Tuesday, December 29, 2009

Worlds Finest Food Franchise Companies In India

BANGALORE: Amit Burman, vice-chairman of Dabur India, never thought that a casual stroll down one of south Delhi’s upcoming localities would
provide an idea for a unique business opportunity.

In 2006, the US-returned Burman and his friend Rohit Aggarwal were in Saket, standing outside one of the outlets of the international chain, Subway. The place was crowded, with people, especially in the 18-35 age group, buzzing in and out constantly. Burman and Aggarwal paused their conversation and wondered if there was a business opportunity here.

“Franchising Subway began as a hobby,” Burman says laughing. In the initial months, the team had to work on creating the sandwich category and tailoring it to local tastes. The classic cold-cut turkey and tuna subs had to share space with chicken tikka and chicken seekh kabab fare. “People were very doubtful about the venture and would ask if I planned to make sandwiches all my life,” jokes Burman.

He needn’t have worried. In three years, Burman’s Lite Bite Foods has become Subway’s largest franchisee in India. The company operates 40 quick- service restaurant (QSR) outlets and has added other international brands apart from Subway to its menu. Street Foods of India serves roti-kababs and rajma-chawal though kiosks, bakery cafe Bakers Street at airports, Pino’s Pasta Pizza and Rapps. It will also franchise US-based fried chicken brand Pollo Campero in the next few months. “We intend to become a restaurant chain with 200 outlets, including 30 QSRs, in three years,” he added.

Consumers’ growing penchant for eating out and taking quick meals in between long working hours has spawned a boom in the Indian QSR industry. Across the country, businessmen are either venturing into QSR market on their own or through franchisee tie-ups with foreign chains such as Domino’s and Papa John. Unlike fine dining restaurants, QSRs largely operate through smaller self-service outlets that provide value-for-money food that can also be consumed while on the go. It is estimated to be worth about Rs 2,500 crore and is growing at 30-40% annually.

Bangalore, which is a favoured choice for many people to open restaurants, has also seen an explosion in the number of QSRs in the recent past. This includes Spencer’s Retail’s Au Bon Pain, Global Franchisee Architects’s Cream and Fudge Factory and Donut Baker as well as Italian coffee brand Caffe Pascucci. US chain Melting Pot is ready to invest $5-$7.5 million in the Indian market by 2010.

“Many international franchise food brands are successfully operating in the country and these success stories have sent positive signals to other US franchisors to actively look at India for expansion,” said US Consulate’s principal commercial officer, Aileen Crowe Nandi. The consulate recently held a programme to introduce Indian entrepreneurs to American fast-food outlets such as CKE Restaurants, Round Table Pizza, Tropical Sno, Melting Pot and Church’s Chicken.

QSR segment operates on a high volume-low margin business model. Not only does it focus on delivering products with speed within high footfall areas but its ability to push sales even in recent months by tapping into captive audiences at malls, educational institutions and airports through evolving formats such as kiosks, drive-ins or even take-away joints has been critical.

“India offers tremendous opportunity due to its sheer size which will see the Papa John’s outlets quadruple to 100 in four years,” said Tapan
Vaidya, general manager, restaurant division, of the Jawad Business Group—the franchisee for pizza take-away chain Papa John’s in India and Middle East.

International brands are not the only ones to cash in on this trend. Local entrepreneurs have jumped into the fray with different concepts and ideas. Sunil Cherian, who runs the Chennai-based Burgerman is one such. Burgerman’s core business proposition is to offer 25 burger variants within a 25 sq ft kiosk. With 50 outlets in Chennai and 30 in Bangalore by the month-end, the chain has tied up with retail chains to grab captive consumers at Big Bazaar, Foodworld, Nilgiris or even HPCL and BPCL.

BuddyChef, which comes from the stables of Pune’s organic farming firm Orgreen, aims to sell pre-cooked Indian and Chinese meals under $1 across every pin code. With seven outlets across Pune, it is selling 5,000 meals a day across the counter to working couples, students and small offices.

Franchising has been a catalyst in fuelling the QSR concept in India. Sanjesh Thakur, Ernst & Young’s associate director, retail & consumer products practice, says that around 17% of the F&B outlets within the organised sector are operated through franchisees and over 30% of the upcoming outlets are projected to be based on this model.

The QSR trend was kicked off by the likes of McDonald’s and Yum! Restaurant’s KFC, which began operations in the 1990s. “Since the market opened up in the ‘90s, consumer habits including eating-out behaviour has gradually undergone a change,” said KFC India’s marketing director Unnat Varma. KFC added 27 outlets last year taking its total count to 72.

All this growth needs money and investors have started opening their purses to the industry.

Bangalore-based East West Ethnic Foods, the holding company of wraps chain Kaati Zone which is adding 100 outlets by next fiscal across Maharashtra, is in talks with two-three private equity players to raise between Rs 12-15 crore.

It received its first round of funding from Accel Partners India, Draper Investment company and the founder of Helion Ventures, Ashish Gupta.

Source:30 Dec 2009, 0006 hrs IST, Sarah Jacob, ET Bureau