Bean there, not done it yet!

First McCafe in India at Sobo Central Mall in Mumbai

The idea of a “food cafe” seems to be picking up in India. A food cafe occupies the sweet spot between cafes and quick service restaurants (QSR)[i]. Dunkin Donuts is one such brand in India which has positioned itself as a “food cafe”. It serves a wide range of donuts, drip coffee, espresso coffee based beverages such as cappuccinos and lattes, fruit milkshakes & smoothies, teas as well as a delectable range of sandwiches made out of artisan breads such as focaccia, croissant, ciabatta & bagels. In 2013 DD introduced its range of 8 Dunkin burgers in India; an elaborate range of vegetarian and non vegetarian burgers. Indians usually visit a cafe/QSR in the evenings. Owing to this consumer behaviour, the mornings and the afternoons are lean periods for companies in this business. The already existing brands in the Indian cafe and QSR space have got the ball rolling to fill in this gap by going the “food cafe” way.

In 2014, Subway will follow suit, and focus on brand extension plans by foraying into the cafe segment.QSR chains which hitherto focussed only on their flagship offerings such as burgers and pizzas are diversifying into the café concept to lure consumers who flock cafes emulating the growing cafe culture in the country. After McDonalds and Pizza Hut, Subway intends to tap the cafe segment in India, which currently holds a 12% market share of the total food service industry in the country. The chain space in the QSR (Quick Service Restaurant) has 90 to 100 brands with around 3000 outlets and holds a 43% market share of the total food service industry. Over the last two quarters, the QSR segment has been posting low same-store sales growth and companies are working their best to increase volume sales by offering value meals and diversifying store formats to increase footfalls. And with a $290 million Indian coffee market, growing at 17% annually and estimated to reach $725 million by 2018, cafes are a clear option for QSRs. (India Food Services Report, 2013)

McDonald’s  introduced cafes in India last year, currently there are 4 McCafes  in India, all in Mumbai. Going forward the company plans to roll out McCafes in other metros such as Bangalore, Chennai and Pune in the next couple of years. McCafes is currently present as a shop in shop format and located within the McDonald’s outlet. The menu bears coffee based beverages, pastries, muffins and cakes. The starting pricing for a cup of coffee at a McCafe is Rs 80(cappuccino). Owing to this brand extension the company intends to boost the average spend of a customer per visit. So far, McCafe has been unable to hit it big in the cafe segment. The brands recent strokes signify the intentional estrangement from being seen as a kids’ hangout place to a place for adults. Two years ago, Big Mac had kicked off a large-scale revamp in line with a global strategy by shedding its red-and-yellow colours for more muted tones to bring more adults into its stores.

Yum! Brand has started a Hut Cafe in a store-in-store format where a Pizza Hut restaurant houses a cafe that serves coffee, tea, smoothies and coolers. Pizza Hut launched its Hut Cafe outlet each in Chennai & Kolkata and this marks Pizza Hut’s foray into a new category of cafes.
Such store in store cafe formats bring in more customers by building a different day part and increasing footfalls within the existing quick service restaurants

Subway cafes will have coffees and pastries on the menu. With this format expansion, the brand intends to fill in the morning and late afternoon part of the day when people prefer less of savoury items and more of snacks. Subway, known for its foot-long submarine sandwiches and salads, launched such cafe in the US three years ago.

This development move comes during a time when most of the brands in the food service industry in the country are facing a slowdown with negative growth in the same store sales, which supposedly tracks the organic growth. It would be intriguing to witness the market’s reaction to this just out trend of the hybridised format.

 

[i] A quick service restaurant (QSR), also known as a fast food restaurant within the industry, is a specific type of restaurant characterized both by its fast food cuisine and by minimal table service. Food served in fast food restaurants typically caters to a “meat-sweet diet” and is offered from a limited menu; is cooked in bulk in advance and kept hot; is finished and packaged to order; and is usually available ready to take away, though seating may be provided. Fast food restaurants are typically part of a restaurant chain or franchise operation, which provisions standardized ingredients and/or partially prepared foods and supplies to each restaurant through controlled supply channels.

(2013). India Food Services Report. National Restaurant Association of India (NRAI).