UK-based Coffee Republic Plc. is in talks with eight Indian companies to appoint an India franchisee that will bring the coffee chain to India as it looks to expand outside its home market.
It hopes to finalize the deal in the first quarter of next year. The company is currently studying whether it should enlist a single “master franchisee” for India or have four different franchisees in the country’s four different regions, Peter J.F. Breach, chairman of Coffee Republic, said. “We haven’t decided…we might do one (franchisee) or four,” Breach said.
Breach declined to name the Indian companies Coffee Republic is talking to but said two of them are real estate firms and one is a “large” company. The company plans to open up to 500 outlets in India in the first five years and add another 250 stores in the five years after that, Coffee Republic executives said. The company hopes to roll out its first stores in the second quarter of 2008.
On Monday, Dubai-based Landmark Group tied up with Gloria Jean’s Coffees to operate nationwide franchisee stores of the Australian firm. Landmark’s hospitality unit, Citymax, plans to invest about Rs40 crore to open 90 Gloria Jean’s outlets throughout the country in the next four years and will scale up operations to 500 stores in the next 10 years.
According to industry estimates, India currently has about 1,200 coffee outlets, and people in the industry expect the number to more than double to 2,500 in the next four years. Currently, business through coffee bars in the country is a Rs500-600 crore a year market but this is expected to triple in the next five years. “It’s (the market) growing exponentially,” Breach said. “It’s an enormous market that is growing rapidly.”
India’s coffee bar culture is barely a decade old and while it has home-grown chains such as Barista Coffee Co. and Café Coffee Day, it is also home to some overseas chains such as Costa Coffee and Coffee Bean & Tea Leaf . A youthful population, a booming economy and rising incomes are translating into more business for coffee bars. Café Coffee Day and Barista, which was acquired in March by Italian firm Lavazza Spa, operate around 700 outlets between them.
Meanwhile, Coffee Republic is in talks with Bangalore-based Coffee Board to assist the UK company to add some Indian coffee varieties to its portfolio in the country, Breach said.