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Franchise 04 Apr 2017

Why franchising is best medium to expand bakery biz

The bakery industry is riding high with almost triple digit growth as the segment has been witnessing the entry of big local and global players.

By Nusra Sub Editor

In the past few years, the bakery industry has given an edge to the entrepreneurial skills in India with a market size of Rs 16,500 crore, growing at a healthy 7.5 per cent per annum, according to a report by FoodFood. The third-largest revenue generator among processed food sector, bakery in India has seen the sweetest success consisting various product categories like breads, biscuits, pastries, cakes, buns and rusks, where the bread industry alone constitutes Rs 33 billion in 2015, and is expected to grow at a CAGR of 10 per cent to reach Rs 53 billion by 2020, says a research by Slide share.

Sweet Is No More Sinful

With popularity in the lifestyle trends and consumer segments, which is increasingly defined by the needs, aspiration and fun, bakery in India has taken a new form. Players like Monginis, Au Bon Pain Cafe, French Loaf, amongst others, are catering to the aspirational wave that is flowing in the market. “Last year, we have done lots of changes in the way we were operating Au Bon Pain. We have changed the complete look and feel of the cafe, including the high energy lighting, music and the menu, which has changed dramatically giving it an Indian flavour and fusion touch so that it becomes palatable to the Indian customers and that’s how we started growing to double digits from last year,” says Manish Tandon, CEO, Au Bon Pain, who is planning to open over 300 outlets in the next 5 years.

Cashing In On Franchising

Widely dominated by unorganised players, the bakery industry has seen an upsurge in the chain cafe segment in the past two years. Players like Monginis alone operates 600-plus outlets, followed by Just Bake at 116, and French Loaf at 100-plus and this is continuously pushing the growth of organised market chain with an entry of local and international brands. Armed with better technology, know-how and novel ideas, organised bakery companies have made rapid inroads into the lucrative market in a short span. “The bakery industry in India is really exploding. For us, franchising remains the only medium to expand as we have grown on this relation and it is a successful model for bakery,” says Qusai Khorakiwala, Director, Monginis, which are focusing on value-for-money customer and is operating 680 outlets in India expanding to new markets like Delhi, Patna and Hyderabad with plans to add another 150 by end of this fiscal.

Commenting on the same, Reynold Fernandes, CEO, Oriental Cuisines, which operates bakery chain French Loaf, adds, “Franchising helps creating value for both the franchise as well as the brand. It is a key to drive down investment for the cost of ownership and build a profitable model.”

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