Chinese Store Association Urges Cuts in Transactions Fees

The China Chain Store and Franchise Association (CCFA) on Sunday urged the government to pass plans to cut bank card-swipe fees charged to merchants as soon as possible in order to shore up consumption.

Secretary-General of the CCFA Pei Liang told Xinhua that a proposal for cutting card-swipe charges issued by authorities is currently seeking opinion from commercial banks.

“China’s retail sales growth has slowed from a year earlier, so the government should step up the implementation of the plan with a view of promoting consumption,” Pei said.

Data from the statistics bureau shows the country’s retail sales of consumer goods expanded by 13.2 percent year on year in August, down from a rate of 17 percent last August.

At present, fees charged to supermarkets and stores for transactions made with bank cards range from 0.5 percent to 1 percent of the transaction value.

Transactions made with bank cards are growing at an annual rate of 30 percent, and bank card transactions currently make up 35 percent of all supermarket transactions and more than 60 percent of all sales in stores, according to a survey conducted by the CCFA.

However, Chinese merchants are seeing their operational costs growing at an annual rate of more than 15 percent and their average profit margin is around 2 percent, according to the survey.

Subway to Open 1,000 Stores in India by 2015

Quick service restaurant chain Subway today said it plans to operate 1,000 stores in India by 2015 through franchise route, which will entail an investment of $58 million (over . 300 crore).

The Connecticut headquartered brand is present in 50 Indian cities with 263 franchisee-run restaurants across the country. Commenting on the potential of the market, Subway President and Cofounder Fred DeLuca said: “India is a promising business destination with a young, educated population having growing disposable income.”

Subway will continue to evolve and adapt its product offerings to suit the Indian taste and plans to grow here through franchise route, he said in a statement. While the investment of $58 million (over . 300 crore) to set up the planned number of stores will be made by franchisees, Subway will invest in providing training and technical know how to its partners.

The brand is aiming to expand aggressively in tier-II and tier-III locations. The planned expansion will generate employment opportunities for another 15,000 people, the statement said.— PTI

VC Firm Pays Rs. 21 crore for a Bite of City Vada Pav

Mumbai-based Goli Vada Pav chain to use funds for its national rollout

The humble vada pav, Maharashtra’s popular snack, is set to compete with major multinational fastfood brands, after a venture firm joined hands with two first-time entrepreneurs to help roll out a national chain of restaurants. VenturEast, a southern venture capital firm, has invested $4.7 million, or Rs.21 crore in Goli Vada Pav, a Mumbai-based ethnic food chain that sells the snack. 

The firm hopes to set up outlets across the country in an attempt to replicate the success enjoyed by Jubilant Foodworks, a franchisee for Domino’s Pizza.
Venkatesh Iyer and Shivadas Menon, founders of Goli Vada Pav, set up this firm in 2004 with an investment of Rs. 1 crore and now seek funds to expand the chain into smaller towns . “At least five investors had approached us, but we selected VenturEast because of their pedigree, approach and ability to understand our business,” said Mr Iyer.

The investment values Goli Vada Pav at about . 100 crore, he added. The funds will be used to improve managerial capabilities and also for brand building.
The company plans to set up training centres for its own staff and also those of franchisees and will also put in place audit and MIS systems, said Iyer who has 20 years of experience in corporate consultancy, franchising chain and retail chain models. His partner Menon’s expertise lies in corporate finance.

With assets of over $300 million under management, VenturEast focuses on highgrowth, small and medium enterprises and has offered financial support to over 50 projects in technology, healthcare and life sciences and other emerging sectors.

The Indian fast food market is growing at an annual rate of 25-30%, industry estimates show. Goli Vada Pav’s turnover is about Rs. 20 crore and Mr Iyer says sales could more than double by the end of 2012-13. “We would also like to make a public issue when market conditions are favourable,” he added.
Goli Vada Pav focuses on smaller towns and cities where the company sees major scope for expansion , given the limited presence of multinational food companies.

The company has grown on a franchisee model with a network of 125 outlets spread across Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu. It plans to develop a network of around 500 franchisees in the next three years.
Iyer says Goli Vada Pav’s strength lies in the quality of its products that are manufactured in hygienic environments with supply chain and technology support from Vista Foods. Vista provides infrastructure and support services from its plant at Taloja in Maharashtra.

Future Group to build wholesale markets

Agre Developers, a Future Group company, formerly known as Future Mall Management, has struck a deal with Bangalore-based developer the Sattva Group to build a wholesale trading market on the lines of Dubai’s Dragon Mart and China’s Yiwu wholesale market. This is the first of the eight businessto-business (B2B) markets that the company is planning to start across major cities in the course of the next few years. These trading hubs will stock general merchandise, IT peripherals, hardware products along with other commodities typically spread across a 5-10 acre space. The BSE listed-company will also be getting into the infra-logistics and retail infrastructure business. 

Kishore Biyani had merged his real-estate business with Kolkata-based developer Sumit Dabriwala into Agre Developers to strengthen the retail major’s foothold in the realty space. The retail to financial services group runs stores like Big Bazaar and Food Bazaar.
Sumit Dabriwala, MD, Agre Developers, told TOI, that the strategy for the company going forward will be to tie-up with strategic partners to facilitate the opening of these tradings hubs and also to build infra-logistics across the country. Agre Developers will work in tandem with Future Supply Chain, the logistics and supply chain vertical of the group, on the infra-logistics business.
“Even as the demand of logistics in the country expands, supply of good quality logistics infrastructure is extremely low. This is where we will work with Future Supply Chain and also with other logistics companies,” Dabriwala said.
The company will look to plough about Rs 500 crore of equity across the three formats and is evaluating the possibility of inviting strategic partners into each of these businesses. The total outlay on the three business verticals will be around Rs.3500 crore over the next five years, said Dabriwala.
“While the wholesale trading and the infra-logistics business will be in partnership with another entity, the retail infrastructure vertical of the company will be operated independently.
“On the retail infrastructure side, the mandate is to play a bigger role which will start right from spotting the location of the mall to designing the mall, determining the tenant mix, sub-leasing the mall and managing it over the life cycle of the transaction,” Dabriwala pointed out.
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