What’s in store for ‘Restaurant Franchising’ in 2016?

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According to a recent report by KPMG, franchising industry in total is going to quadruple by 2017.
  • Nusra Deputy Features Editor
Restaurant India

Franchising has been described as most successful formula to drive any business. Restaurant business, which has almost 95 per cent of brands taking franchisee route for expansion, stands strong at getting most of the franchisee transactions. According to a recent report by KPMG, franchising industry in total is going to quadruple by 2017.

And, pushing on this growth, like every other year, 2016 also has some great arrivals in the franchising trends, both for global brands and on local front. Brands like Barcelos, Domino’s, Burger King amongst others which entered India with company owned and company operated model have started taking quickest formula of getting best returns. Barcelos has opened two franchisee outlets in India; Domino’s which has entered 1500 restaurants mark has started giving franchisee at airports and other such locations. Similarly, Burger King which opened its first restaurant in November 2014 has entered 50 restaurants mark and it may take the route to capture tier II and Tier III cities.

Formula for ‘Local Brands’

For Indian brands to succeed in franchising the rules are similar to that of a global standard. While there may be numerous things we need to get right, the most important piece is a clear positioning of the brand in fast evolving food market. Multinational brands have taken a long time to get focused and arrive at their core offering to consumers. They have been in the making for more than 50 years where they have made many mistakes and when they come to India they benefit from that experience. Likewise, Indian brands will have to go through the same process. The time taken will seem longer. However, according to experts when it comes to lifecycle of a younger brand as compared to the multinationals, brands have to understand that they need to work harder, dig deeper, make mistakes, learn, and take corrective action and move ahead confidently in order to be a game changer.

“Any brand is successful when its franchisee is successful, both are in-seperable. I think perseverance on both ends is the key, “shared Dheeraj Gupta, MD, JumboKing Foods which is successfully running Vada Pav chain in India.

Going forward, restaurants need to see market and trends with open eyes, strong systems, and differentiated consumer connects to succeed and evolve to enter Rs 1000 crore market.

Growing on ‘Global’ diameter

In last few years Indians have become very addicted to global food as compared to their own. With high disposable income, international exchange, travel and food knowledge, many global brands have made a way into the Indian market. With successfully running franchisees of KFC, Pizza Hut, Costa Coffee amongst others Devyani International is one of the few brands that has given a way forward to the fast pace growth of the franchising industry. Likewise, McDonald’s which was one of the few global brands to enter India has mushroomed itself at each nook and corner of the country. But, it is all due to the strong system, places, customer attention, reinvention and experimentation that these brands are gaining ground at a foreign land.

Commenting on the same, Unnat Varma, MD, Pizza Hut India Subcontinent, shared, “Franchising per say, there is a massive opportunity and across industries, a lot of global companies enter local countries on the back of fantastic franchise partnerships. As far as food is concerned, our experience, particularly in India, has been that the corporate franchising setup works best for our requirements. So, unlike some other categories and brands, in our case, less number of franchises, very well capitalise and capable to set up operations or 100 stores or multiple of hundreds is the kind of setup that works best for us.”

So, we can see that going forward franchising has so much to dispense and share when it comes to growing business in a region. And, India as a market which is growing at a fast clip and small blips like the ‘often spoken about’ drop in same store sales during 2015 will be a minor bump on the journey to build large Indian and multinational food chains in our country.

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Franchising Formula for 2016
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