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Monginis… The Cake Shop

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History: -

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.

The credit of this goes to Mr. 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. Also now its into : Celebration Cakes, Cookies, Specialty Breads, Chocolates, Snack Foods

and Savories. Monginis are also into Party Decoration, from supplying buntings to disposable-plates and

party take-home gifts.

Vision at Monginis :-

To supply the best quality products with value for money, to continue maintaining national leadership in

cakes with a presence in all towns, across the country, to develop human resources.

In keeping with these objectives, Monginis follows a simple "doughnut principle" whereby the customer

remains that most important consideration around which all

other activities revolve . This is done , by creating value-for- money products without compromising on

quality in terms of taste or appearance. It's been the main reason for its rise as a retail franchise network of

nearly two fifty outlets across India alone, resulting in their acquiring market leadership in the cake industry

and the largest food store chain in India.

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Monginis challenge was to extend the brand and reposition it in India. Its plans were to focus

mainly on cakes and go for an aggressive growth strategy. Monginis chose the franchising route and

evolved a comprehensive marketing strategy including the launch, pricing, ad agency selection and sales &

distribution. Monginis decided to opt a customer orientation and positive perception management. A strong

campaign was supported by periodic promotions. Internally too, Monginis advocated a complete overhaul,

dividing operations into distinct strategic business units and independent profit centers. The results led to a

national brand presence - over 70% growth in the number of cake shops to 184 and an increase of

manufacturing franchisees from 1 to 7.

Monginis Foods Ltd (MFL) is embarking on a major marketing and distribution initiative

to woo pastry lovers. To support the strategy, Monginis has chalked out a distribution plan to be executed

through two strategic business units (SBUs)-one SBU will deal through exclusive Monginis cake shops and

the other outside the Monginis universe.

SBU-I currently deals with 253 cake shops in the country - spread out in Mumbai, Calcutta, Pune,

Hyderabad, Rajkot, Goa, Nasik, Baroda and Jaipur. This unit deals with merchandising of a full range of

cakes, pastries, savouries and birthday accessories. The price for pastries ranges from Rs 8 to Rs 15 and

birthday cakes from Rs 200 to Rs 350 for a kg. SBU-II comprises packaged products like slice cakes, ice-

cream cakes and mawa (cup) cakes. The price for slice cake ranges from Rs 5 to Rs 40, while that for ice-

cream cakes is from Rs 20 to Rs 50.

The products under SBU-I are perishable and last for a day or two. Against this, the packaged products

under SBU-II have a long shelf-life and is meant to last for as long as 40 days.

As part of the SBUs, the company has also appointed two sales managers in Mumbai. In setting up the

SBUs, MFL carried out a pricing strategy which caters to the upper middle class and is termed `Value for

Money'.

Not only is the company a pioneer in franchise cake shops; it is also giving out manufacturing franchises

across the country. One Monginis franchisee in one city manufactures products for 25 to 30 outlets. In fact,

25 to 30 outlets develop mini-outlets to cater to both the mass and premium- end segments.

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In addition to these new schemes, MFL plans to expand the number of retail cake shops from the current

253 to around 1,200 by the end of 2005. The company plans to offer new designer varieties in pastries such

as a doll, a duck and a rabbit embedded at the top of a pastry. Also, as part of its promotional scheme, the

company plans to obtain a database of one lakh customers by getting their date of birth and wedding

anniversary dates. The company will be posting personalised greetings on these occasions.

Monginis is authorised to produce cakes in shapes of Walt Disney Characters since Monginis is the

authorised licensee of Walt Disney. Monginis has two units in Mumbai - one at Versova and the other at

Bhandup. MFL's market share stands at 50 per cent in Mumbai and 70 per cent in other metro cities in the

Rs 70-crore cake market in India. In fact, it expects the pastry market to grow from 15 per cent in the

current year to 25 per cent by the end of 2002. MFL expects to increase its turnover from Rs 50 crore for

1999-2000 to Rs 200 crore by the end of 2002.

Monginis Packs A Slew Of Initiatives This Summer To Push Brand Visibility :-

Ushering in the summer, Monginis Foods Ltd is planning to roll out a slew of marketing and promotional

initiatives to promote its existing as well as new products. As part of the marketing strategy, they are

planning to enhance the brand visibility for Monginis at outlets by setting up special Monginis lollipops. In

fact, Monginis lollipops are a signage of Monginis in the shape of a lollipop. In addition, the company is

also planning to focus on school promotions to promote its existing range of bar cakes and slice cakes in the

Indian market place. They are targeting 600 schools to reach out to children.The promotional campaign will

involve three steps. One, schools will be enrolled and approached, second, schools will be given an

opportunity to visit Monginis factory for an entire day. This promotional campaign will continue from April

2002 to March 2003. As a third step, there will be hosting of drawing contests and quiz contests. They have

recently launched ‘Monginis Brownies’ priced at Rs 5 at all our cake shops in Mumbai.The company

recently launched ‘Monginis Khari’ in a mid-sized pack priced at Rs 20. Further, the company also plans to

introduce new exotic varieties in fresh cream cakes targeted at SEC A & B priced between Rs 100 and Rs

300 soon.

In order to position ‘Monginis’ as a strong cake brand, which offers the benefit of being soft and

fresh, the company recently released a television commercial. Monginis has grown 614 per cent in the past

five years and is about to touch Rs 100 crore by 2004-end, through strong marketing initiatives. They also

have products at a large number of price points to ensure maximum availability. According to Mr. Jagdeep

Kapoor, managing director, Samsika Marketing Consultants Pvt Ltd—the brand marketing strategy

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consultants for Monginis— the objective is to build the Monginis brand with a clear target of 1,000

franchise cake shops.

From a level of 37 a few years ago, it has crossed 300 cake shops. Monginis has already set up many cake

shops in west and east. Now, these cake shops are being set up in the North also. Thus, manufacturing

franchisees for Monginis have grown from one to 12 in the past few years.

Sales and distribution marketing initiatives have worked well with the brand’s expansion into new areas

like Pune, Nashik, Goa, Baroda, Rajkot, Kolkata and Hyderabad.

Some new branding & promotional strategies

It plans to organise a ‘colouring contest’ for school students. After the colouring is done, it will collect these

forms from them and in return send them Monginis greeting cards along with a 10 per cent discount on

purchase of any Monginis cake.

Cashing in on the World Cup Cricket fever, the company plans to introduce new retailing initiatives at all

its cake shops across the country .As part of the new initiative, a customer who enters a Monginis cake shop

can avail of a World Cup Cricket calendar. During World Cup Cricket, it also plans to introduce three new

customised cakes. As part of its co-branding strategy, the company is currently in talks with Hindustan

Lever Ltd’s ‘Lipton’ and ‘Nestle’ in order to enter into a new co-branded strategic tie-up with them in the

near future. The existing co-branded strategy with Coca-Cola has taken off well wherein Monginis offers

meal combo consumer promotion on a periodic basis every year. Monginis is planning to roll out its new

snack product called ‘Monginis Munchin’ nationally in over 2,000 retail outlets by mid-2004.

The Untravelled Zones :-

Last year in Christmas Monginis made a foray in Konkan in Maharashtra and Karwar in

Karnataka. Goa-based New Millennium Bakers who began as Goa franchisees for Monginis two years back

will pursue these new markets in these regions beyond the Goa borders. In Goa, which has a rich tradition

for cake, Monginis is now a well-established brand with 16 specialised shops.

Monginis’s aggressive marketing strategy focuses on children, particularly the school going kids.

Their birthday parties and the daily school tiffins are targeted.

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Monginis trophy for 60 schools multi-intelligence competition, kids festival to promote talent have kept the

kids into focus. Theme parties for children's birthdays get immense response

The wide price range for bakery products from Rs. 2.5 till Rs. 2500 and flexibility for modifying

the taste to the local taste even taking into consideration consumer recipes are the other reasons for the

success of the brand.

Today the credit of popularising a totally western food concept in the country goes to Monginis - stirring up

the right mix of picks by children between the age group of 4-13 years

The Monginis group’s investment in their franchise model are limited to supply chain and

manufacturing of food products. The group adopts a dealership route to expand its retail chain. The dealers

lease, invest or buy out the shop space. They will also invest in the decor and relevant equipments. All the

dealers are trained. The training focuses on the business module, inventory management and attractive

display of food products. It has restaurant chains like Roti, Dosa-diner, Tendulkars, China Joe and premium

cakes and confectionery chain — Birdy’s as it’s major threats.

Monginis cake shops in Mumbai have gone national very successfully using Jagdeep Kapoor, brand-builder

and managing director of Samsika Marketing Consultants as the whetstone.

Franchisee example:

Surya Monginis Cake Shop

Birthdays are always a special time, full of laughter; they are a day to celebrate that special person in your

life.

Surya Monginis Cake Shop is having the franchisee of monginis cakes pvt ltd. Cakes are offered into

different shapes, designs, flavours that make a person feel very Special, happy & excited about it.

The biggest chain of cakes in Mumbai having network of 120 shops. All cakes, butter creams and fillings

are made from scratch, from the freshest ingredients. They try to use as many organic ingredients as

possible to ensure the highest quality and best taste. Monginis cakes are always supplied fresh. The rates are

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very competitive due to heavy quantity manufactured. High quality and a reasonable price is the main motto

of monginis.

The in-house of Surya Monginis cake shop provides sitting arrangements to their customers to have snacks

and be settled in a cool atmosphere. They also provide free home delivery in near by areas at no extra

costs.

The Website & The Online Cake Shop : -

The Rs 52-crore Monginis Foods Ltd. is putting up a website of its own. Now why would a cake

shop put up a website? Because although it positions itself as "The Cake Shop", Monginis is expanding as a

chain across the country.

It wants to be the national 'cake shop' retail boutique, occupying its own niche. Starting out as a cake brand

that sold out of Mumbai's Akbarally's department store a long time ago, it's now a cake and savouries chain

across six cities--Mumbai, Calcutta, Hyderabad, Pune, Nashik and Rajkot. Its cake outlets currently number

just over 200. As many as 40 of them opened only last year. Seven cake factories are already up and

running and four more are in various stages of completion at Baroda, Ahmedabad, Jaipur and Goa. That

adds four more cities to the six for this year.

All factories and outlets are franchises, and Zoher Khorakiwala, chairman and managing director of

Monginis Foods, believes this is the best way to expand. Being a small company, Monginis cannot really

afford to go for the huge investments that own-shops and factories would require. Besides, local tastes vary

widely. The best way to deal with this is to have local people making and selling Monginis products.

Monginis' acceptance beyond Mumbai has been good enough for the company to start thinking about

aggressive expansion. Since its products are priced lower than those that sell out of shops like of Taj Birdy's

and Croissants, etc., it is managing to draw crowds.

Expansion strategies :-

As for expansion, the grand plan is 1,000 shops across 40 cities in about six years' time. In four

years, Monginis is targeting 700 shops. The idea is to keep the outlets small -- between 150 and 300 sq ft.

Khorakiwala doesn't see the sense in expanding his shop scope to sit-in eateries. They do add a few tables if

the shop size is a little big. But viability is important; they have the maximum returns per square foot

amongst food boutiques .In the overall view of how Indian retailing will evolve, we as a group have no

doubt that Monginis will grow and be profitable. Boutique chains will prosper, survive and thrive. It's the

mid-level shops that are neither here nor there that will find the going getting tougher and tougher.

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Monginis is working hard at brand building. At the front end, it is taking a serious re-look at the

vision statement. And product upgradation and range addition -- such as the cream range in cakes, and more

kinds of packaged products -- are already happening. At the back end, it is currently conducting a business

process re-engineering study. Monginis officals strongly feel that their franchise managers have to be more

technically-oriented.

Monginis is going to target NRIs, who can send in orders for cake gifting to relatives and friends in

India. How the payment system will be handled for this is still to be figured out, of course. In the

meanwhile, Monginis is working out a deal with a Pune-based company that caters to exactly such NRI

orders. Getting cakes delivered will be a first for the Pune Company. Monginis will take up the delivery

responsibility, and the Pune company will pay it for the cakes. But Monginis has to pay the excise for the

delivery, which is something yet has to be sorted out.

Monginis is very open to other such relationships, if anyone's interested. Of course, Khorakiwala admits

that the company has to gear up internally for web-based operations first. But the plans are rolling, getting

fine-tuned. Khorakiwala is not unhappy at all with the way things have gone so far.

A Little About The Franchisee Model :-

The real business model as approved by Monginis Foods Ltd (MFL)

- Experts feel that the real franchise business model for India is far different from that of the Western

system. The following are a few basics that are applicable in any environment:

Limited unit level earnings

Volume driven

Long gestation

Best combined with owned operations

Initially requires equity; leveraging and gains come later

Brand value benefit - future cash flows, coverage, visibility

Continued research and development

Unit/master franchising

National/international franchising

Plan consolidation phase

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The Products: -

Overseas Products: -

Family Cakes :-

Chocolate Butter

Pineapple

Pizza : Base Mini

Big Italino

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New Product Launch : -

The company plans to launch new products every month and the incentives are given to the franchisees on

the sales basis.

Monginis penetrates the cakes segments with the launch of TOPPINGS:

To further reinforce it’s stranglehold on the Indian cakes market, Monginis has launched Monginis

Toppings a range of do-it-yourself products for those who want to bake their cake and eat it too.

These products can be broadly classified into three categories:

Pre-Mix: includes Jelly Crystals, Custard Powder, Icing sugar, Cake Mix , etc

Decorative toppings: includes Icing tubes, Icing flowers, choco-chips, Treasure balls , Cherries ,etc .

This category was never before made available by any Indian brand on shop shelves. It will enable the

cake lovers to decorate their sponge cakes according to their desires.

Liquid decorative: includes Chocolate sauce, Strawberry crush, Mango crush, Liquid Caramel at the

disposal of the home makers who want the value added cakes, desserts and ice – creams on their tables.

Monginis is hence looking forward at exploiting the display space in the premium stores .The

bright and colorful packing is bound to attract the customers .The Monginis Toppings can give the

customers another reason to celebrate.

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Confectionery Terms: -

Marzipan: A mix of sugar and almonds that can be replaced by other nuts or kernels such

as cashewnuts

Gianduja: A composition of roasted almonds, icing sugar and couverture and cocoa butter.

The nuts and icing sugar are first ground into paste and then the melted couverture is added

to it .It is then allowed to set and then powdered till smooth.

Praline: Mix of the melted sugar and almond flakes or groundnuts.

Couverture : Chocolate made with at least 30 % cocoa butter to give high gloss used to

cover sweets and cakes .

Ganache : A blend of fresh cream and couverture

Rolled Fondant : Mix of Icing sugar , water , liquid glucose and veg Gelatine .