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CHAPTER I

Introduction

1.1. HISTORY

The Monginis brand name originated over 100 years ago, when 2 Italian brothers set up a

catering firm in south Mumbai. Monginis catering services including cakes, pastries and

savories were in great demand. To the last detail, complete with a wedding cake it was

Monginis that breathed life and fun into the European weddings that took place in

Bombay. After it was bought over by the Khorakiwala's in 1960's, the brand has

remarkably grown to become the national leader in cakes. In 1971, for the first time in

India, a plan of having an exclusive franchise cake shop was conceptualized. Mr.

H.T.Khorakiwala, the founder president of national association of bakery industry, who

spear headed the operations, realized that to grow it was necessary to focus on production

standards and distribution. The retail management was best left to the shop owners, who

were in a better position to offer personalized service to the customers.

The success of the first franchise cake shop sparked off a setting up of a chain of

franchise cake shops all across India, which is nearing the 500 mark. Monginis has

emerged as one of the largest food store chain in India. At the sprawling 150,000 sq. feet

combined manufacturing facilities in Mumbai and its twin city thane. The organization

today owns the state of the art manufacturing facilities to produce a whole range of cakes

and bakery products, both oven fresh and supplied daily to all the cake shops.

A pioneering step was the franchising of manufacturing operations across the cities of

India. Monginis realized, at the outset, that the culture and tastes of people differed from

state to state and even from the same cities in the same state. Hence Monginis opted for

growth through the franchise route where the manufacturing operations are owned and

managed by the franchisee. These franchises hail from that particular city and who

understand the habit and tastes

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1.2. COMPANY PROFILE

The 42,000-sq-ft HACCP certified headquarters of Monginis is the place from where all

the yummy stuff emerges from. It is the nationwide headquarters, to which all

manufacturing and cake shop franchisees report. It is the fountain head of ideas that are

good enough to eat The Monginis headquarters is also a model bakery with state-of-the-

art manufacturing facilities designed to produce a wide range of cakes, gateaux and

pastries, tongue-tickling savouries and a variety of any-time snacks. Here quality

assurance steps at each and every stage of the manufacturing process ensure world-class

soft n fresh cakes, snacks and baker's ware. Monginis headquarters has a well equipped

lab and has gained the HAACP certification since past 2 years for maintaining and

assuring best of the Hygiene and quality standards of our products and for our customers.

Recently, Monginis commissioned a factory at Bhiwandi near Mumbai measuring 6lakh

sq.ft.

Today's reputed Monginis brand name, originated as a single Italian bakery, at Mumbai's

Fort area, over a hundred years ago. The Monginis Catering Service, as it was then

known, was largely responsible for the success of most European weddings held in

Mumbai city at that time. However after it was bought over by the Khorakhiwala's in the

1960s, the brand has grown remarkably in the form of the hugely-successful Monginis

Cake Shop franchise network being run all over India today.

This, thanks to the efforts of H.T.Khorakhiwala, Founder President of India's National

Association of The Baking Industry, who spearheaded the operations that resulted in the

establishment of the first Monginis Cake Shop in 1971. From being a single shop then, to

the highly-evolved franchise network of nearly two hundred stores across India,

Monginis has sure come a long way.

At a sprawling headquarters in Mumbai's north-western suburbs, the organization today

owns state-of-the-art manufacturing facilities, to produce a whole range of cakes and

bakery products - both packaged and oven-fresh.

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So the delightful menu now reads: Celebration Cakes, Cookies, Specialty Breads,

Chocolates, Snack Foods and Savories. And that's not all.

Being the true "celebration people", Monginis are also into Party Decoration, from

supplying buntings to disposable-plates and party take-home gifts. Which makes it seem

like the final icing on the celebration cake.

1.3. VISION

To supply the best quality products with value for money

To maintain national leadership in cakes with a presence in all towns across the

country

To develop human resources

Monginis follows a simple “doughnut principle” where the customer remains that valued

creamy centre around whose satisfaction all activities revolve. This is by creating value-

for-money products without compromising on quality in terms of taste or appearance. It's

been the main reason for our rise as a franchisee network of nearly five hundred outlets

across India alone!

The bedrock of this success, is the emphasis on freshness in our products, management,

ideas, ambience, customer service and décor of the cake shops.

Our vision is to become a national cake company with one thousand Monginis cake shops

through forty manufacturing franchisee units spread over the metro cities of India.

Core purpose:-

“To help people express their happiness in a memorable way.”

Core Values:-

• Good intentions in dealing with one another amongst the stakeholders (share holders,

suppliers, employees, franchisees, dealers and consumers) breed (or yield) good products

and services.

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• All our products and services shall be offered with the same love, care and affection as

if, they were meant for the most beloved person (or a family member).

Brand Insight: There is a “child” hidden within each of us, who wants to give way to its

feelings

Brand Expression: Expression of Happiness

Advertising tagline: Go Ahead Celebrate!

1.4. Ideas and Innovations

Ideas and innovations make it possible for the high-level excitement to be sustained in the

brand.

• Pioneers of a fantastic Cross delivery System which connects 11 manufacturing

Franchisees through an intricate network to simplify the means so that your beloveds can

get a cake delivered in any part of India ordered from anywhere in the world.

• An Interactive website which allows online bookings of our products from all across the

world to be delivered in parts of India, where we have a presence.

• Pioneers in the introducing corporate cakes with Company Structures, logos and

Products too.

1.5. Products

Monginis sells itself as "The Cake Shop", producing ready-made as well as order-made

cakes for catering or carry-out. Individual cake slices are also kept in Monginis stores for

dine-in customers. The chain sells both Indian and Western savouries, including samosas,

puffs, cutlets and doughnuts. Apart from these, snack foods and breads are also sold at

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Monginis shops. Monginis has a product line for diabetics, and offers themed products

during Diwali, Christmas,Easter, EID and other festivals.

Fast food Snacks include more than 50 items like Burgers,Pizzas,Patties,Cornato(bread

cone with garlic chicken),Cornizza(veg version), Hotdog & so on.[5]

Monginis produce more than 30 different gateaux primarily in round, square and heart

shape both in egg and eggless category. Monginis has cakes in regular, premium and

super premium segments in which Black forest, truffle Dutch premium Shimmer and

premium Zanzibar are most popular cake family among customers.

1.6. Availability

Monginis has made a name for itself in site delivery and accessorized carry-out catering,

with telephone and internet ordering options. It counts 558 exclusive franchises in total,[6]

and at least one production center each, in 38 cities. These include some of the biggest

metropolis, such as Mumbai, Kolkata and Hyderabad. 215 of these are in Mumbai, where

the company is headquartered at a 42,000-square-foot (3,900 m2) office/factory complex.[7] Besides Mumbai the company has a considerable presence in the city of Kolkata (130

shops), Pune (60 shops), Goa (34 shops). Monginis also supplies less perishable products

to over 10,000 locations.

1.7. Product Portfolio

The company has two strategic business units

1. STRATEGIC BUSINESS UNIT – I (SBU – I)

This business comprises of establishment of franchised cake shops. The product range

would include all unpacked cakes & pastries;bread products; chocolates & cookies;

birthday cakes; novelty cakes; savories including veg.and non veg. patties,

rolls,croissants, etc. the franchisee would also be required to trade in approved non-edible

items like birthday accessories and party related gift items

for exclusive supply to cake shops.

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2. STRATEGIC BUSINESS UNIT – II (SBU – II)

This business comprises of packaged cakes which have shelf life of 30 to 90 days. These

products are in the fast-moving-consumer-goods category (FMCG) and are required to be

marketed in all the relevant shops namely provision shops, kirana stores, chemist shops,

in the territory defined.

The company offers a manufacturing franchise for strategic business unit-I (SBU-I) viz

the cake shop business. The packed cake (SBU-II) would continue to be

Supplied from Mumbai.

CHAPTER II

BRAND MONGINIS

Brand Monginis is a leading brand of cakes in India. Generations have grown celebrating

their birthdays with Monginis cakes and thus it has become synonymous with the Cakes.

Making cakes is an art which Monginis has acquired over a long period of time but

converting it into a viable business model was an icing on the cake. Today, brand

Monginis stands tall on certain basic values like – consistent quality, continuous

innovation, value-for-money offerings and availability closest to the consumers.

At Monginis follows a principle of creating “brand ambassadors”. Brand ambassadors are

not the celebrities who advertise the brand for money but common people who after

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experiencing its products get satisfied and share their experiences with their near and dear

ones. Thus creating immense goodwill for the brand. Monginis knows that this can be

achieved only if the product quality is maintained consistently above the people’s

expectations.

Product innovation is a hallmark of Monginis. In this ever-changing world, the Cake

designs, flavors and recipes keep changing. Monginis has a strong product development

team which keeps a tab on the current trends and keeps making necessary alterations or

develops new products altogether.

A tight control over the costs without letting the quality deteriorate is a skill acquired by

the management team of Monginis through its experience of over 25 + years. The cost

advantage gained is then translated in the form of “value-for-money” products for the end

consumers.

Both physical and psychological accessibility for the consumers comes to a brand after

years of hardwork and personal attention. And Monginis strongly believes that the

consumer should reach to its products without much effort and he / she should feel

“comfortable” while entering and dealing in its shops. Monginis sales staff is adequately

trained in such a way that they not only sell the products but also make the consumers

“comfortable”. They also do a considerable “missionary” work of educating the

consumers on cakes.

SWOT ANALYSIS

Strengths of Monginis

1)      Monginis Foods Pvt. Ltd. has been there for a long time almost for 4 to 5 decades.

2)      It has good coverage; it has around 500 retail stores all over India.

3)      Has acquired a name in the world of bakery, food processing and packaged foods

industry.

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4)      It has recently started offering home delivery and online booking and delivering

system.

5)      Prices of their products are quiet reasonable as compared to its competitors

Weakness of Monginis

1)      Monginis has fewer varieties in the range of cakes as compared to its competitors.

2)      There have been cases of lack of consistency in quality because of Monginis being

a franchise business.

3)      Monginis is not promoting its products aggressively.

4)      Being a franchise business it has limited control over the location of the store.

Hence some of its stores are not strategically located

Opportunities of Monginis

1)      There is an opportunity for Monginis to make its presence felt in the malls which

now-a-days becoming a strategic location for such kind of products.

2)      Getting more varieties in their product range by proper market research.

3)      More services can be added to boost sales further and make the brand name

stronger in the mind of the customers.

4)       Promoting the online system properly by targeting corporates, NRIs, etc.

5)      Getting in more customization options would be good for the customers.

6)      Using the tag line “What are you celebrating today?” more effectively.

Threats of Monginis

1)      Monginis has threat from its competitors such as Birdys, Hang Out, Merwans, etc.

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2)      Cadburys and McDonalds are also a threat to it because they are also positioning

their products on the lines of celebration.

3)      Mithai Mate is a latest venture in the world of online gifting of sweets which is also

a competitor to Monginis.

4)      The franchise system of business can lead to sometimes misuse of the brand name.

It can also hamper the quality of the product and also the service offered by the

employees at the store.

MONGINIS - "BUSINESS MODEL"

“Monginis” exclusive cake shop business operates on a franchisee model. It franchises

out not only the retailing but manufacturing also. It strongly believes in inherent human

entrepreneurship and strives to bring it out by training and by giving a lot of freedom in

working so as to create “entrepreneurs”. The “entrepreneur” franchisees then work in a

team with the brand striking a perfect “win-win” situation for both.

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A Monginis Manufacturing Franchisee virtually owns the entire Monginis business of the

city he has been appointed for. He is responsible for the procurement of raw materials,

manufacturing, logistics and local marketing. He has to work hard to develop a set of

reliable local vendors, get competent and skilled people to handle manufacturing, create a

robust logistics and appoint strong retail franchisees to take care of the critical last mile.

A Monginis Retail Franchisee owns and operates a Monginis Cake Shop. To begin with

he has to receive a proper training in “store management”. He has to properly receive and

store the products. He then sells the products by using his best of the selling abilities. He

has to constantly strive to offer the best shopping experience to the Monginis customers

so that they not only keep coming back again and again but spread a positive word of

mouth for the brand and get additional footfalls also.

FRANCHISE OPPORTUNITY

In India's emerging boom market, there are hundreds of successful product and services

and an equal number of unsuccessful ones. Now Monginis offers you a franchise to

operate the market with time tested and repeatedly proven management concepts

and marketing techniques.In the U.S.A. it has been estimated that over 80% of

new business fail in the first five years because they operate on a basis of trial and error

method. However, every 17 minutes, a franchise business opens in the United States.

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Franchising is referred to as “wave of the future”. The authors of mega trends 2000

predict that franchising will account for more than half of all retail sales by the early

years of new millennium. In a study entitled “future of franchising”, Naisbitt concluded

that franchising is the most successful concept ever created”. More than 540,000

franchises currently operate throughout the united states, generating nearly 60%

of all retail sales.This franchise system is constantly updated concept with learning and

experience leveraged from many cities with diverse cultures. Franchise system offers

financial independence and the chance to own an independent business. It is a system

where you are in a business for yourself, but not all by yourself. You have the support

and backing of a much larger and successful organization behind you.The continuity and

longevity of business under the franchise mode are factors that have weighed heavily in

businessmen deciding on this way of prosperity.A Monginis franchise enables you

topurchase the experience, reputation, brand awareness, training expertise and marketing

support of the franchisor.

Monginis Franchising

You become the immediate beneficiary of trademark and goodwill associated with us and

acquired over more than 35 years.Guidelines on various aspects for starting a Franchisee

manufacturing unit including site selection, estimation of project cost, infrastructural

requirements, related government formalities, parameters for assessing the potential of

business in the area etc.Minimum risk in the selection of right machinery and

equipmentswith proper installation and start up.Assistance and time to time guidance in

the stage wise completion of franchise unit.Popularity of brand ensures short leadtime

and good sales response from day one.Complete guidance regarding opening of franchise

shops, like selection of location, shop infrastructure, internal decor, training of dealer

salespersons etc.Access to new formulations, product recipe, specifications, expansion

programs, operational manuals etc. Initial training provided at the Monginis

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MONGINIS SEEKS FRANCHISEES

Monginis, a Mumbai based leading bakery chain, is all set to open 50 new outlets via the

franchise route by the end of 2010. The company also plans to double its retail

distribution from the current retail network of 15,000 stores across the country.

As told to Abha Garyali of Franchise India Holdings Limited (FIHL) by Virendra Ghole,

Marketing Head, Monginis, “We have set a target of adding 50 more shops by the end of

this year, to our current number of 558 shops in 38 cities.” Presently the company has

their outlets in New Mumbai, Panvel, Pune, Satara, Goa, Nashik, Kolkata and many other

cities. Ghole added, “All the cities where we are present today are growing and as per our

understanding can take a few more shops. For example, we are planning 30 more outlets

in and around Mumbai.”

Monginis is in the process of finding suitable manufacturing franchisees for their

expansion in states like Kanpur, Lucknow, Raipur, Chennai and Bangalore. The retail

franchisees can be appointed only after the manufacturing is commissioned. Regarding

the issues of investment Ghole informed, “The franchisee has to pay a refundable deposit

of Rs one lakh and a franchisee fee of Rs 50,000. Besides this the franchisee has to invest

in doing up the interiors and also in counters, equipments, as per the specifications laid

down by the company. Therefore the approximate investment comes to around Rs six to

eight lakh.”

Apart from opening these outlets, Monginis also plans to add a segment of health foods

like ‘0% Sugar Cookies’ in different flavours like coconut, jeera, chocolate chips and

shrewsbury. The company has also started a concept called ‘Gift-A-Cake Online’. Ghole

said, “We are trying to reach out to NRIs, who want to send cakes to their near and dear

ones in India.” 

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ABOUT MONGINIS FRANCHISE

Monginis -a premier and popular destination for lovers and connoisseurs of all varieties

cakes, chocolates, pastries and cookies, with a commanding and distinguished presence in

12 cities around India and 2 in Egypt.

-Core Purposes : "To help people express their happiness in a memorable way." Assist

customers in conveying happiness to their loved ones in memorable and personalized

ways.

-Core Values : All our products and services shall be offered with the same love, care

and affection as if, they were meant for the most beloved person. Use the best

ingredients, offer fresh bakery products, customized to suit personal tastes, with excellent

standards of creativity, and delivered with the highest degree of timeliness and assurance

of impeccable quality. Good intentions in dealing with stakeholders like Suppliers,

Employees, Franchisees, Dealers and Consumers yield good products and services.

Cherish, honour and respect, the goodwill and cooperation given by stakeholders like

Suppliers, Employees, Franchisees, Dealers and Consumers.

Monginis uses only the finest and freshest ingredients in its products, with insistence on

quality control at every stage of production, packaging and delivery.

Monginis have specialized in and gained renowned for custom made personalized

products, which the client can order as per individual specifications and tastes, together

with unique messages, which touch the hearts of the recipients.

Monginis expert staff of chefs, confectioners, and artist, strive for ongoing creativity and

customer satisfaction - we create the dream gift which the client has conjectured in his or

her mind.

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Monginis is the 'Celebration King' with virtually no popular or special occasion

remaining outside its range. Clients have now become habituated to celebrate with

Monginis whether birthdays, anniversaries, weddings, engagements, Children's Day, etc.

-Monginis outlets - Cake Shops, are conveniently located, with a friendly ambience and

helpful staff, whose motto is - the complete satisfaction of the customer's sweet wishes.

-Great ethics and services, have ensured that Monginis has spread its wings across

exclusive 521 outlets, using 1,25,000 sq. ft. of retail space, 20000 non exclusive dealers

selling the brand, and a daily footfall of 75000 customers, in addition to the large

organized retailers like Big Bazaar, More, Spencer's, Dmart, Star Bazaar, Reliance.

-Monginis - The name Guarantees. Clients have become accustomed to hassle free

services and blemishless products, which come with a high degree of creativity and

aesthetism.

-The prompt and efficient delivery service has been one of Monginis fortes and

hallmarks. In a market environment where emphasis by many supplier s of goods and

services is only on core products and sub contracting of related ones, for Monginis, the

timely and proper delivery of the client's choices in perfect condition, has always been

very much a vital part of the complete process aimed at blameless customer satisfaction.

-Monginis Gift Coupons and Corporate Gift initiatives have gained widespread

credibility and acceptance. They are not only supremely convenient and easy to utilize,

but are supported by Monginis core desire to provide creative and personalised products,

( as opposed to mass produced, assembly line manufactures) . Every gift is for a unique

individual, for no two persons are ever the same. Monginis confectioners, chefs, and

artists are always on the stand by to create exclusive and artistic products, to the entire

satisfaction of the client. Monginis concept of 'logo'cakes, artistic renderings of the

company product or logo, have been warmly welcomed in the corporate world.

-Started in 1958 by the Khorakiwala family, Monginis flowered under the visionary

genius of Husseini Khorakiwala in the 1970's. An entrepreneur par excellence, he felt that

progress ought to be a combined experience. He offered franchises to budding business

persons who could operate their own enterprises, by employing the product and service

range offered by the mother company, Monginis. Excellent ethical standards and

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products, ensured that the move flourished. Today, Monginis franchisees are a happy and

progressive part of the family.

-In the field of electronic marketing too, Monginis has not lagged behind. Instead , its

portal , www.monginis.net is one of the leaders in on line marketing and servicing,

creating a valued niche for itself. The portal gives clients a convenient and safe option of

sending gifts to loved ones, or business associates, without the hassle of personal visits or

payment hurdles.

-Beside Cakes, Monginis also serves snacks like puffs, bread rolls, pizzas, burgers and

sandwiches through its exclusive cake shops. Monginis also dynamically caters for

"snack packs" ideal for parties and get-togethers.

-Globally too, Monginis has created a distinctive presence in Cairo and Alexandria in

Egypt, with supplies reaching neighboring Countries like Libya, Yemen, Sudan in the

African Continent. Monginis also caters to the prestigious UK market with active plans

for expansion to other European countries.

-The company has 14 manufacturing plants producing oven fresh, mouth watering cakes

consistently throughout the year. Of these, 3 plants are Company owned and the rest are

owned and operated by the manufacturing franchisees.

-Monginis offers mouth watering, lip smacking, aesthetically designed, personalized

cakes, pastries, chocolates, special seasonal confectioneries, cookies, snacks like puffs,

bread rolls, pizzas, burgers and sandwiches, at its Cake Shops.

-Monginis is a popular option for bulk catering at parties, weddings, and other functions.

-Monginis Cakes come with imaginative and appealing names like Black Forest, Dutch

Chocolate, Chocolate Marquise, White Forest, etc. and exotic flavours like Fruit of the

Forest, Passion Fruit, Blueberry and Walnut, Coffee and Hazel nut, etc.

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Manufacturing Franchisee Testimonials

Our company started its production on 13th December 1998. Due to the grand

inauguration and excellent quality of products, we could touch the hearts of Rajkot

public. Though the concept of “Cake Shop” was new in Saurashtra region, we effortlessly

managed to build the image / brand of “Monginis”. Until now we have received almost

350 applications for Cake Shop, which in itself is a great achievement. Delicious Foods,

RajkotSwitz Foods became a Monginis Manufacturing Franchise in 1991. Although

Monginis then was not as strong a brand as it is today, we benefited immensely from the

sharing of learning experiences and from the inherent strengths of the basket of products

painstakingly developed and nurtured over the years by Moniginis Foods.

Today, twelve years later, Monginis is an “All India” brand. In Kolkata, Monginis is

synonymous with cakes, good times and celebration. Tomorrow, this will be true

for the whole of West Bengal. And what Bengal thinks today is still true for the

rest of India.Switz Foods,Kolkata “Monginis” is celebrating each and every occasion and

sharing joys with so many people. Pune is bakery city but even then Pune Monginis has

created its own identity, popularity and proud to say a No. 1 bakery in Pune and its

surroundings, only because of its system of work, quality of products, varieties and

special shapes. We are very much grateful that we are a family member of “NATIONAL

LEADER IN CAKES” and their encouragement, freedom to create our identity as a

“Monginis Franchisee”.Luft Foods Pvt. Ltd.Pune

MONGINIS FRANCHISE GROWTH STORY.

You can’t miss the Monginis headquarters even in the hustle and bustle of Andheri, a

western Mumbai suburb: the sprawling, multistoreyed building is painted in similar

shades of pink and blue as the company’s logo. Even if you overlooked that, the delicious

smells of baking wafting all the way from the factory to the main road will have you

turning towards it. Those smells of vanilla and sugar are well-known to most

Mumbaikars — for generations, their birthday cakes have most probably come from a

nearby Monginis outlet. Zoher Khorakiwala, the chairman and managing director of

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Monginis, has been on a mission to take the cake shop to nearly every neighbourhood in

Mumbai and nearby states. He’s succeeded to quite some extent: there are currently 600

Monginis Cake Shops across six states (Maharashtra, Goa, Gujarat, Madhya Pradesh,

West Bengal and Odisha), of which 225 are in Mumbai alone. Every year, the chain sells

30 million pastries and 4 million cakes.

“We are the largest chain of cake shops in any city where we are present,” claims

Khorakiwala, adding that the Rs 116-crore Monginis has a 26% share of the organised

bakery market. According to a study by Assocham in 2011, the Indian bakery market is

valued at Rs 3,295 crore, of which about 65% belongs to the unorganised sector. In a

country where cakes still constitute just about 20% of the total desserts and sweets

market, it’s interesting how Monginis has carved a slice for itself.

Sweet beginning

Monginis traces its roots to two Italian brothers who set up a restaurant by that name in

the 1900s in Mumbai’s Fort area. After World War II, the brothers were forced to leave

India, selling the restaurant to a local family, the Khuranas. In 1956, Zoher’s uncle

Fakhruddin T Khorakiwala, who also founded Wockhardt hospitals, bought the 10,000 sq

ft restaurant and converted it into a department store, the first in the country, Akbarally’s.

The bakery unit, though, was retained and with an initial outlay of Rs 30,000 for

upgrading the equipment, cakes were baked and sold from a counter at Akbarally’s.

“Back then, cakes used to be very expensive. Since we sold them at a reasonable price,

we were very popular; people came even from the suburbs to buy the cakes,” recalls

Khorakiwala, who joined the business when it started.

As Monginis’ popularity grew, even local grocery stores expressed an interest in stocking

the cakes. Initially, the bakery supplied to some 80 stores across Mumbai, but without

proper handling, the cakes often went stale. “That’s when we thought of opening our own

cake shop,” says Khorakiwala. The first Monginis Cake Shop opened in 1970 in

Chembur. The rules of the business were laid out at the start itself — Khorakiwala would

be responsible for the baking, quality and distribution of the desserts, while the store

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owner would be in charge of day-to-day operations. It’s a business model that continues

even today.

Recipe for success

From one store, Monginis grew steadily to 75 by 1986, the same year it set up the 42,000

sq ft factory that houses the current headquarters. Four years later, the cake shop moved

outside Mumbai for the first time, opening stores in Rajkot, Pune, Goa and Ahmedabad.

“Once we moved outside we realised that tastes in every state vary. To be successful, one

had to fully understand the local palette. So we decided to franchise even the production

of the cakes,” explains Khorakiwala.

Monginis now has 13 production facilities, of which only four (two in Mumbai and one

each in Hyderabad and Surat) are owned by it. The franchisee manufacturers now

account for about half of total production and the company monitors quality by deploying

its own executives to be part of the franchise team. All products are made at these

centralised bakeries and then sent to the various outlets, which also helps Monginis

optimise retail space — the cake shops are only about 200 sq ft. Monginis charges the

franchisee bakers a royalty of 4% on their total sales to franchisee outlets. Typically, a

production franchisee takes three years to break even although retail franchisees can

become profitable in a year or two, depending on the store location. Khorakiwala’s rule

of thumb for retail success: a store needs to have sales of at least Rs 2 lakh a month.

There’s been a clear advantage for Monginis in opting for the franchisee route — for

starters, it hasn’t risked its own capital. “Perhaps we would have made more money if we

had opened our own stores,” concedes Khorakiwala, “but we couldn’t have grown as

fast.” The numbers certainly bear out the fast-track expansion. In the past five years

alone, some 30 stores have been added every year.

Khorakiwala says franchising also gave the company the opportunity to focus on another

important business unit — packaged cakes. Monginis began selling sliced cakes in 1986

as a way of reaching out to a wider customer base — the packaged cakes, which have a

longer shelf life, are sold through all retail stores across the country. The company has

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360 distributors for this product, and plans to increase this number to 500 by FY14.

Currently, packaged cakes accounts for 20% of turnover; over the next five years,

Monginis is targeting 40% revenue contribution from this business.

Not a cake walk

Ask the average Mumbaikar about Monginis and they will say the cake shop’s charm lies

in the fact that it hasn’t changed over the years — old favourites like black forest and

plain mawa cake are still to be found behind the glass counters, just as they were 50 years

ago. Khorakiwala, on the other hand, takes pride in how Monginis has kept up with —

and stayed ahead of — the times. About 15 years ago, the company introduced eggless

cakes, one of the first bakeries in Mumbai to do so. It also ran an ad campaign to

popularise ‘vegetarian’ desserts. Now, more than half of all the cakes Monginis sells are

eggless.

Monginis was also quick to jump on to the e-commerce bandwagon — but it hasn’t been

anywhere as successful with this venture. In 2005, the company started its website

positioning it as a gifting portal. But interest has picked up only in the past couple of

years although conversion rates are still negligible. “We get about 4,000 hits a day now,

but only 150 orders materialise. Of this, 20% are orders from abroad to deliver cakes

within India,” says Khorakiwala. The online venture can begin contributing to the

business only when it starts seeing at least 1,000 orders a day, which it hopes to achieve

in another few years.

Challenges are increasing for the cake shop. For starters, input costs are escalating and

since Monginis has been passing on the rise to customers — it has hiked prices every

year since 2009 — it risks losing its ‘affordable’ tag. “The only way Monginis can hold

its own amidst increasing competition is by sticking to what made it popular —

affordability,” says Damodar Mall, director, food strategy, Future Group. Even if the

brand wants to introduce premium products, it should be done under another brand, he

recommends. “Much like what HUL did with brands like Lifebuoy and Dove.”

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Meanwhile, competition is only increasing. While it battles stalwarts like Britannia in

packaged cakes; in the bakery business, in Mumbai alone, brands like Denish, Merwan’s,

Birdy’s and Ribbons & Balloons are all growing in popularity. And they are all rivals for

Monginis, since its cake prices range from Rs 390 to Rs 750 a kg. Adds Monginis’

general manager Virendra Ghole, “Consumers in evolved markets like Mumbai prefer a

brand over a local bakery. In smaller towns, mom-and-pop bakeries are still major

competitors.” While Monginis is tackling competition by simply increasing its presence.

Khorakiwala admits that there’s little the company can do about rising prices other than

better supply-management and reducing wastage. Currently, about 3% of the stock goes

unsold every day, which is almost inevitable according to Khorakiwala.

Measured steps

So, perhaps it’s not surprising that for the next two years at least, Monginis will focus on

consolidating its position in its existing markets, rather than venture into South and North

India. Plans are cooking for larger franchise stores of upto 1,000 sq ft in tier 2 towns that

will also bake on the premises. “It is unviable to have production facilities to cater to

small towns. The catchment they cater to does not justify the costs of setting up a

production franchisee,” says Khorakiwala. Over the next year and a half, Monginis will

be venturing into 10 small towns in Maharashtra, Madhya Pradesh and Rajasthan, where

it will have one main store and a few satellite stores, with the large store supplying

products to the smaller ones.

It’s a sound strategy, believes Future Group’s Mall. “Monginis should enter new markets

as the big daddy of the bakery business and fill the market with cake shops even as it

launches. This will help it maintain its leadership,” he says.

Meanwhile, plans of establishing a national presence haven’t been totally abandoned,

although they have been placed on the backburner for the next couple of years. Indeed,

expansion is very much on Khorakiwala’s mind: he hopes to double his turnover every

three years by widening Monginis’ reach across the country. For now, though, western

India is where the dough is.

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SUCCESS STORY

Cakewalk to Success

From a single outlet in the 1950s to the current 605, Monginis Foods has chartered a

steady growth path. Chairman and MD Zoher Khorakiwala traces the 100-year old

brand’s eventful journey.

Selection criteria for your franchise partners

We select franchise partners based on their financial soundness; they need to invest Rs

1,25,000 towards deposit; Rs 50,000 as franchisee fee, and some more towards interiors

and equipment as per our specifications. They also need to have an initial working capital

of Rs 1,00,000 to finance the stocks of around Rs 80,000 and a market credit of Rs

20,000. Besides this, they need to have a property in a high visibility area such as a

railway station, a popular market place, on the city’s main road, in a mall, etc. Experience

in dealing with reputed retail brands would be an added qualification.

On an average an investment of Rs 6-7 lakh (excluding cost of acquiring a property on

ownership basis) is required for opening a store. The franchisee’s earnings are directly

proportional to the revenue generated by the store. We do not open stores which have a

revenue potential of less than Rs 3.5 lakh per month. Our sales vary depending on city

and location from Rs 3.5 lakhs per month to Rs 15 lakhs per month.

Quality standard

We have a qualified and trained team of franchisee management executives who guide

our franchise partners and help them in promoting their shops. We also have a team of

auditors who regularly visit the shops and audit them on various parameters which are

broadly classified under customer service, ambience, storage and stock management.

A new franchisee is typically required to undergo training for at least one month in a

designated shop. Similar training is given to the shop manager, who may be the

franchisee. Our CSPs (customer sales persons) are either recruited from existing

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Monginis shops or have some experience in the bakery or retail industry; but even

freshers are considered provided they have the right attitude for selling. Our franchise

agreement is renewable after every three years.

Apart from the franchise outlets, we also have franchise bakeries or production units,

which account for almost half of the total production. The company monitors their quality

by deploying its own executives within the franchise team. All products are made at these

centralised bakeries and then sent to the various outlets, which also helps Monginis

outlets to optimise their retail space. Monginis charges the franchisee bakers a royalty of

4 percent on their total sales to the outlets. Typically, a production franchisee takes three

years to break even, although retail franchisees can become profitable within a year or

two, depending upon the location.

Monginis has initiated a new business model through which it plans to expand into

tier I and II cities

As per the new model for tier I and II towns, we will begin with a ‘bake shop’ which will

be situated in the most prominent location in the city. The bake shop will both make the

products in a back kitchen and retail them. This way, we will be able to supply the

freshest products and wastage would be minimised. We would also be able to cater to last

minute orders.

So, to open a bake shop, the prospective franchisee must have premises on an ‘ownership

basis’ at a prominent site, and the shop must have a minimum carpet area of

approximately 1,000 sq ft.

An investment of approximately Rs 35-40 lakh (excluding premises) will be required. In

case the shop premises are not large enough for storage, a separate place for storage

purpose will have to be identified. Subsequently, depending on the response to the bake

shops, satellite shops can be opened in the same city or in nearby cities, which will be

catered to by the bake shops.

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Highest revenue generation from market

From all our exclusive cake shops, we are able to generate a total of Rs 225 crore

annually, and from the open market, that is the traditional retail stores and modern trade

outlets, we earn a revenue of round Rs 30 crore per annum. Currently, there are 605

Monginis cake shops across 6 states (Maharashtra, Goa, Gujarat, Madhya Pradesh, West

Bengal and Orissa), of which 225 are in Mumbai alone. So our major market is West

India, which generates 60 percent of the total sales.

Our best performing store is in Borivali, Mumbai, where we get very high footfalls, and

also because of the exemplary customer services provided by the franchisee. Customers

keep coming back no matter how crowded the store is. We reward our franchisees by

felicitating them during our Annual Cake Shop Franchise Conference.

Franchise model worked for the Monginis brand

Opting for the franchisee route has brought a great deal of advantage for Monginis. To

begin with, and most importantly, we did not have to put our own capital at risk. No

doubt we would have made more money if we had opened our own stores, but we

couldn’t have grown so fast. Thanks to franchising, in the past 5 years alone, some 30

stores have been added. Franchising also gave us an opportunity to focus on business

diversification – for instance, we were able to start a packaged cake segment.

Monginis largest selling product categories

Our largest selling category is celebration cakes, which contribute around 58 percent of

the total sales, followed by pastries which generate around 21 percent of the total

revenue. Our best-selling cake flavour is black forest. In fact, of the 190 sq ft area for

display and storage, 81 percent of total counter space and 37 percent of total storage area

is occupied by the celebration cakes and pastries. Other categories such as savouries

generate 8 percent of the sales, packaged cakes and trading items (namkeens, wafers,

candies, etc), 4 percent each; breads contribute 2 percent; cookies, chocolates and party

accessories (caps, party poppers, face masks, candles, balloons, flowers, etc) add I

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percent each. During Xmas and the period up to New Year, we witness soaring sales, and

of course occasions like Easter, Raksha Bandhan, Bhai Duj, Eid, Diwali and Valentine’s

Day also add considerably to our sales as we often offer themed products during these

festivals.

Plans for increasing sales

We are planning on expanding our reach and moving up the price ladder with the launch

of more premium variants of cakes. We are also now focussing on meeting the changing

demands of our increasingly discerning customers. We have identified two major trends –

‘vegetarianism’ and ‘health consciousness’ - and we are concentrating on these by

introducing products that meet these demands. In fact, we have already taken some active

steps to leverage on these trends, for instance, we have launched a TVC for our egg-less

cakes, and alongside, we have expanded our range of these pure veg cakes. To address

the demand from our health-conscious consumers, we have launched sugar-free cookies

and a healthy range. We are now planning to introduce sugar-free cakes as well.

The tastes and aspirations of our customers have undergone a change over the years. Now

they demand more exclusive and customised cakes and want premium flavours and

value-additions. As a part of our pre-sales customer service, we send them reminders or

information about our products; at the point of sale, we share information with them, and

as part of our post-sales service we offer free home delivery. However, since we deal

with products that are purchased for special occasions like birthdays, anniversaries and

festivals, sales schemes such as discounts, promotions and loyalty programmes do not

work for us.

Please tell us about your front and back-end infrastructure.

Our shops have an average of 200 sq ft carpet area. An undivided row of counters divides

the shop into two parts. Cakes, pastries and savouries are displayed in glass counters,

which are illuminated with a warm white light that renders an appetising glow to the

products. Packaged products are displayed on shelves, along with party accessories and

decorations. We also have self-service counters where customers can touch and feel the

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products before buying them. There are four to five employees in each shop, including a

manager.

We have centralised bakeries where all the products are made and then transported to the

retail outlets in their respective areas through our own logistics system. These bakeries

are located in Mumbai, Bhiwandi, Pune, Nasik, Surat, Baroda, Ahmedabad, Rajkot,

Indore, Goa, Hyderabad, Cuttack and Kolkata. Out of these, four are company-owned

(two in Mumbai and one each in Hyderabad and Surat) and the rest are franchisees.

Our back-end infrastructure consists of a production unit, a cold storage system, and

transport vehicles with a cold storage set-up. Cold storage is vital for our operations

because 70 percent of our products are the cakes, which are made with fresh cream.

On an average, the minimum display and storage area/space at a Monginis store covers

86 sq ft for shelves and counter; 46 sq ft for back shelves; 20 sq ft for self service shelves

and counters; and 37.5 sq ft for a deep freezer including shelves. So the total storage and

display area measures up to 190 sq ft.

Investments made with respect to technology up gradation/ modernization

Point of Sale (POS) softwares are increasingly being used by our franchisees to maintain

inventory and a database of their customers. The POS helps them in taking important

business decisions as well as planning new initiatives. Around 10 percent of the total

investment goes into technology.

In 2005, we started our online store/portal where people can buy cakes online. It is

positioned more as a gifting portal for customers wanting to gift customised cakes, or

order chocolates, cookies, packaged cakes, flowers, greeting cards, candles, toys, etc.

Orders received online are processed through our stores. We have invested quite a lot in

this initiative, since we believe that e-commerce is set to become a big retailing channel

in India.

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Operational challenges at Monginis

One major operational challenge which we are facing (and will continue to do so) is

maintaining an optimum balance between ordering and selling. When the products

remain unsold, they are wasted. But if we order a lesser number, it could lead to loss of

sale. Currently, about 3 percent of the stocks remains unsold every day. Unsold products

are returned to the company by the franchisee, which are then destroyed, and the cost of

wastage is borne by the company, not the franchisee.

Our other issues are with respect to the laws and regulations. In the food sector,

especially, there are several stipulations and strict controls, such as laws that prohibit

unethical and unhygienic practices, etc. But, today’s discerning customers are more

aware than ever before and can decide on what’s good for them and what’s not, so I think

a lot of regulations are not really necessary.

Future plans

Reaching out to more customers will be our primary concern, so we plan to take our store

count to around 1,000 in the next 5 years in metro cities, including penetration into tier I

and II cities. As discussed earlier, we are also focussing on our new business model of

inviting franchisees for larger stores of up to 1,000 sq ft with an in-house kitchen since it

is not viable to have production facilities for catering to small towns. As per our plans,

over the next year or more, we will be venturing into 10 small towns in the states of

Maharashtra, Madhya Pradesh and Rajasthan, where we will have one main store and a

few satellite stores, with the large store supplying products to the smaller ones.

The company is also working towards increasing the turnover from its packaged cakes

segment. Currently, we have 360 distributors for packaged cakes to the open markets, and

we plan to increase the number to 500 by 2014. Packaged cakes account for 20 percent of

our turnover; and over the next five years, we are targeting 30 percent revenue from this

category.

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CONCLUSION

This is best time for Monginis to launch new variety of products there exist a strong

demand in market for fruit flavor cakes which can be easily recognized by reading

comments of customer in opens ended questions of questionnaire Some steps must be

taken to solve plastic bag problems as it is creating embarrassing situation for sales

persons to ask for charge of plastic carry bag. Monginis can use this opportunity to

declare as a green supportive brand like Pepsi and others and communicate this message

well by providing eco friendly bags. Monginis over a period of time has evolved as price

leader of bakery industry i.e. any deflection in their pricing ultimately leads increase or

decrease in pricing in both the ends of elite and local bakery company, hence it has a

leverage of increasing price up to certain extend. Customer sales person stands to be the

last hand to serve customer so their interface is of extreme importance, hence Monginis

should take care of their recruitment and training also a keen attention should be given to

their compensation .There exists a demand for promotion of website of Monginis as most

of customers are not aware of online purchase of cake.

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BIBLIOGRAPHY

http://www.slideshare.net/abhijitjaitapkar/summer-internship-project-with-

monginis-foods-pvtltd

http://www.marketing91.com/swot-monginis/

http://en.wikipedia.org/wiki/Monginis

http://yummcakes.blogspot.in/p/monginis-as-company.html

http://virendrarghole.blogspot.in/2010/09/monginis-business-model.html

http://www.franchiseindia.com/interviews/Established/Franchising-a-cakewalk-

for-Monginis-75/

http://www.indiafranchiseblog.com/2012/05/growth-of-indias-largest-cake-

shop.html

http://www.indiaretailing.com/Interview.aspx?Id=113

http://www.monginis.net/files/recipe_2.pdf

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