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Reasons why Coffee Franchises have become a Hot Spot for Investment

Nikita Arya
Nikita Arya Aug 27 2019 - 3 min read
Reasons why Coffee Franchises have become a Hot Spot for Investment
Presently, the coffee chain market in India is valued at Rs 2750 crore and is anticipated to reach Rs 4540 crore by 2023. Read on...

Despite being the 6th largest producer of coffee in the world, India was primarily a tea-drinking nation until a handful of entrepreneurs tried to unlock the potential of the coffee market. Until then, a perfectly brewed cup of coffee was a luxury – something that is not for the masses.

With time (and rising purchasing powers), people started finding connect with the aroma of coffee, especially the growing youth of the country. Eventually, the luxury of coffee found its new home in the air-conditioned coffee houses that allured all the old and the young ones and the coffee culture exploded in India. Presently, the coffee chain market in India is valued at Rs 2750 crore and is anticipated to reach Rs 4540 crore by 2023. Not just in the tier-I regions, but there is an abundance of coffee retail franchises in tier-II and III regions also. This suggests that coffee franchises are lucrative opportunities for entrepreneurs in this business.

Here are some of the reasons as to why coffee franchises have become a hot spot for investment.

# Coffee Retail Chain is one of the fastest growing consumer food categories

As per recent reports, India is among the top 10 fastest growing market for specialist coffee and tea retail chains. From a fairly static to a big-budget market, the cafe chain market in India has brewed itself in the past few decades to become a whopping industry that is valued in crores as of now. The coffee retail chain market is also one of the fastest growing categories in the consumer food service industry.  

With such extravagant size, many entrepreneurs are running in the race to start their own coffee chains, and most of them prefer taking the franchise of other established brands. Cafe Coffee Day (CCD) is one of the biggest names in India in the field of coffee retail chain, and operates on a franchise model offering lucrative business opportunities to like-minded entrepreneurs to join in the venture. CCD is also recognised as a source of inspiration for all the newbies of the industry that started the revolution in the coffee space in India.

#Changing Demographics and Consumer Behaviour

With the rise in middle class, growing brand awareness, growing population of youth and the influence of international brands, the coffee culture in India is witnessing a significant boom. As mentioned above, coffee was once a luxury for the general public as it was majorly consumed by the privileged. But now we can see numerous brands in the category that are opening their franchises in every nook and corner to make the luxury of drinking the perfectly brewed coffee possible for the masses.

Along with this, other contributory factors such as favourable sitting spaces, social status, and availability of Wi-Fi etc are attracting people from all walks of life to coffee franchises. All of these factors are influencing the footfall in coffee shops. With higher footfall come higher profits, thereby making the coffee franchise a perfect investment opportunity.

# Highly-Rewarding Business Opportunity for Entrepreneurs

One thing about which every prospective franchisee is concerned is the viability of the business idea. How much do I have to invest? Will I earn higher returns or not? Questions like these crosses the mind of any aspirant. In case of a coffee franchise, one thing is clear that the investment is minimal. However, the amount of investment differs from brand to brand. Here is a general summary of the franchise requirements of a coffee franchise in India:

Investment Required: Rs 5-15 Lakhs

Area Required: 100-1000 sq ft

Expected ROI: 50 percent

Payback period: 11 months

 

  

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