Why should F&B players open outlets away from established destinations

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With the government pressing the accelerator on building and ramping up highways and the surrounding infrastructure, these places have become the hot spots for business, especially foodservice

By Sanjay Kumar

Mumbai: In yet another thought-provoking and insightful session on Day 2 at India Food Forum comprising panelists from leading foodservice players, the discussions and the polemics surrounding it distilled down to an existential question for any food business operator: Does it make commercial sense for a food retailer to hang up his shingle in a part that is far removed from the commercial hubbub and heart of any city or town? Is it commercially viable and pragmatic to set up shop off the beaten track, far away from highstreets and main streets?

At face value, the question would appear to have a quixotic element enough to strain our credulity? Who would like to put his business on the line by going where commerce is in embryo and far from breaking out? But, as the audience attending the panel discussion discovered to their surprise, it actually makes oodles of business sense to open a foodservice establishment at off-piste and unconventional places like highways, ports, bus and railway terminus, IT and industrial parks, and other transit hubs.

“In dwelling upon this topic, I am reminded of my college days when I used to make frequent trips by train from my home-town Kanpur to reach my alma mater IIT-Delhi. An integral part of the baggage would be a full dabba packed with the usual home delicacies to consume during the overnight journey, because apart from the open food – more likely to be as drab as dishwater in the garb of aloo-puri – sold at the train’s stopovers, there was just no other better choice of food. Even at our IIT, a lone Nescafe joint was our exposure to unconventional food inside the campus which is no longer the case today.  Now, some 15 years later, things have started changing and passengers have more choices at their disposal even though there is still a long way to go when it comes to travel and transit food retail,” observed Gaurav Ahuja, Co-founder & MD, Red Ginger Group, who also moderated the panel discussion.

“However, in many places across India, there is a magical transformation in food amenities that are now available to consumers, whether it is travelling along any highway, say, in Karnataka or while travelling down to an airport in Madhya Pradesh….People now have the best food choices available to them whether they are journeying down a highway or tootling along roads that are far away from the heart of a city like Delhi, Mumbai, Bangalore and other major urban hubs of India. As promoters and founders of companies in the food retail business feel that this is an area that needs a lot of our attention,” said Ahuja whose company has recently created a new vertical focused on airport hospitality that dabbles in flight catering and operates master concessions at a few airports in India.

As a majorly pizza producing and delivery company, Domino’s business is mostly concentrated around residential clusters, malls and high streets but not highways. But now we have realized that the time has come to move our stakes to the unconventional parts like highways and we have already started opening our outlets in such places. About a month ago, we just brought our footprint to IIT Bombay in the form of an air-conditioned food truck and the response has been phenomenal. Similarly, some of our other experiments in opening outlets at unconventional places have turned out to be good,” pointed out Akash Srivastava, AVP & National Head – BD, Jubilant Foodworks.

With the government pressing the accelerator on building and ramping up highways and the surrounding infrastructure, these places have become the hot spots for business, especially foodservice. “It’s a $8-10 billion opportunity that still remains largely untapped and is waiting to be cracked open,” said Srivastava.

Factors for Deciding on Unconventional Locations

Sites that are away from the main city grid pose a different set of challenges and call for different levels of scrutiny by the food retailers. “The first thing that we look at is how many other food brands have already moved in, which is unconventional in the sense that in a mall or a high street we are only too eager to jump in to leverage the first mover advantage. But in the case of highways, we want to know if the site has the presence of a KFC, Burger King, McDonald’s, Pizza Hut…we don’t want to be the first brand out there,” shares Srivastava.

“We also want the developers to commit to some investments in the business, which can help to reduce our CAPEX, operating costs and also mitigate the risks of operating in a non-established commercial turf. If I decide to open a food court, I would like the developer to offer me some added facilities like getting more flexibility in using the common areas,” said Vishal Telkar, Business Development, Taco Bell (Burman Hospitality)

In the case of Chai Point, which operates close to 150 outlets across the country, having a presence at transit hubs makes for a lot of business sense, as proved out by its outlets spread out across quite a few major airports in the country. “We are in IT Parks, hospitals, pilgrim points, apart from being at the conventional places as well. Typically, we look at the type of customers visiting those unconventional hubs and since chai as a product can be taken multiple times a day, it makes a lot of sense for us to be at places like IT parks, hospitals, etc.,” said T Sriram, Head Real Estate, Chai Point.

“Today, we are seeing a lot of branded players moving into opening their outlets at sites that were earlier dominated by the unorganised players. If one travels from Mumbai to Pune, you get to see a lot of branded foodservice players along the route, especially around Lonavala, which was not the case earlier. But with domestic tourism booming, and highway traffic multiplying very fast, all these branded players have a ready clientele to cater to and it contributes a significant share of their business,” noted Pranav Rungta, Director, Mint Hospitality.

Not just the highways, but with smart cities coming up and smaller cities in the throes of a makeover, the case for food service players to move into the lesser conventional places, is now almost well-settled, the panel concurred.