Sarah Jacob , The Economic Times
Bangalore, 23 May 2012
American doughnut maker Krispy Kreme has flagged off its India plans barely a week after rival Dunkin’ Donuts opened shop in the country, setting the stage for a doughnut onslaught in a country that loves pizzas and burgers as much as dosas and pav bhajis.
Krispy Kreme Doughnuts, which operates around 700 stores worldwide, signed its first franchisee deal in India with Bedrock Food Company to open 35 Krispy Kreme outlets in North India in five years, the US firm announced last week.
New Delhi-based Bedrock also holds franchisee rights for American sandwich chain Subway, operating about 185 Subway restaurants in north, west and south India.
Doughnut — a fried, ring-shaped snack often glazed with sugar or filled with cream, which is widely consumed on the go with coffee across the US — may well be the next big-ticket western food item that Indians will tuck into, going by the hectic activities in this nascent industry.
“It does not matter who entered first. It is not a 100-metre race but more of a marathon,” Dev Amritesh, President& COO-Dunkin’ Donuts India, Jubilant FoodWorks, says.
Dunkin’ Donuts, which has partnered with Jubilant Foodworks in India, will open its third store in Delhi this month. It is targeting 80-100 stores in five years.
Existing players such as Mad Over Donuts, Donut Baker and SH Donut Empire too have drawn up aggressive expansion, while Donut Factory plans a relaunch.
Mad Over Donuts plans to open 50 outlets across cities such as Chennai, Hyderabad, Ahmedabad and Chandigarh this fiscal.
Donut Baker, owned by Global Franchise Architects that also owns of Pizza Corner, and Mumbai-based SH Donut say they will venture out of Bangalore and Mumbai, respectively.
Most western restaurant chains are turning to India as sales slow in mature markets and the higher-spending Indians willingly experiments with new cuisines.
Perhaps these entrants are also enthused by the success of pizza chains that have invested large amounts into marketing and clockwork home delivery to find loyalists for a product that once was alien to Indian tastes as doughnuts are today.
“Earlier people said India was a country for tea, but coffee has seen huge growth in demand,” Devangshu Dutta, chief executive of retail consultancy Third Eyesight, says. “There is latent demand for doughnuts too both because Indians have a palate for sweet products and because our exposure to western snacks is increasing through films and travel.”
India’s increasing young population is the key to these chains.
Priced Rs 30-50 for a doughnut, some chains are targeting young professionals and college students, while others are reaching out to children.
Most doughnut chains model themselves as all-day outlets and serve coffee, sandwich and other products.
“Quick service restaurants are transactional, offering a standardised, limited menu and positioned as value for money. Cafes offer an experience but are mostly focused on beverages. We are a food cafe, addressing the segment between the two,” Amritesh of Dunkin’ Donuts says.
Branded as Dunkin’ Donuts & More in India, the chain will retail sandwiches, bagels, milkshakes and coffee along with doughnuts.
Companies say it’s also important to serve other products because doughnuts may take time to grow in the market.
“Doughnuts will grow over a period of time. But we have to look at other product categories too,” Tarak Bhattacharya, COO of Mad Over Donuts, says.
The Singapore-headquartered firm is adding a range of coffee, bubble teas and cupcakes to its menu.
Amit Tacker, founder of Donut Factory, a homegrown brand that shut stores across malls last year, says finding the right location is the key to success. “Location is a big factor in new product food retail,” says Taker who will open a Donut Factory at New Delhi’s Khan Market in July-August.
Joseph Cherian, global chief executive of Donut Baker owner Global Franchise Architects, says entry of global biggies such as Dunkin’ Donuts and Krispy Kreme will help grow the category with their deep pockets and brand recall.
But not everybody is convinced about doughnuts’ success in India.
“Doughnuts and coffee are breakfast concept globally and Indians are ready for that only in certain pockets,” says Gaurav Marya, president of Franchise India Holdings, which helps brands find franchisees in India.