After serving that strong cup of coffee in the country for the past four years, Australia’s premium brand Gloria Jean’s Coffee’s India numbers are perking up. The India operation has managed to break even.
Citymax Hospitality, the master franchisee for Gloria Jean’s, now plansto add 30-40 cafes every year and is mulling a sub-franchisee model.
Mr Vishal Sawhney, President, Citymax Hospitality, said: “Today, we have achieved break even and are making money in India. Since we are growing between 8 and 10 per cent, we are also considering appointing sub franchisees after a year.” High rentals remain the biggest concern for the café chain. “Café chains do not have high margins and to get the right rentals at malls and high streets will always be a challenge. While there is demand for cafes, there is not enough supply of properties due to which most of the players are suffering,” he said. In spite of the steep rentals, the chain is now getting ready to launch its first outlet on Colaba Causeway in South Mumbai.
But scaling up is the only way forward to sustain profitability on a long term basis. “It is a dynamic market and we hope to have 250 stores in the next four years. Once we reach critical mass and get adequate volumes, we could even think of retailing the GJC brand outside the cafes like we do in Australia,” said Mr Sawhney. In fact, in Australia, Gloria Jean’s follows a business model similar to that of Starbucks in the US. “Just like Starbucks, we have a front-end café business and a retail business. Both of us follow a similar business model in our respective countries, where we are the leaders in coffee,” he added. Besides, Gloria Jean’s cafes would be enhancing its food offerings with ‘hand crafted’ snacks to suit the demand of consumers at its relatively large outlets. Competing with premium international coffee chains such as Costa Coffee and Di Bella, Gloria Jean’s is bracing itself for the entry of Starbucks in the country. “There will be healthy competition with Starbucks. Today, there are about 2,000 coffee outlets in India and it can easily go up to 3,000 as there is going to be enough room for everybody,” claims Mr Sawhney.
The coffee retail market is estimated at Rs 1,100 crore with a CAGR of 20 per cent.