Talking breads

FRANCHISING: Crustum Products brings its Asian bakery chain Bread Talk to India in an attempt to break the traditional mould.

A bakery that's listed on the stock exchange? Singapore-based Bread Talk, started in 2000 to break the mould of mama-and-papa bakeries, trades on the Singapore exchange. With over 200 outlets, it claims to be the world's largest bakery chain too. And it has just franchised the brand in India to Crustum Products, a wholly-owned subsidiary of Viceroy Hotels.Will it break the mould here too?

"The uniqueness of Bread Talk is that it is a glitzy, futuristic-looking store, more a boutique than a bakery, with the production facility in each store fully visible to customers," says Ravi Krishnan, vice-president, Viceroy Hotels.

Oven transparency would be new to Indian customers, accustomed as they are to opaque behind the sales counters. Yet, the company does not want to stray too far from the familiar: the bakery is known to adapt its products to local food traditions with its fillings and flavours changing from country to country.

"However," as Krishnan adds, "the product specifications are very standardised, with a sizeable percentage of the ingredients, including the all-important flour, and all the equipment being imported from Bread Talk, Singapore." The staff will be trained in Singapore too.

The company's retail model, for example, specifies standalone mall outlets. The first outlet in India is slated to open next week at InOrbit Mall in Mumbai.

"Our intended brand perception dictates that we will not operate stores in value malls," says Krishnan, even though the pricing would not be too different from that of other premium outlets in India's metros.

The broad plan is to target urban zones of conspicuous consumption. Once the brand gains acceptance and gets tongues moving in Mumbai, it will head to the National Capital Region (NCR: Delhi and its suburban sprawl) by the end of 2006. "We are targeting 20 outlets within 26 to 30 months," says Krishnan.

Crustum has earmarked a capital expense of Rs 75-80 lakh for each outlet, and the model operates on projected daily sales of about Rs 25,000.

"We are going to work hard at institutional sales," adds Krishnan, "because that's where the big money is." This would require some of its fast-selling products to attain currency in day-to-day conversations.

The idea of a large bakery chain in India is not new. Chennai-based M Mahadevan started Hot Breads back in 1989, which now has 22 outlets in India and 16 in North America. But while this brand is popular, it has not yet been tested in a battle of product standards.

Financial muscle could make a difference. The Bread Talk Group boasts of a rapid ascent up the revenue curve. In 2005, it recorded a topline of $95.3 million, up sharply from $50.2 million in 2004.

The Indian franchisee's strengths are mostly in the hospitality business; the Viceroy group has a management agreement with Marriott International, signed in 2003.

The Viceroy Hotel in Hyderabad has been turned into the Hyderabad Marriott, and the company is also developing the Rennaissance Bangalore, Marriott Courtyard Hotel in Hyderabad and JW Marriott Chennai.

The bakery business offers the group both backend and frontend synergies, not to mention that extra bit of word-of-mouth.