Aroma of coffee with a dash of franchise

A single visit to a shopping mall, high street or a neighbourhood market, school, college, hospital or any public place makes us realise the growing popularity of coffee shops in India. The brands available are not just the local brands, rather lot of international brands have also managed to grab the share of coffee market in India. Whether it is a school or a college friends meet, an official interview/meeting or even sharing some moments of happiness with loved ones, the best place to meet is over a cup of aromatic coffee. Coffee shops have become the most popular places to relax after a grilling day at work. Not only are café shops pleasurable for working class, but it is heaven for shoppers who can rest their feet in a café after a hectic day of shopping. All these benefits have led a large number of national as well as international café chains to expand their network via the franchise route. Let us find out the factors that have encouraged the growth of café brands before reading about these brands and their success journey.

Encouraging factors

Dominance of youth segment: Beverages like coffee is especially preferred by youth. About 50 per cent of the county’s population is 25 years or younger. This amounts to the growing popularity of cafes. This trend is sure to pick up in future because researches show that the youth population is expected to reach 55 per cent by 2015.

Increase in disposable income:Students get a higher pocket money to spend on cafes with their friends. Earning class also does not mind to spend a few extra bucks on having a delicious cup of coffee in comfortable ambience of a café.

Café’s as a social hub: With coffee culture brewing up pan India, it has become a great social hub for all kind of people to chat and relax over a cup of coffee.

Increase in private offices: The increasing MNC culture has also helped in the popularity of café chains. Working professionals usually prefer to hang out at these places during their free time.

Low cost kiosks: The foremost factor for growth of coffee culture is its low cost benefits. Any interested entrepreneur can take a coffee kiosk due to low investment needed.

AG Puttaraj, President, Coffee Day Xpress said, “There is minimum risk involved in running a coffee franchise as coffee is a widely accepted drink and most people do prefer coffee. Moreover, it requires less investment and has minimum risk.”

Availability factor:  Café outlets or kiosks are available at mostly all places. Customers can also opt for ‘take-away coffee’ if they are running out of time due to its easy availability.

Growing coffee culture via franchising

Technopak Advisors, a Delhi-based research and consultancy firm has researched that out to 1,500 cafés in India around 1,000 have opened in the last five years. The organised café market, which stands at US$185 million, is estimated to be growing at a compound annual rate of 25 per cent. This shows that the café industry has been emerging rapidly in the last few years. In the last one decade many coffee players have emerged in India who took the franchise route for rapid expansion.

Manish Tandon, President, Citymax Hospitality Pvt. Ltd, Master Franchise for Gloria Jean’s Coffees shares, “Domestic coffee consumption in India has increased significantly over the past 10 years, but there is still ample scope for growth, especially in terms of franchise operations. Gloria Jean’s Coffees world class franchise model has proved very successful, with more than 1,000 coffee houses across 39 countries today. We saw an opportunity to translate this success to the Indian market under the Master Franchise business model.”

Ghouse Mohiuddin, Managing Director, Café Desire said, “In 2008 we started getting enquiries from other parts of the country then we decided to go national-wide. On that front we thought franchising would be the best route to expand.”

Coffee Day Xpress a division of India’s largest coffee conglomerate, the Amalgamated Bean Coffee Trading Company Limited (ABCTCL) opted for the franchise route in 2003 and presently, it has a network of more than 600 franchisees pan India. It popularly operates through its kiosks which require 50-100 sq.ft area and a location that has high footfalls.
Gloria Jean’s Coffees, is an Australia based company that partnered with Citymax Hospitality as its Master Franchisees has proved that the markets is ripe for international brand to foray in India. Gloria Jean’s Coffees entered the Indian market in 2008 and is expanding across key cities. Currently, having 16 outlets the brand is looking to serve high quality coffee to the growing population of Indians. The brand has plans to rollout 200 outlets in the country by 2014.

Costa Coffee, a UK based coffee chain entered India through its Master Franchisee Devyani International (part of Jaipuria Group). Currently the brand is operating through 75 coffee outlets and plans to open around 100 more outlets in the near future taking its presence to every nook and corner of the nation. Coffee Beanz established in December 2001 at Kochi believes in serving more than coffee. The company opened a franchise outlet in Thiruvananthapuram recently. Café Desire originated in 1998, took to franchise route in 2008 after sipping success with company owned outlets. Regarding its expansion plans Mohiuddin says, “As of now we have 35 franchisees mostly in southern part of India and we have plans to take it 100 in the near future.”

International players ready for foray

These are few of the brands which have become popular in café industry via the franchise route. Costa Coffee, Gloria Jean’s Coffee are some international brands which have made their mark in India. However there are many players who are waiting to make a splash in the Indian landscape. US based Starbucks and Dunkin' Donuts, London's Coffee Republic, Australia's Coffee Club and France's Alto Coffee are a few brands who are aiming for an Indian foray. In a recent development Dunkin' Donuts has announced its Master franchise agreement with north India-based Jubilant FoodWorks, which operates the Domino's pizza chain in India. Therefore the first Dunkin' store is expected to open in the first quarter of 2012. The target is to open 30 outlets in three years and increase to 100 in the next five years.

To conclude it would be apt to say that the Indian coffee market has grown tremendously in the past. The future is brighter with many other national and international brands ready for their entrance in this highly popular industry.