Analysing why some food brands don’t pick up, even at good locations
Oberoi mall is one of the most successful malls in Mumbai. It is located at Goregaon West and has a strong cachement area.
Three brands in Oberoi Mall recently closed down due to slump in sales. Has Juice Bar that was started by Mr. Avinash Bharwani, (whose family has built the Jetking education franchise). He built it into a franchise chain, starting off at Bandra and growing the chain to a few units, before selling it off. Team India Managers had also picked up equity in Has Juice Bar, apart from a couple of other investors. Has Juice Bar had launched a couple of other food products like salad and sandwiches, which were not very well accepted by the public.
Crepeteria food restaurant (Express outlet) serves crepes to customers, both vegetarian and non vegetarian. It was started by Adith Podar. Majority of Indians, even in a well travelled, up-market city like Mumbai would not know about crepes. Some of the customers mentioned the brand hasn’t created enough awareness, not have they worked hard enough to educate customers.
Sanskriti serves North Indian Sattvik food at Oberoi Mall. Sanskriti is started by Sapana Chaturvedi. Sanskriti serves food that is primarily without onion and garlic. Ms. Chaturvedi mentions that the rental + CAM (Common Area Maintenance) was increased from Rs. 2 Lakhs to over Rs. 2.5 Lakhs (25% increase) and hence the outlet’s profitability was compromised.
There is nothing wrong in closing down locations. An entrepreneur gains rich experience in the bargain of closing down non profitable or unviable stores. Every successful brand, right from McDonalds to Smokin Joes to Subway have all had to close or relocate some of their existing stores.
What is common in all the three businesses is that they were all company owned and company managed. Maybe had the original entrepreneurs decided to franchise then they would have been able to increase local awareness and participation. It has been generally observed that when a franchisee takes up a business, there is an increase in sales and a decrease in expenses. Yes as a franchisor, the company does lose control, but in the bargain ends up strengthening the system.
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