In a short period of time Yo! China has emerged as a formidable brand in the Chinese food segment. Last year, during the slowdown, Yo! China focused on brand building and adding value to its offering. And making most of the strategy, this year Yo! China is set to take up aggressive expansion. Ashish Kapoor, managing director, Yo! China talks to Vinod Behl about their growth strategy and franchise opportunities. Excerpts..,

Yo! China has been around for over six years but its market penetration is still not very high?
If you take the history of F&B brands,you will find that their growth is quite low in the first decade. Take the case of McDonald and Pizza Hut which are around for atleast one and a half decade.They have started growing substantially only in the last five years.The reason behind this is that F&B businesses grapple with teething problems of consistency, real estate and supply chain management. If you build the basics, brand building becomes much easier.In our case, though we have been doubling our growth every year, yet its now that we are building the scale after putting all the basics in place.Infact 2010 will be a year of high growth for us.

What are your precise expansions plans?
We will have 25 dinning outlets, 100 carts and 10 express outlets in one year.Presently we have 60 points of presence including carts, dining and express outlets. Our focus will be on north (including Delhi-NCR) and we will keep populating outlets in cities like Delhi, Chandigarh,Kolkata,Patna,Pune, Bangalore, where we are already present. This year, will be making an overseas foray into Middle –East, USA & Mauritius markets. We want to be the restaurant of choice.

What about your plans on franchising front?
We have been franchising for the last about 3 ½ years.We had taken to franchising as we strongly believe in entrepreneurial spirit.Taking to franchising helps companies to make more investments towards product innovation and brand building.They can also focus on building infrastructure and back-end support. We look out for passionate people who have hunger for making money with pride.They should basically love the brand and be proud of it.Only then they can develop the skill. We are the largest Chinese food brand in the country.There is a distinct advantage for franchisees as a brand recognition is very strong and support systems are in place.Not just the cost of structures and ability to train is lot easier, even the risk of failure is low. Our carts are 100 percent franchised while 50 percent restaurants are also franchised. Going forward, we ant to maintain 50:50 ratio of company owned and franchise outlets.

How will you fund your expansion?
We are going to spend Rs.30 crore on our expansion plan this year.We will be generating this money through internal accruals and franchising.At a later stage , we may even consider IPO.

Tell us about your different franchise models?
We have three different franchise models –Carts, Dining and Express outlets. The Cart model is in true sense Mother Dairy of entrepreneurship in Chinese food.Our carts sell Dimsums and Noodle Boxes at prominent locations like cinemas, airports, offices, tech parks, hypermarkets etc.All that a franchisee need is a 50 sq.ft. space and a total investment of Rs.4 lakhs for full set-up.There is no franchise fee and royalty and we supply branded products. For the franchisee, the pay-back period is 8 months to one year.Our cart franchisees who are at the bottom of the pyramid have potential opportunities to upgrade tohigher models. For our dining model in malls and high streets,the franchisee needs 2500 sq.ft. retail space.There is an investment of Rs.1 crore with an upfront franchise fee of Rs.15 lakh and 6 percent royalty fee in addition to 2 percent marketing fee.The pay back is in about 3 years as sales levels are very high-about Rs.2 crore a year. For the Express Model which is a delivery outlet with limited dine-in, the franchisee requires a retail space of 800-1000 sq.ft.The investment required is Rs.50 lakhs and franchise fee is Rs.10 lakhs.The royalty is same as in the case of Dining Model.The Pay- back period is 2-3 years.

What impact did the slowdown have on your business?
We made most of the slowdown.Last year we had less emphasis on opening new stores.Instead we went in for refreshing the brand with a complete new look, new menu, and upgraded service levels. So instead of cutting corners during recession, we pampered our customers with greater variety and quality, adding almost three dozen new dishes including many signature dishes introduced by Chefs from China.

In short , we added lot of buckets to our value offerings.As such our midscale casual dining has added more fun appeal to youth (college goers and young professionals) besides families.All this contributed to about 35 percent increase in footfalls that benefitted our franchisees too.And this year, we will have various food festivals with lucky prizes to add more value to our offerings.

How do you see prospects of your franchisees in the coming months?
Food is one of the most stable businesses as the eating out trend is fast spreading.Moreover,Chinese food is a big segment and we have worked hard to build Yo! China brand in 14 states.So, our franchisees can really cash in on to reap big benefits. The popularity of our franchise can be judged from the fact that recently we had to temporarily suspend offering ,franchise for three months due to unmanageable rush of farnchise seekers. We restarted it only after fulfilling our earlier franchise commitments.

What is your promise to your franchisees?
My promise to my franchisees is the same as to my employees.If you have pride and passion in building and running this Indian brand of International standards, the profi ts will follow.

How do you see the prospects of Franchise industry?
The downturn has proved to be a blessing in disguise as it has created more entrepreneurs and shown that greater stability in business is possible through entrepreneurship.But I strongly believe that there is a need for more reforms and legislation to ensure speedier growth of franchising. Especially the reforms around trade mark anddilutions of brand issues, we need an apex franchise body and relevant laws to promote franchising.