Top 5 Trends In 2019 That Shaped The Indian Franchising Industry
As the year draws to a close, it is critical for aspiring as well as seasoned investors and entrepreneurs to keep a close eye on the patterns that formed the economy in the previous year. Businesses may analyse their present policies and revise them to suit the market by keeping a close eye on insights and trends. These trends contribute in improved research, development, and innovation while providing insights into the Indian franchising industry.
The year 2019 has indeed been excellent and has given businesses many valuable lessons with regard to franchising. An effective way for investors to generate consistent revenue was and will remain to be a franchise business. When you ink the franchise agreement, nobody hands you a magic wand, so you’ll need to put in the time, energy, and strategic planning necessary to make it successful. Understanding some of the key franchise developments that occurred in the sector over the last year is crucial.
2019’s top 5 trends in the Indian Franchising Industry
- The Development of Asian Dollar Store Chains
- Plans for International Brand Expansion
- The Zomato Gold Conflict
- The Beginning of Cloud Kitchen
- Subway’s Dismay
The Development of Asian Dollar Store Chains
These well-known retail chains from around Asia, including Miniso, Ximi Vogue, Mumuso, and Uniqlo, are placing their bets on the Indian economy. The expansion of these businesses from countries like Malaysia, Thailand, Hong Kong, Taiwan, and Japan accelerated in India in 2019. Among the first few Asian retail companies to research the Indian economy and determine its profitability was Miniso India. The company plans to establish more than 800 outlets by the end of 2020 and is optimistic about the Indian market.
Most of these companies are low-cost retailers with a target market of people between the ages of 18 and 35 who have a moderate income and a preference for goods with a global appeal. These businesses are maintaining great sales records despite intense competition from one another by adopting the proper price, advantageous locations, and adhering to offline formats. These brands appear financially profitable and bankable from a franchising perspective.
The Zomato Gold Conflict
Zomato has been among the main forces driving the rise of the F&B business, which is among the most lucrative and in-demand franchise sectors. However, Zomato’s membership service, Zomato Gold, seriously strained relations with F&B restaurant owners.
In essence, the “Gold” programme was developed to provide loyal customers with exclusive deals and discounts, but it soon began to affect the expenses of operations and the reputation of restaurants all across India. Due to this, the service started to encounter opposition from the Indian Hotel and Restaurant Association barely two years after its introduction (AHAR). Deliveries from unlawfully operating kitchens, substantial discounts for clients at the expense of earnings, and a lack of delivery executives were listed as the causes.
Even when the firm ultimately changed its policy this year, over 8000 members still chose to boycott it. The key takeaway is that, while being a low-risk business model, franchising is not completely risk-free. You need to be flexible since outside circumstances (like the status of the economy) might have an influence on your firm.
Plans for International Brand Expansion
2019 saw the expansion of several foreign companies, not only Asian ones, in India. For instance, Taco Bell inaugurated its 50th location in India and demonstrated that and it’s here to stay by announcing plans to add more than 600 locations over the next ten years.
Hamleys was another brand that astounded the nation. Currently owned by Reliance Industries, Hamleys has 190+ locations worldwide, 100 of which are in India. This sort of market expansion by international companies suggests the strength of an economy, the increase of the middle class, rising purchasing power, and more franchising prospects.
If you are an investor and you are currently making money from your current outlet, you should keep a close eye on the planned expansion of these businesses and aim to purchase several units. By doing this, you win the brand’s confidence and reproduce your accomplishment in other regions.
The Beginning of Cloud Kitchen
The cloud kitchen, also known as the ghost kitchen, dark kitchen, and virtual kitchen, experienced extraordinary expansion in 2019. For those who are unaware, a cloud kitchen is a tiny restaurant that exclusively specialises on meal delivery. It has reduced operational costs and fewer staff members because it doesn’t have a dine-in option, which increases its profit margins. In comparison, starting a dine-in restaurant costs around one-third as much as a cloud kitchen.
Whether you want to open your own cutting-edge cloud kitchen or purchase a franchise, it is anticipated to be a successful business. There is still much room for innovation in the Indian market because it is not yet fully developed. Based on this structure, well-known businesses including Faasos franchise, Butter Singh franchise, and Indish franchise are flourishing. Since Cloud Kitchen accommodates contemporary schedules and lifestyles, it is considered to represent the food franchising industry’s future.
Subway’s Dismay
For yet another year, Subway remained one of the most popular fast-food franchises worldwide, while encountering several difficulties. It had to close more than 1000 locations in the US, far more than they had initially anticipated, in addition to dealing with lawsuits from different US franchisees.
Investors should take away from this example that the most prosperous franchise firms eventually reach their peak after developing a complacent attitude. As a result, investors must take risks, develop effective money management skills, and keep an eye out for fresh chances.
2019 shown that, regardless of the industry, franchising needs significant effort, devotion, and business savvy to be successful. Franchise owners had a good year, and potential franchisees should anticipate greater chances with Indian and international companies in 2020. Keep these important trends in mind as you prepare to launch or grow your company.
We would suggest being aspirational yet grounded in reality when it comes to your business’s objectives and targets. Consider franchising carefully and be ready to put in time and effort at first, rather than viewing it as an easy method to make passive money. Take into account the brand’s past, find out about its management, and predict its future course before making a decision. This is the time to invest since India is poised to become one of world’s most alluring consumer marketplaces. Please contact us if you would like more information about franchise business possibilities in India.
