Sugar Coat your success by Investing in Bakery Franchise

The bakery business in India is the largest in the food processing sector. The industry has achieved a third position in generating revenue among the processed food sector.

The bakery industry is also noted to be one of the fastest growing segments within foods with an annual growth rate of 20-25%. Bakery products have gained popularity and become an item of mass consumption owing to its international quality today, competitive prices, coupled with rapid growth and changing eating habits of people.

With emerging consumer trends, growth of upcoming bakery institutions and the rise in aspiring bakery chefs, the industry is all set to bloom.

Market Scenario

The bakery segment in India can be classified into the three broad segments: bread, biscuits and cakes. The per capita consumption is very high in industrialised states like Maharashtra and West Bengal. Biscuits are becoming quite popular in rural areas as well. Generally, rural sectors consume around 55% of biscuits. Tier-I and II cities are growing, but in tier-III cities, there is a significant boom. There has been a shift from mainstream bread, toasts and Khari to cakes, which has led to immense growth and potential in the bakery industry.

The bakery and confectionery has about 35% of the market share in the food service domain due to the rise in the ready-to-eat a baked product with a higher shelf life. The confectionery vertical focusing on frozen desserts is all set to move up the ladder to serve the masses.

Trends Propelling the Growth

Cakes and bakery goods are an important part of gifting, especially in big cities and the trend is soon catching up in small towns and cities. Due to the rapid population growth,  rising foreign influence, the emergence of a female working population and the fluctuating eating habits of people, bakery products have gained immense popularity among people, thus contributing significantly to the growth of the bakery industry. 

Another factor which is propelling the growth of the bakery industry is the online delivery service. With the increased penetration of internet and many brands offering same-day delivery services, as well as midnight delivery, have led to increased consumption of bakery goods, especially for gifting purpose. For India’s largest flower-gifting chain, Ferns N Petals, cakes account for 40% of its online business. The trend of combining cakes with flowers with a lot of customisation is also providing the relevant boost to the bakery market.

The customisation of cakes & other bakery items has been in demand for the past few years. Customers no longer want the basic designs, but personalised according to their needs and taste. An,d this is not a metropolitan fad anymore; it has established its roots in tier-II and III cities as well. In addition, Indianisation is also helping the market grow. For instance, customers are now demanding for Indian-inspired French pastry. Bakeries and patisseries are taking inspiration from the flavour notes of traditional Indian sweets and pairing them with classic French pastry to create one-of-a-kind desserts.

Business Model

Bakery franchises are a rage in today’s time. If you've ever wanted to start your own bakery, opting for a bakery franchise could be the perfect opportunity for you.  It will not only provide you with the ease of setting up a successful business model but will also help you attain relevant training and support. The bakery franchise business calls for an investment of at least 10-20 lakhs.

Established brands like Monginis demand investment of about 15-25 lakhs depending on the location and size. They require a minimum area of 225 sq. ft. to 300 sq. ft and the investment cost is inclusive of franchise fees, performance deposit, shop infrastructure cost and Government licensing fees.

The margins typically range between 25-30% with the anticipated return of investment to be around 60-70%. Moreover, for unsold/returned products after shelf-life expiry, franchisors will reimburse 100% of those products within 21 days and after 21 days, 85% of the cost will be reimbursed.