Franchising - a cakewalk for Monginis

Well- known for serving delicious bakery products and chocolates across the country, Monginis is a favourite destination for all the cake aficionados. Virendra Ghole, Marketing Head, India, Monginis Foods Pvt. Ltd shares Monginis success story.

Pallavi Majha (PM): Tell us something about the origin, growth and success of Monginis as a brand? When, where and how did it originate?

Virendra Ghole (VG): Monginis traces its roots back to its humble beginning when it was a favourite with the Europeans in Mumbai. The shop, located in Mumbai's Fort area, was a favourite with Europeans. In 1960, Monginis was bought by the Khorakiwala family, and after that history was made. By 1971, the idea of having a nationwide franchise network and reaching out to customers in neighbourhood was born. Today, the 42,000 sq. ft ISO 22000: 2005 certified headquarters of Monginis is the place from where all the yummy stuff emerges from.

PM: When and how did the company decide to opt for franchising? What is the eligibility criterion to be Monginis franchisee?

VG: The idea of franchising originated in the year 1971. To become Monginis’ franchisee one should own a shop at high visibility/high traffic (pedestrian traffic) location. An aspiring franchisee has to pay one time security of Rs one lakh which is refundable and non-interest bearing, one time franchisee fee of Rs 25,000, architect’s fee of Rs 25,000, cost of the interiors including counters, air conditioners, computer, etc. A franchisee has to pay a consolidated amount of Rs 6 to 8 lakhs.

PM: What all services do you provide? What kind of market have you found in India as far as chocolate, cake and bakery products are concerned?

VG: We provide services like ‘gift-a-cake’ online, home delivery of cakes and birthday party celebration assistance. So far as cakes market is concerned, it is still growing, and there is a lot of potential for further growth also. So far as chocolate market is concerned, we are into boutique chocolate segment. As far as bakery products are concerned, we always keep our focus on cakes.

PM: How many outlets do you have at present and how many of these are franchised?

VG: We have 480 exclusive cake shops in India and all of them are franchised.

PM: What all training and support do you provide to the franchisees?

VG: We start training our franchisees well before the shop opens. Our training needs more of on-the-job training which is provided in our model shops, where most of our successful franchisees train the new franchisees. Our sales team provides directions through out the training programme and keeps providing additional inputs wherever required. The technical sessions like product knowledge are conducted by the company’s technical team. Apart from extensive training to our franchisees before the shop opens, we also provide a lot of support after the shop opens till it stabilises, in terms of operations.

PM: What difference have you noticed in the performance of the brand after the company opted for franchising?

VG: In fact going back in history, we started as a single outlet, and what we are today is because of the well executed idea of franchising. We did not stop franchising our outlets, but we went beyond, and have franchised our manufacturing and distribution also. So barring Mumbai and Surat, the manufacturing and distribution of our products is done by our manufacturing franchisees.

PM: How much investment is required by an aspiring franchisee in terms of money and time?

VG: It is approximately Rs 10 lakh, which is not much, when compared with the renowned brands of the stature of Monginis. But, when it comes to investment of time and dedication, we are very demanding. We ask for 100 per cent time and dedication of the franchisee, because we know for sure that the ‘level of involvement’ of the franchisee makes or breaks the business.

PM: What is the break even period for a Monginis franchisee?

VG: It varies from place to place depending on the shop turnover, but generally it is less than 2 years.

PM: What are the company’s future plans in terms of expansion through franchising or through company owned outlets?

VG: We are very much satisfied with our business model and have no intentions of altering it. The power of franchising, which other businesses are realising now, we have already done it.

PM: Have you noticed any change in the performance of the brand as a result of economic depression?

VG: People never stop celebrating, especially birthdays. It’s once in a year occasion, which no one wants to skip. The joy of sharing happiness is simply irresistible and precisely for the same reason we are insulated from the economic downturn.