The Indian market has been witnessing a growth of coffee outlets and tea bars, not only in the mass segment but in the premium segment as well. Bakery cafes is yet another emerging concept as consumers look for different places to hang out.
With an increasing penchant for informal socialising, Indian consumers are driving demand for more ‘hang-out’ options where they can simply ‘chill out’. From the likes of pseudo-city cafes such as MKOP and Java City, to mighty chains Cafe Coffee Day, Barista, and Costa Coffee, the Indian market has been witnessing a growth of coffee outlets and tea bars. The arrival of Starbucks and McCafe in India is yet another cue that cafés are here to stay.
Traditionally designed for a smaller footprint within a relatively lower catchment area, the cafe segment has been registering innovative concepts in terms of format, size, menu offering, and location. Cafes are largely food service formats, with beverages such as coffee, tea, juice, liquor, etc, sometimes supported by complementary food items. The average value per person ranges between Rs 80 to Rs 250 depending on the location, brand, and value proposition of the cafe.
With a greater number of consumers moving up the value chain, new segments with newer product offerings are evolving, whose differentiation is along factors such as regional flavours, international coffee blends, innovative range of teas, etc. The segment’s innovation has powered the rise of newer cafe formats like Bakery Cafes, which reverse the concept of cafés by extending bakeries/chocolate retailers to also offer complementary beverage items.
Thus, unlike a regular cafe, a Bakery Cafe is, at the core, a provider of baked food, with the beverage segment only a complement to the menu. A typical Bakery Cafe menu includes a wide selection of breads, encompassing variants like wheat, rye, five-grain, multigrain, cracked wheat, flute, baguettes, ciabatta, etc, as well as baked goods like brioches, croissants, cookies, muffins, cakes, scones, strudels, brownies, pies and puffs. The menu may also feature soups, salads, and other dishes, made using wholesome, locally-sourced ingredients, cooked and served fresh. These can include eggs, freshly-made sandwiches, rolls, wraps, paninis, baked beans on toast, etc. In terms of beverages, the menu offers a range of fine teas, freshly brewed coffees, hot chocolate in multiple variants, and on the cold side, iced teas, smoothies, and shakes.
International players like Au Bon Pain, Le Pain Quotidien, and domestic chains Theobrama Patisserie, Angels in my Kitchen, Baker Street, La Opera, and Choko La are expanding from their current format to the sit-in cafe format. This extension is currently being witnessed largely in the metros and mini metros as a result of the high population of the target group in these cities. Furthermore, increasing exposure to international food products through higher degree of travel, media exposure, cookery channels, etc, is creating demand for such concepts.
Though bakeries and bakery cafes have gained traction in recent years, the concept is not new to India. Earlier, bakeries were set up as a result of British influence. Wenger’s in New Delhi provided a unique proposition at that time, and set the pace for growth of bakeries and bakery cafes in the post-Independence era. In Dehradun, where a large number of students from all parts of India have been converging, bakeries such as Elloras have been popular for decades. Other notable establishments include Flury’s in Kolkata and Birdy’s in Mumbai. The 1980s saw the emergence of the German Bakery in Goa and subsequently in Pune. In Delhi, L’Opera, a chain of bakery shops started by an expatriate couple, is immensely popular due to the authenticity of the products as well as its quality and range.
Whether they are an extension of existing bakeries, or a menu-wise expansion of a cafe, Bakery Cafes have become popular as a unique way of dealing with the classic dilemma for any cafe format, that is, how to drive sales at all hours of the day. Traditionally, cafes, due to their strong beverage focus, used to see a lull in visitor count during lunch and dinner time. The addition of a food component has not only helped these cafés realise additional revenues by catering to traditionally non–peak periods, but also offered their customers another eatery to frequent during meal times. With their focus on baked items, Bakery Cafes also offer extended all-day breakfasts with freshly-prepared, healthy offerings.
Although the market is set to gain speed with more such formats anticipated in the near future, some key challenges need to be addressed to make these concepts viable outside of the top 8-10 cities. The inclusion of Indian palate-friendly menu items is an imperative to achieve acceptability at a broader level. Bakery Cafés are now including ‘fusion’ products such as seekh kebab rolls, ajwain puffs, chilli chicken rolls, kadhai paneer puffs, and chicken tikka sandwiches, among others.
In fact, constant product innovation is a major challenge given that many of the food products offered are best enjoyed absolutely fresh; so efficient production and inventory management is a ‘must tackle’ challenge. Quality in service and production, training of sales staff combined with innovative ways of marketing, are likely to be the focus areas. Apart from these, typical challenges such as supply chain management, menu consistency, and limited quality real estate, applicable to the F&B industry at large, are also applicable to Bakery Cafes. However, the concept has gained a strong footing and looks set to grow in several cities, adding multiple brands to its fold.
About the Authors
Tarun Jain is Vice President and Vidul Sharma is Principal Consultant, Food Services & Agriculture at Technopak.