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Jun, 15 2013

SUMPTUOUS FEAST OF BIZ SUCCESS

Everyone enjoys good and delicious food, no matter what the occasion. But, has anyone thought of the lucrative business opportunities, an outstanding eating experience can turn out to be for franchisees in the F&B industry, especially if they opt for the

THE Indian market has, over the last few years, witnessed many foreign and organised entrants in the F&B industry via the franchise route. It has managed not only to tantalise the taste buds of the foodies but has also opened gateways for businessmen on the path of lucrative opportunities.

With the increasing population and rising affluence of people, players across the globe have found enough motivation and opportunity to foray into the Indian market. To add to this is the Indian government's regulations and broadening of laws that makes it easier for foreign companies to enter the Indian market. There are a number of F&B players across the globe that have already marked their presence and established themselves in India. There are also some brands that are about to explore India.

There was a time when just a handful of brands, especially from the unorganised sector, were available for dining out. With the influx of international brands via the master franchise route and Indian brands going global, we are witnessing immense activities in the F&B services industry.

Venkatesh Iyer of Goli Vada Pav opines that a master franchisee's role is to create a network within a town/ territory to ensure sufficient pollination of stores, underlining sentiments to create like-minded entrepreneurs passionate about food business in viable locations. He says: “Master franchisees select place and regions where there is a possibility of pollinating 10 or more stores, thus leveraging networking skills for further expansion.”

Goli Vada Pav operates only through the franchise invested franchise operated model, while the brand is contemplating the idea of adopting the franchisee invested company operated model in select cities.

Master franchising is today one of the best kept secrets in the franchise industry. Master franchise is a contract with a person or entity to provide services to franchisees in a specified territory (typically a major market or even one or more states). The master franchisee helps the franchisor by recruiting franchisees while he pays the franchise company a significant initial fee for the rights to develop the territory and then retains most or all the initial fees and royalty fees paid over time by individual franchisees in the territory.

Burgeoning market

According to the quarterly report by Technopak, Outlook June, 2012, the Indian F& B services market is expanding rapidly. The current market size of the Indian F&B industry is Rs 32,000 crore, while the CAGR is expected to be 25 per cent and will continue to grow at a similar pace in the next few years. Also, an increased interest in investing for an F&B chain is speeding up the growth in the industry.

The F&B industry is on a high today as this segment is leading the growth of business around the world. The F&B industry is doing extremely well due to the robust economic and financial activities taking place across the world. The industry has now diversified into various segments that get a tremendous boost as they take on the franchise route. International players foraying into the Indian market through master franchisees are following different business formats, including QSR, fine dine, cafes, take away, express format, bakery and confectionery, which are essential part of the F&B industry.

Cocoberry, a homegrown froyo chain, has adopted the franchise model (franchisee owned, franchisee operated) only after four years of operating company-owned stores and understanding how to make them profitable. Rahul Deans, C.E.O, Cocoberry Restaurants & Distributors Pvt. Ltd., says: “We do not have an 'MNC model' of operations being force-fitted to India. We have home grown experience suited for emerging markets, while partnering the best suppliers internationally. Franchising helps in  expanding while establishing brand's systems and processes with minimum risk involved as against starting something of his own.”

Foreign entrants

International F&B brands find India a potential market by looking at the numerous franchisors that have entered the country. Domino's and the more recent Dunkin' Donuts entered via master franchising with Jubilant FoodWorks.

According to the Emerging Markets Information Service, Devyani International Limited, a part of the 3000-crore RJ Corp, the largest bottler for Pepsi with interests in beverages/food/real estate/education, is among the biggest players in the Indian retail F&B sector with master franchise rights for Costa Coffee and also the largest franchisee for Pizza Hut and KFC and now Swensen's Ice Creams. Currently, it has a visibility of 200-plus outlets across India.

The concept of chocolate is another segment of the F&B industry that falls under the category of confectionery. Leonidas, a Belgian chocolate brand since 1913, has evolved its offerings to consumers by thinking out-of-the-box and using new ingredients, invocation and constant progress of the concept. “Currently, in India the chocolate concept is evolving and it is highly fragmented. We have over 1400 stores worldwide in 46 countries, of which over 1000 are franchisee-owned. This model has been successful for both, us and the franchisees, and it has helped us to grow at a very rapid pace. We have applied the same model in India and Asia to succeed and be a part of the growth story,” says Vrinda Rambhia, Director, Business Development, Leonidas (India).

Developing areas  in F&B sector

The current trends in the F&B industry comprising the cuisine that has to be served, the ambience required and the suitable upholstery would go hand-in-hand with other franchise formalities and regulations.

Santosh Kulkarni of a home grown F&B chain, Bighdey Nawab says: “After gaining popularity in the Pune market with awadhi cuisine, I decided on expanding via franchising. As a franchisor, I thought of developing Mumbai as a perfect place to relocate the chain for the connectivity it shares with other cities. Moreover, all franchisees prefer to see a brand from a metro city, rather than a tier II city.”

Cookie Man, a brand that has been franchising since its inception in the country, believes franchising is a good way for a company to expand its business. The benefits for a franchisee are also several. It is a perfect business opportunity for people looking to run their own business and has the added advantage of working with an established brand. The brand is operational via both company-owned company-operated and franchisee-owned franchisee-operated stores and does not give master franchising rights even while entering new markets..

Roll out

Currently, Leonidas marks its presence in Mumbai with two stores, of which one is company-owned and the other is a franchise outlet. The brand is looking at expanding in New Delhi, Ludhiana, Chandigarh, Gurgaon, Jaipur, Ahmedabad, Pune, Bangalore, Hyderabad and Chennai via the franchise route.

The brand also provides practical as well as theoretical training to its franchisees for one week, along with other regular support.

Bighdey Nawab is also operational via seven franchise outlets in Maharashtra, Gujarat and Andhra Pradesh. The brand intends to grow by way of franchising at a rate of 6-8 outlets per year or 12  15 outlets per year in case of venture capital funding. The mughlai cuisine chain is looking for entrepreneurs with good communication skills, those who can strategise for the betterment of the business, and the ones who will follow certain procedures with the willingness to learn. Bighdey Nawab offers its franchisees trained staff and regular support.

Cocoberry, which is currently operational via 30 stores pan-India, targets 200+ stores by the end of 2015 by means of company stores ( tier I - India), franchising ( tier II cities - India & international stores).

Franchise facts

 

Name of the brand         Investment (in Rs)          Area(sq ft)          RoI                         Break-even

Leonidas                  27-47 lakh                        100-500            40 - 45%            6 - 8 months

 

Bighdey Nawab         18-30 lakh                        300-1200              -                           -

 

Cocoberry                 25 Lakh                             200  300                -                      24 months

 

Goli Vada Pav            20-30 lakh                            -                       -                        15months

 

Cookie Man                 8 30 lakh                          50- 300            20%                       12-18 months

 

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