Franchise News India : There is something about food that lures investment bankers and management consultants into leaving highly paid jobs to become foodpreneurs. These professionals are setting up a variety of businesses from packaged foods to speciality food flavours and quick service restaurants all seeking to grab a share of the growing Indian food industry that is estimated to reach Rs 18 lakh crore in 2016.
“I travelled the world and saw that Indian food was very popular but there is no Indian food chain. I knew we could create a global food brand,” said Jaydeep Barman, 40, chief executive officer of Faaso’s who quit as associate partner at the London office of global consultancy McKinsey to focus on his company.
In recent years, successful public listings by companies like Speciality Restaurants and Jubilant Foodworks have proven that food is good business in India. “Indian consumers are willing to spend and are willing to experiment,” said Reetesh Shukla, associate vice president at retail advisory Technopak.
“The huge young population in the country is time starved and are looking for convenience and that is creating opportunity.” The past few years have seen the launch of innovative businesses primarily in two segments—food services and packaged food.
While companies like Faaso’s, Ovenfresh, Box8, ID Fresh Food, Martha’s Preserves, Indian Home Gourmet and Arohan Foods offer a variety of products they all have one thing in common – freshness, taste and most importantly convenience.
The market for food services, which includes models as varied as quick service restaurant (QSR) and fine dining chains, is expected to growth from Rs 5.6 lakh crore in 2013 to Rs 8.68 lakh crore in 2017, according to data from Euromonitor.
For entrepreneurs, getting even a fraction of this market could mean a business worth several hundred crores. To that end they are focusing on local cuisine, affordable price points and convenience of delivery. While Faaso’s, the Pune-based wrap maker, has emerged as one of the largest with 70 outlets others like Ammi’s Biryani, Box8, Hello Curry and DCK are also in the fray.
“One major trend is the revitalisation of Indian cuisine, especially in new formats. No matter how many burgers you have, the palete of the Indian consumer is still Indian,” said Technopak’s Shukla. ” Companies like Faaso’s and Box8 have shied away from the franchising route to maintain quality and consistency of the product. They are also opening up central kitchens in each city where the food is cooked and transported to their stores each day.
“We started this business as we were tired of the frozen McDonald’s type of food. So we will not do that type of food,” said Faaso’s CEO Jaydeep Barman, 40. Investors are now looking to ride in on this growth story.
“While in segments like pizzas and burgers there are large international companies already present, we saw an opportunity for chains which could offer Indian food with consistent quality across cities,” said Vishal Sood, managing director at SAIF Partners which has invested in Mainland China owner Speciality Restaurants, Ammi’s Biryani and DCK. These startups are also focusing on takeaway where majority of the revenues come from. This allows them to keep real estate costs low, with store size typically of 200- 400 square feet.
“In food services, real estate costs and tweaking the flavours to local tastes as a chain expands remain the top challenges,” said Kanwaljit Singh, senior managing director at investment firm Helion Venture Advisors which has backed ethnic food chain Mast Kalandar Also focus on per unit economics is becoming important.
“Each unit has to be profitable typically 70 per cent of the profitable outlets are financing the balance 30 per cent which are loss making,” said Hemendra Mathur, managing director at SEAF India Advisors. In packaged foods, convenience forms the core, especially for the army of young urban working Indians, who seem to be subsisting on a variety of packaged, pre-cooked or ready-toeat food.
Source: economictimes.indiatimes
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