Opportunity Jun, 16 2015

Non-traditional retail formats are the new hotspots

It is important for franchise brands to find new locations in order to build recognition and bolster their franchise network from time to time. Market saturation can lead to brand dilution and hence digression is needed. Lets us learn how after establishi

By Rashi Mathur, TFW Bureau
Feature Writer
Non-traditional retail formats are the new hotspots

According to Indian Brand Equity Foundation (IBEF), the Indian food service industry is expected to reach US$ 78 billion by 2018. The Indian gourmet food market is currently valued at US$ 1.3 billion and is growing at a Compound Annual Growth Rate (CAGR) of 20%. It is expected to cross US$ 2.8 billion by 2015. Be it QSR, fine-dine, café or lounges; F&B industry has experienced breakthrough profits lately. The most important factor that has contributed to the giant stride in this sector is the right franchise location. A food business can earn heightened returns if the site is able to attract a decent footfall.

The boon of non-traditional locations

Non-traditional locations include airports, college campuses, sporting events, stadiums, petrol pumps, hospitals and other locations where bulk of population dwell, visit, assemble or happen to pass by. These locations develop brand awareness and help the franchise grow in size. Non-traditional locations can be leveraged as a distinctive way for franchisors to strengthen their portfolios. They involve low set up cost. The real estate cost is also considerably low. Owing to low franchise fee and limited staff recruitment, it is a lucrative opportunity for starters and young franchisees as well.

Established adopters of non-traditional space

SUBWAY, one of the leading QSR chains of the world created a landmark for itself by taking the count of its non-traditional stores to 500 in the UK market with plans to open more stores in locations such as petrol forecourts, convenience stores, hospitals, transport hubs, universities and colleges across UK. Alice Chalmers, National Accounts Manager for SUBWAY UK and Ireland says, “Being one of the largest sandwich providers of the UK and Ireland market, it is crucial for the brand to achieve growing heights in the convenience retail sector.” The addition of SUBWAY franchise into a convenience store will bring an increased footfall and remarkable business growth opportunities for the brand.

Tracing the trend in India

In India too, SUBWAY has been successfully operating restaurants at non-traditional locations. Given its minimal requirement for space and equipment, SUBWAY offers convenient options to franchisees wanting to operate out of such locations. Manpreet Gulri, Country Head, SUBWAY Systems India Pvt. Ltd says, “SUBWAY’s fresh and healthy menu suits these locations because of its adaptability and convenience to customers looking for a quick yet healthy meal. Most restaurants in non-traditional locations like airport terminals, highways, college/university campuses, railway stations and hospitals tend to do well because they offer great flexibility in terms of hours of operations and consumer preferences of eating healthy. These locations form an integral part of the overall growth and development strategy and have been a large contributor to SUBWAY’s positive growth. At present, approximately 10% of the total SUBWAY restaurants operate in non-traditional locations. As per the brand’s expansion plans, SUBWAY India expects to take the figure up to 20% in the medium term.”

Cookie Man is another international brand that has a presence in non-traditional locations. It earns high returns by way of revenue per square feet from airport stores. Anupam Saluja, Chief Executive Officer, Australian Foods India Pvt. Ltd says, “Cookie Man has kiosks at airports which are points for a premium brand’s presence. Retail at airports presents the opportunity to reach out to a grand audience, where people awaiting their boarding call indulge in buying gifts for their loved ones or colleagues because they have the time. Footfall at the airport outlets is almost guaranteed.” Indeed non-traditional locations can greatly help in driving the growth of F&B brands.

Related: Footwear brands keen to capture the North East market

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