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| Shri Gangaram Hosptial, Delhi |
It’s no secret that hospitals are booming in India. The Indian healthcare industry was $65 billion during 2011-12 and is expected to reach $280 billion by 2020. Increase in patient population, increasing lifestyle-related health issues, awareness of preventive healthcare disorders, improving health insurance penetration, government initiatives and focus on public private partnership (PPP) models and large investments by private players are some of the reasons for this growth. This tremendous business growth has also drawn some unconventional partners to associate with hospitals. Food retail is one such sector which sees immense opportunity in this setting.
The sector
The food service and catering market was estimated to be worth Rs 90,825 crore in 2009-10 of which the organised retail market stood at 10.7 per cent or Rs 9,737 crores. Food retail has about 15 per cent of its business coming from hospitals. “At hospitals there is a need for quality, hygienic food and beverages,” says K Ramakrishnan, President Marketing, Café Coffee Day. “There is always a significant number of people who are usually found waiting at hospitals and thus the need for continuous refreshments,” he adds.
Lucrative location
It’s known that location is a major factor leading to a retailer’s success or failure. A good location may let a retailer succeed even if its strategy mix is mediocre. Hospitals are considered a good location for retail business. A hospital gift shop may do well, although its assortment is limited, prices are high and it does not advertise.
Today, a 300-bed multi-speciality hospital may get a foot fall of 300-500 people every day. These would largely comprise patients and attendants and people who may be students, business associates, axillary workers etc. “Large hospitals may get almost 1,000-1,500 outpatients per day, a multi-speciality hospital may get about 300 outpatients a day and smaller ones can pull a crowd of about 100 people a day,” explains Mudit Mathur, COO, HCG Global, Bangalore.
Changing tastes
‘Food on the move’ is the new mantra of the consumers. Besides hospitals have become hot waiting zones where people spend a long hours waiting for consultations, diagnostics, etc. Day surgeries and process also account for this trend. Interestingly, people are willing to spend money to drink a cup of coffee or tea in comfort. While the cafes provide customers with an option to relax and drink coffee, other formats caters to the hunger needs of consumers on the move or those wanting to take a short snack break. “The kiosk system is a hugely successful takeaway concept and provides fast, healthy, convenient-to-eat food and beverages offerings at great prices,” says Ramakrishnan.
Serving cafes
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| Au Bon Pain, HCG Hospital, Bangalore |
Many F&B companies in India have already stepped into this sector. Cafe Coffee Day and Au Bon Pain have already made a mark in this segment, with a large number of small brands also dotting the arena. Others like Tata Starbucks and Barista are still contemplating their entry move. The maximum share, however, belongs to the unorganised food retailers with individual set- ups at single hospitals run by local catering channels.
Today, Cafe Coffee Day has the largest number of set-ups in hospitals in India. One of the biggest F&B company in India CCD was an early entrant and has definitely got the early advantage. “Coffee Day Xpress (CDX) is present in almost 100 hospitals across the country, which is about 11 per cent of its outlet base. CCD is present in 19 hospitals,” informs Ramakrishnan.
Au Bon Pain has one outlet at Cradle, a maternity hospital and another in HCG a cancer tertiary care hospitals in Bangalore. The bakery chain has outlets in 60 hospitals in the US and 10 hospitals in Bangkok and is now looking at West Asia and India as potential growth markets for this format.
Tata Starbucks is the youngest company on the block and is also aware of the opportunities in the segment. “Globally, Starbucks has a strong footprint in this segment,” said Avani Saglani Davda, CEO, Tata Starbucks.
Win-win for both
Having a food retail set-up not only brings profit to the F&B company, but is also beneficial for a hospital. “Whether it’s a CCD cafe or the CDX, Coffee Day has been extremely successful at hospitals,” shares Ramakrishnan. “The potential for growth is excellent and we are looking at expanding in this sector,” he adds
In addition to providing a unique, experience to the patient it also obviates the necessity of the worried attendant and patients to look for hygienic, adequate food. In some instances the F&B company also shares profits and pays rent to the hospital. However, the hospitals say that this is not the core focus of the hospital and these set-ups are not for profits. “Our core focus is to provide world class healthcare facility,” observes Mathur. “F&B set-up is a value add for patients,” he adds.
He further says that today patient comes in with a wider exposure and demands likeable food. They are also aware of what they can or cannot eat and have an enhanced palate. Then there are international patients and attendants who are not familiar with local food and would be comfortable with a menu closer to their palates. “F&B setups are plug-n-play solutions, that provide good ambiance and cater to the customer in a wholesome manner. There is a comfort factor, and they have become an integral part of hospitals and a differentiating factor for brand,” Mudit explains.
Looking ahead
With an increasing number of large and medium hospitals on the horizon, this business opportunity for food retailers will never die down. “Cafe Coffee Day has a variety of café formats which makes it possible for us to cater to different hospital requirements,” informs Ramakrishnan. “The plan now is to launch more cafes and kiosks in such locations. Due to the growing need for quality and hygienic F&B services at hospitals to cater to the number of people visiting and waiting at hospitals, it is a good business model and has shown significant growth both in terms of revenue and new launches.” he adds.
The company is looking forward to better connect with their consumers and grow along with the trend. “We are already associated with several big hospital chains in India. We expect to grow along with this trend and foresee a huge opportunity not just in terms of business but also in terms of consumer connect,” he further says.
Tata Starbucks is also planning to build a strong presence in the segment. “Tata Starbucks is committed to India for the long term and focused on working thoughtfully to build a strong presence in the market,” said Davda. “We are committed to providing our customers here a high quality coffee house experience which may take on varying store formats depending on customer and neighbourhood requirements. We will explore the opportunity that this segment presents in India at an appropriate time,” Davda concluded.
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