Mid-sized global restaurant chains find Indian market attractive

New Delhi: Nearly a dozen small and mid-sized global cafe and restaurant brands have entered India in the last two quarters or are in talks with local players at a time when major global chains are seeing a sharp decline in same-store sales and growth.

Mid-sized global chains are making investments even in a modest range of Rs 20-30 crore to reach out to select cities and intend to keep the number of stores below 30 to remain profitable at each store. This is in contrast to earlier times when cafes and chains were entering India with mega operations and investment plans, executives said.

Belgian bakery Daily breadFrench pastry chain LaduréeUnited Kingdom JD Wetherspoon and Frank HotDogs are among those that have signed collaborations with Indian partners, while newer ones like Harley’s, Paper & Pie, abCoffee and First Coffee are expanding with first-time investors and mid-tier store launches.

“A combination of factors is driving this shift towards newer, smaller launches,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. “There are niches that newer chains are addressing as consumer choices evolve and become more niche. Also, there is a broadening wealth base in India leading to mid-sized companies having the capacity to invest and willingness to try new segments,” he said.

As big food service launches sell out, there has been a proliferation of smaller offerings that are expected to grow.

Bake & Brew, which has signed a master franchise agreement with Belgian bakery chain Le Pain Quotidien to re-enter India, is investing Rs 35 crore in the first year. “We will start in metropolises and may expand to smaller cities later. We also see potential in travel retail, airports and larger railway stations,” Annick Van Overstraeten, CEO, Le Pain Quotidien, told ET. Bake & Brew is backed by the Nalanda Group, whose core business interests are metal auto parts.

Earlier this month, French pastry chain Laduree announced it would launch its café at the Ritz-Carlton in Pune, in collaboration with the CK Israni Group, which has business interests in home decor and construction. Its managing director, Chandni Nath Israni, said in a statement that the CK Israni Group was planning to expand Laduree’s presence to other cities in India.

Experimentation with new cuisines is also driving change. “Our decision to expand in India stems from a deep appreciation for variety and a passion for bold flavours. We see great potential in the Indian market“said Benjamin Attal, founder of the American chain Franks Hot Dog.

By contrast, smaller, newer local chains are expanding, backed by mid-sized investors and trading companies, many of which are entering food services for the first time.

Last week, Brigade Group, a real estate company, announced a partnership with specialty coffee chain abCoffee to establish six outlets within Brigade properties.

“We have partnered with abCoffee to enhance the food and beverage offering in our office parks. abCoffee can modernize operational buildings without the need for additional water or gas points,” said Arvind Rao, Vice President, Commercial Business, Brigade Group.

Specialty coffee startup First Coffee plans to open 35 stores by the end of 2024 “focused on delivery and minimalist store aesthetics,” according to a company statement, to sell flavored coffees, cold brews and bubble teas.