a mall).

NG: What all services do you deal in?

ZK: We deal in:

  • Home Deliveries: Cakes booked by the customers are home delivered on request;
  • Online Store: Monginis has a online store, where one can buy or gift cakes and other products, which are door delivered;
  • Birthday Party Organisation: Monginis has tied up with qualified vendors for this purpose

NG: It can be lucrative business venture for aspirants. What are your views on it?

ZK: What Monginis offers is assured business right from the day shop is opened. One need not even wait very long for break even. It’s a transparent, steady business with sales spurts on days like Valentine’s Day, Xmas, New Year, Rakshabandhan, etc. To make it even more profitable entirely depends on the efforts and business skills of the franchisee.

NG: What according to you are the advantages of running a franchise of bakery? Mention few challengesand how can they be overcome?

ZK: The advantages of franchising out of a bakery business are stated above. But, managing a franchised out bakery business is not so easy. There are certain factors like taste, freshness and hygiene which can make or break the business. Even though the best of the products are delivered to the franchisee, and if they are not handled or stocked with proper care, the same products get damaged. Also, last minute orders, which are increasing day by day, pose another challenge. To cater to these orders, one needs to maintain optimum stocks at the franchisee shops. Under stocking leads to loss of sale whereas overstocking leads to higher returns of stale unsold goods. Therefore, there are not many chains of franchised bakeries in the World. One learns the intricacies after experiencing only.

NG: What can you say about the future in this field? Is this sector promising for entrepreneurs?

ZK: Future is certainly promising. Celebrations are increasing in terms of scale and frequency. But, the business is difficult due to its intrinsic factors as mentioned above and also because of competition from unorganised local bakeries coupled with strict government policies and regulations.

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