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Food and Beverage 2011-11-28

Blending coffee with franchise success

Coffee chains today have become an integral part and parcel of every society, community, class or region. International as well as national coffee having acknowledged the potential and growing popularity of coffee culture, have successfully established th

By Neha Gohil Feature Writer

The Indian coffee industry is currently about four to five hundred crore market, and is still growing. Many national and global cafe brands have already established their presence in Indian market and several others are gearing to enter Indian café world. Franchising has enabled them to grow faster as the franchisors can expand into new markets with minimum capital risk where as the franchisees can start their business with minimum risk of failure. Franchising also offers sustainable growth to both brands and investors.

The present scenario is exciting for all three: the brands, investors and the consumers. The gap in the coffee market offer franchisors a scope to extend their footprint in new locations. The investors get an opportunity to start their ventures. Also, the increasing competition among cafe brands is benefiting the consumers too.

Market drivers

Speaking on the current developments in the café industry in India, Tony White, Regional General Manager, Gloria Jean’s Coffees International comments: “Domestic coffee consumption in India has increased significantly over the past 10 years, but there is still ample scope for growth, especially in terms of franchised operations.” The increasing spending habit of Indian youth indicates that the coffee shop market is certain to grow drastically.

Indian consumers visit cafés in shopping mall, high street, school, college, hospitals etc. Cafes have gained the reputation of being the best meeting point for social as well as corporate purposes. The factors driving the Indian café sector are:

Rise in purchasing power: With rising income level of the Indian consumers, discretionary spending on food and beverages has also increased. More and more people do not mind spending extra bucks for their favourite cup of coffee in a branded café in comfortable ambience.

Social meeting points: The growing trend of people visiting cafeterias for social and business engagements has encouraged the prominent café brands to penetrate even in the smaller cities. The cafés offer an excellent meeting point for people to chat, relax and even have business meetings over a cup of coffee. Youth appeal: Nearly half of Indian population comprises people who are of age 25 or younger. Young people more often look out for a place where they can hang out with friends. Students get a higher pocket money which the can spend in cafes. They are an important consumer segment for the café brands seeking large customer base.

Focusing brands

The Indian coffee industry is dominated by many national as well as international brands, which have been well accepted by the consumers. Café Buddy, Brewberrys, Café Desire, Barista, Café Day Xpress, Cuppa are few of the national players while Costa Coffee, Gloria Jeans Coffees, Café Oz are some international players. Starbucks will be entering India through a joint venture with Tata. Dunkins’ coffee has also taken franchise route for expansion into India.

Franchise scenario

Franchise model has helped many café brands to expand quickly, profitability and grow their brand further.
Sharing how franchise model has helped the brand to grab a large market share, PK Gupta, Founder, Café Buddy’s says: “I was convinced that franchising is the only mode that makes it possible for a brand to expand rapidly and cost-effectively. Café Buddy’s as a brand serves the masses. It would not have been possible to mark our presence across the nation without franchising.”

Café Buddy has 110 franchise and 35 company owned cafés across India. The brand’s franchise fee is Rs one to three lakh. Whereas, seeking for committed and entrepreneurial spirit in a prospective franchisee, Brewberrys investment starts from Rs 7 to 40 lakh. Brewberry has 50 franchise outlets so far.

Café Desire, another popular brand is present pan India with 35 franchise outlets in malls, high street market and residential markets. The brand has a demand Rs 50,000 franchise fee deposit which is refundable.

Gloria Jeans Coffees, an international brand has also become popular among consumers. It is present in cities like Mumbai, New Delhi, Bengaluru, Pune and Chennai via master franchisor Citymax Hospitality Pvt Ltd.

The Coffee Bean & Tea Leaf is seeking franchisees and targets across premium high streets and malls in all major metro cities in India.

Challenges

Along with opportunity lie the challenges for both - new players and as well as existing ones. Indians are price sensitive and are used to a cup of coffee not costing more than Rs 15 to20 in small restaurants. Organised coffee shop chains have price range between Rs 50 and 75. As Indian consumers have become increasingly brand conscious they are willing to pay more. But if the brands will further increase their prices, then they are sure to be in a tight spot, as customers have plethora of options to suit their budget.

The café owners will have to bring in product innovation, customisation and maintain quality and service standards to lure the clientele. How critical are these factors for operational success of the stores is explained by Ronak Kapatel, Director, Brewberrys Hospitality Pvt. Ltd. He shares: “We do not just provide coffee to our guests but also provide them with lip-smacking cuisines that are cooked in the cafés only. We understand people do not come to café just to have coffee; rather they come to sit, talk and relax.”

Location can also be a problem as existing cafe players have already snapped up premium locations in big cities. So the competition for premium space is going to blow up. Existing players would face another challenge of retaining clientele and as well as employees. Kapatel tells: “One of the major challenges is to get a good location at reasonable commercial rates.”

Finally….

However despite the bottlenecks, the cafe sector has enough potential for all the players. The question now is whether they can successfully brew a winning potion. The sector is not only promising for aspiring entrepreneurs but also for people working in the sector this would mean more job options. Besides this consumers too are in a win-win situation!

Comment
Krishna Vyas 13, Jun 2011 at 05:46 PM
We are interested for looking fanchisee... Contact us...
manish chandna 13, Jun 2011 at 06:13 PM
keen on Farm2Kitchen kindly let us know of their plans for DEHRA DUN
najemah 13, Jun 2011 at 06:25 PM
Its a good concept but the details of the same are not sufficeint. Plz send the details.
kanika dang 15, Jun 2011 at 08:30 PM
its seems to be a good concept...kindly send more details for farm2kitchen.Thanks.
Sunita 16, Jun 2011 at 07:05 PM
Pls. send me more details, investment, space and can I start up here at Pune city ?
Yashodhan 16, Jun 2011 at 07:23 PM
Pl send the details.
Md Masood Hussain 20, Jun 2011 at 01:18 PM
its great just pass me the complete information
NIRAJ MADANLAL KASLIWAL 21, Jun 2011 at 03:21 PM
Pls. send me more details, investment, space and roi
rajesh baveja 22, Jun 2011 at 05:57 PM
i m interested in one of these franchisees
Richard 23, Jun 2011 at 07:22 AM
Can i take this franchise for a location like Greater Noida. I am also open for a Delhi franchise. Kindly advise. Thank you.
Aditya Bal 23, Jun 2011 at 05:30 PM
Thanks for providing such an opportunity. I would like to know about the financial allocations to be made and also details about the space required, investment and i would like to start up in Nagpur city
harpreet singh 24, Jun 2011 at 07:01 PM
Hi Its a good concept...Pls. send me more details, investment, space... i would like to start up in delhi...
Muralidheran 25, Jun 2011 at 01:21 AM
Hi, I am based out of Kochi. And am interested to know more about this Franchisee opportunity. Please revert.
haresh paryani 25, Jun 2011 at 02:59 PM
Interested in Master Franchise for PUNE DISTRICT (MAHARASHTRA) KINDLY SEND MORE DETAILS.
Aditya Bal 26, Jun 2011 at 11:55 PM
I would like to know the details. plz send. i have already posted
Home Solutions 27, Jun 2011 at 03:39 PM
Kindly provide me the details for Gaziabad.
Ramesh Babu 27, Jun 2011 at 05:01 PM
Hi, I am based out of Hyderabad and I am interested to know more details, investment, space (location). I am interested to start in Hyderabad. Please revert
Ketul Mehta 27, Jun 2011 at 05:39 PM
Thanks for providing such an opportunity. I would like to know about the financial allocations to be made and also details about the space required, investment and i would like to start up in Vadodara city
prabhat ranjan 28, Jun 2011 at 04:27 AM
how much investment for franchisee of fresh & ripe business plz tell or suggest me. i would startup in ranchi it is small city and capital of jharkhand
ashok awatani 28, Jun 2011 at 10:41 PM
i am interetsed in fruits & vegetables franchisee so plz call me
Yasin Zariwala 29, Jun 2011 at 04:44 PM
Hi, I am based in Mumbai. And I am interested to know more about this Franchisee opportunity. Please revert.
sudesh pai 05, Jul 2011 at 05:19 PM
I am interested in this plz send me more info .
Prriyankaa Singh 04, Jun 2012 at 04:49 AM
Dear Yasin,\r\nWe have started a similar concept in Mumbai. If you are interested plz let me know by reverting on my mail id with your details.
Preeti 03, Nov 2013 at 09:56 AM
Very good business concept.. Even i would like to startup with this business option in guwahati (Assam). Appreciate if you could send me an email with the complete details. Thank you.
Amit Nain 14, Apr 2014 at 05:55 AM
I am very much interested in franchise of retailers
Tariq Ahmad Khan 09, Jul 2014 at 04:10 PM
I am from srinagar Kashmir, I like this concept, Kindly provide me details of requirements, like investment, Space, formalities.
Tariq Ahmad khan 09, Jul 2014 at 04:13 PM
I am from Srinagar Kashmir,I like this concept .Please provide me the full details like .Space, Investment and formalties
Tariq Ahmad 09, Jul 2014 at 04:14 PM
I am from Srinagar Kashmir,I like this concept .Please provide me the full details like .Space, Investment and formalties
tariq 09, Jul 2014 at 04:15 PM
I am from Srinagar Kashmir,I like this concept .Please provide me the full details like .Space, Investment and formalties
Abhishek Gupta 13, Sep 2014 at 02:53 AM
Hello dear,Seems very very much interesting, send me complete details to start this business.RegardsAbhishek
Manish 22, Feb 2015 at 08:20 AM
please send me budget and conditions. process for starting.
sweetlene 03, Mar 2015 at 08:36 AM
can i have the full details , investment and facilities required etc.? This is for opening a franchise in Chennai. Thanks.
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