What is your deal with 7-Eleven?
We have got into a franchise agreement with 7-Eleven and we plan to open our first store in Mumbai. 7-Eleven runs in 17 countries. This will be the 18th country. They operate nearly 70,000 stores. Just to give an example, Thailand as a country has 11,000 7-Eleven stores. They are predominantly present in south-east Asia and Japan and is probably one of the well known franchising model in the world. We are their master franchise for India and we look forward to a larger and a deeper relationship with them.
It is a 30-year contract in which we are building a joint business plan. We have built a strategy for India and we believe these stores are very different from the current stores which exist in the country because these are convenience stores which have categories like sipping, munching, confectionary, fresh food and café in some of the stores. You can get your morning breakfast to lunches to dinners to takeaways to 24-hour operational stores. I believe modern urban life today India needs stores like this.
Yes, it is a very urban sort of concept. So, would you be only focussing on metros, tier I cities for now? Would the first store be coming up in Mumbai?
The concentration will be only in urban centres and whichever market we go in, whichever urban city we go in, we will go in little deep.
Talk to us about the business model. It is a master franchise agreement that you have struck with 7-Eleven, What will be the kind of royalty will you owe to the company and what kind of revenue are you targeting over a longer period of time?
We have made our business plan with our parent and the business plan is within seven to eight years, we have to build a business of over billion dollar and the royalty which we pay is towards the brand which we use and towards the equipment which they provide us with. They have a lot of proprietary equipment which they have developed in the sipping category, ice-creams and a lot of other products. They also give us technology. They run hand pay stores in Korea. They have scan and go technology available plus franchising is all about being process oriented and technology being the layer on which everybody works.
That is what they provide to us and it is a much deeper relationship. They want us to become profitable as soon as possible and for that they charge a franchise and royalty fee.
Let us talk about the offerings. You said it is more sipping, munching, fresh food so on and so forth. What are the cross selling opportunities that you have because Future Consumer is very big on the snacks, munching category?
Future Consumer has put up 40 factories. We have partnership with Fonterra on dairy side. Our products are getting launched in June-July. We have partnership with Hain Celestial on organic and natural food. So, Terra Chips sensible portions are being now manufactured in India. We have partnership with Sunkist as licensee. We have multiple partnerships for multiple products. I believe these products get distribution.
One of our brands is Tasty Treat which is the largest in munching category for us. We will be a Rs 1,000-crore brand probably by next year and we want distribution for that brand. It is an opportunity for us to distribute our products and let the consumer decide what they like. We are sure they will like our products.
And how much of a fillip are these niche kind of stores going to give to a brand or the multitude of brands that Future has?
We have our ecosystem. We have a supply chain ecosystem. We have commissaries and cloud kitchens. We think we can give a meal at Rs 40. Our ecosystem will help us to make and deliver products, It can create whatever our consumer wants. Our ecosystem will come into play with 7-Eleven also in a bigger way.
What is the kind of format or size that you are looking at for 7-Eleven stores? Will this be a part of your larger goal of expanding your small format stores or will it be over and above that?
These are very different stores and these are very urban centric. We would not go deeper in this format. This is for a young urban people who are on the go.