Amongst the league of numerous established brands in the F&B sector, there are many young names that are all set to make a mark in franchising. Most of these started franchising recently and are preparing to get the taste of profits. Here is a glimpse of
Top names in the F&B sector like Subway, Dominos, Pizza Hut, Baskin Robbins and many more have already explored the franchise route and are making waves in the Industry. But many young brands in the industry have just stepped into the franchise world and are set to explore the opportunities ahead. According to a report by Technopak Advisors, the Indian food service market is currently worth $13.5 billion, growing at seven per cent. Of this, the organised sector accounts for just $1.9 billion (14%), but is growing much faster, at 16 per cent. By 2017, the market size of organised players is expected to double to $3.9 billion. Many young brands in the franchise arena like Moti Mahal Delux brands- Dosa n Chutny and Darya, The Coffee Bean & Tea Leaf, Bru Café, International yogurt brand Smooy, Quiznos, Thali brand- Panchavati Gaurav, Johnny Rockets and many more have joined the franchise league and are giving loads of opportunities to numerous prospective franchisees and entrepreneurs.
USP of any F&B brand makes it different from the other. Therefore, every brand tries to offer something unique to the epicures. International brand, Krispy Kreme is known for its innovation. It takes immense pride to introduce to all the delhi-ites Krispy Kreme's unique Doughnut theater which features the process of fresh delectable doughnuts coming off the doughnut making machine straight onto the trays for the consumers to relish. Another brand Bawarchi International Group's, Chairman, JD quotes: “Bawarchi specialises in authentic Mughlai and North Indian cuisine and it lets its chef's present delicate meals that are appealing to both the smell and taste bud of the customers.”
Ice-cream brand Pabrai’s Fresh & Naturelle focuses to make 100 per cent natural ice creams of a style and quality never tried before in the country. The young brand strives to create ice creams which would make people sit up and go wow. Indore-based FYI ( For Your Information) boasts of its wide assortment of food base with instant noodles as core ingredient. Moods Hospitality, well known for its brand Yo! China takes pride in its two young brands, Dimsum Bros and Yo! China Café. Yo! China Cafe caters to the niche segment and Dimsum Bros offers more than 100 varieties of dimsums in the menu.
What sets Italian brand Yogola apart from other brands is its devotion to healthy quality and superior taste that make for a perfect nutritionally delightful treat. Brewberrys Café started franchising in 2009 for expansion and its USP is its live food at the cafe, freshly prepared snacks counter and an Indianised menu that appeals the corporates, college-goers and their likes.
Training is supposed to be one of the most important aspects after appointment of any franchisee. Since it is an important and ongoing process, Pabrai’s Fresh & Naturelle imparts training at three levels. Firstly it trains its franchisees and staff on daily operations. Secondly, on controls and check for operations and thirdly, financial monitoring of the businesses. FYI has a robust and dedicated team that offers all kinds of support to the franchisees ranging from technical, marketing and operations. Special measures are followed to control the food costs as food inflation seems to be all time high and cuts down the profits. Umak Hospitality has well-known brand, The Great Kabab Factory under its umbrella. The launch of its new Indian restaurant brand - The Spice Factory has offered the brand a new platform for entering the tier II and III cities. The Spice Factory launched its first outlet in Lucknow in November 2013 and now provides required training to its franchisees. Bangkok-based Bawarchi Group along with its franchise partners takes care of the advertising allowing the business to increase its exposure to the target market in a more cost effective manner by means of required print and digital marketing.
Yo! China café and Dimsum Bros also offers opportunities in FOCO and FOFO models. The company has a robust training mechanism to train the kitchen and restaurant staff of the franchisee both onsite and offsite. Italian brand, Yogola entered India via the master franchise route. Aussie Indo Hospitality Group is Yogola's Master franchisee for all over the world. The brand offers opportunity in Kiosk and standalone model and gives full-fledged support to a franchisee with complete training regarding preparation of food, interacting with customers and running overall operations of the outlet. Under the umbrella of Billionsmiles Hospitality pvt.ltd, there are three young brands South Indies- casual dining South Indian vegetarian restaurant chain, BonSouth- upscale casual dining South Indian non-vegetarian restaurant chain and Upsouth- South Indian QSR chain. The company adopted the franchise route two years ago and offers complete training to its franchise partners.
Non availability of funds can be one of the major obstacle in the growth of a young brand. Young brands take little steps to make the cash flow right in their company. Ankur Gupta, Director, Brewberrys Hospitality pvt Ltd explains: “The inception of Brewberrys was self funded. We pooled in our savings and got help from family. The revenue generated from the store enabled us to formulate a franchise model and market the same.” Pabrai’s Fresh & Naturelle ice-cream has a unique financial system for running the business. Kunal Pabrai, Partner, Pabrai’s Fresh & Naturelle quips: “We are a zero debt company and have practically zero creditors. We have no funding from any outside source and have no loans. We reckon that our model is something start-ups could study and emulate. These policies, although is filled with its own challenges, has helped us grow at 60-70 percent YOY and yet ensure us to remain in a very liquid financial condition.”
Promoters had funded the initial capital for Billionsmiles Hospitality Pvt Ltd and the company also had a few HNI investors who helped build their young brands.
Most multinational mature franchise brands are an inspiration to young and budding brands. Pabrai’s Fresh & Naturelle ice-cream looks up to McDonald's for its single minded focus on systems and processes, Subway for their focus on growth and Dominos and CCD for their excellent market research. Following an established brand as a role model definitely helps young brands shape their goals. Vijay Abhimanyu, Managing Director, Billionsmiles Hospitality pvt.ltd says: “I admire Chipotle, the US based Mexican chain. They have achieved tremendous success and reach in a reasonably short duration.” To Brewberrys Café, Starbucks story has always been inspiring.
Challenges and strategies
During the growth phase, most brands go through business hiccups which naturally help them learn and climb the ladder faster. Bedrock Food Company Pvt. Ltd. is the licensed franchisee of Krispy Kreme Doughnut Corporation for the North India region and the brand is expanding fast in India overcoming all the challenges. Purwa Sinha, Director, Krispy Kreme says: “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 that 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.”
Good location and quality team are one of the biggest challenges in the F&B Industry. Ashna Kapur, Vice President, Brand Development Restaurants, The Spice Factory by Umak Hospitality asserts: “Increased rentals and real estate have been a serious challenge in the process of franchising. This rise in rentals have in return increased the project cost of upcoming restaurants and operating cost of existing ones. To combat this issue, we have launched The Spice Factory with a lesser project cost that are also suitable for tier I and II cities.”
Pabrai’s Fresh & Naturelle ice-cream has in place a special incentive system for franchisees who decide to open additional counters. Pabrai of Fresh & Naturelle says: “We extend this to counters that are opened by others who come through existing franchisees reference as well (including generic enquiries from persons who visit their counter). We also have a very open idea policy wherein we take in suggestions from each franchisee and use them to strengthen the franchise system. For e.g. one franchisee suggested that we should list our stores on google maps. It was a simple idea. Perhaps a bit technical, but we thought it would be a good addition. Now, almost all counters are listed on google maps.”
No F&B business can grow in long term if the product offering is not of a consistently high standard. One must know the target customer and relentlessly keep focusing on them. Billionsmiles Hospitality pvt.ltd focusses on perfecting a highly systems and process driven operation structure which should enable the brands to scale through franchise route at a faster pace. Abhimanyu of Billionsmiles Hospitality adds: “To perfect the unit economics and to achieve the perfect formula of price point, customer satisfaction, EBIDTA and RoI has been quite challenging. Ensuring consistency across all outlets has also been a challenge. We have executed various strategies over the years to crack this problem and have reached a high level of consistency.” Bawarchi, a chain of Indian Restaurants in Thailand's capital city Bangkok is an ambitious venture of Incapital Ventures. For Bawarchi International Group, biggest challenge is competition and innovation.
Moods Hospitality believes in negotiating with the landlords for reasonable rent/lease deals to be cracked. Well planned recruitment policies of the brand help the franchisee recruit the best manpower, regular training programs for the franchisee's employees particularly for kitchen staff. Mohan Agrawal, Vice President, Franchise Business Development & Operations, Moods Hospitality says: “Keeping in mind the taste and likings of young people, we do innovations in new dishes at our brands.”
Most young brands plan to expand fast across India and look forward to take themselves to the league of established brands. To strengthen its brand positioning and enrich customer base, Yogola strategises to open 50 outlets across India in tier II and III cities by the end of 2015. Moods Hospitality is open for new restaurants roll out at unrepresented locations pan India and at the selected cities overseas also. Fresh & Naturelle Ice creams started franchising in 2010. Currently, the brand has 22 counters in 10 cities. The brand soon plans to expand to at least 100 outlets in the coming years. QSR brand, FYI started franchising in 2011 and now has expanded to 21 outlets. It looks forward to target tier II and III cities. Umak Hospitality is already present in tier I cities with their other restaurant brands, so now the strategy is to enter tier II and III cities. Billionsmiles Hospitality pvt Ltd plans to add 15-20 outlets in the next 12-15 months across all brands. Target is to reach 200+ outlets in four years. Bawarchi Group plans to go for an IPO in the coming years and also is keen to launch Bawarchi Masalas by the end of 2014