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Bed And Breakfast

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They are the unlikeliest of places to sport cosy retail outlets. Yet, several hospitals in India, mostly those catering to the well-heeled, now have one, two or many. Jostling for space in a hospital foyer — along with the customary chemist — are a host of food and beverage (F&B) chains enticing you with their aromatic offerings. Reason: hospitals provide them with a relatively high captive audience and large footfalls — enough to make any retailer salivate. But there is a twist in the tale. Read on:

The oldest such chain is Kwality Foods with its Breads & More and Kwality Express counters totalling 13. The relatively new entrant Café Coffee Day (CCD) has 15 coffee outlets. Nutritionist-entrepreneur Ishi Khosla's Whole Foods has seven counters across Delhi, while Nescafé has sporadically spread kiosks across hospitals. Others such as yoghurt major Cocoberry, Costa Coffee, Subway India and Sagar Ratna are building presence across hospitals. "Our philosophy is, wherever there is a waiting period, we should be present," says K. Ramakrishnan, marketing president at CCD. Such captive consumption base offers a new window of growth for quick service restaurants (QSRs). No wonder this space is fast becoming a retail haven for QSRs.

Take, for instance, the Max Super Speciality Hospital in south Delhi's Saket. Gone is its old canteen. Families of patients as well as doctors and nurses can now choose "organic food" from Whole Foods, Indian and Chinese cuisine from Kwality Express, and sandwiches and desserts from Breads & More. A few months down the line, the choice will increase further with the addition of South Indian food chain Sagar Ratna. What's more, one can also pick up a book from the reading zone, while munching a snack.

"It's all about enhancing the guest experience and offering them multiple food and beverage options," says an official spokesperson of Delhi-based Apollo Hospitals, which has recently added a Whole Foods counter to existing Kwality Express and Café Coffee Day outlets.

Fortis Healthcare will open a 24-hour food court at its Gurgaon hospital. "Our primary purpose is to look after the accompanists of the patient. That is an important part of patient care," says Daljit Singh, president-strategy and organisational development at Fortis Healthcare.

On The Menu
The Kwality Group, which started its hospital catering business seven years ago with Delhi's Sir Ganga Ram Hospital, has lined up contracts in 42 hospitals — from Fortis, Wockhardt to Apollo — across the country, over the next four years. Early-mover advantage has definitely helped the group; it enjoys a lion's share of QSRs at hospitals across the country. Hospital retail outlets contribute 20 per cent of the group's business, and the chain earns 15-20 per cent of monthly sales as profits. Says CEO Nitin Luthra: "We have now perfected the art of catering to hospitals."
PATIENT SNACKS: A Whole Foods outlet at a Max hospital in Dehi. Max currently has 10 food outlets across its eight hospitalsCafé Coffee Day, too, is bullish. "Growth in this segment will be immense over the next four years," says Ramakrishnan.  Though the coffee chain is discreet about its future deals for now, it hints at a strong pipeline.

Whole Foods, established in 2001, had its first encounter with hospitals four years back, when Max invited it to be present in its Saket hospital. "A hospital atmosphere tends to make people more diet conscious and reach out for healthy eating options," explains Khosla.

Cocoberry, which started with a standalone outlet in Delhi in February 2009 and now has 19 operational outlets in different parts of the country, is opening an outlet each at the Fortis hospitals in Delhi, Gurgaon and Mohali in Haryana over the next few months.

The food chain says it has received a slew of offers from several major hospitals. "Since we operate in the health food segment, a lot of hospitals are approaching us to open outlets across India," says G.S. Bhalla, managing director of Cocoberry. "We are even looking at expanding our product mix in hospitals and tailoring the offerings to a more health-conscious audience."

All's Not Well
However, in spite of the excitement, QSRs have not perfected the art of hospital retail — which is full of pitfalls. Unlike in malls, where it takes six months to break even, it takes 5-6 years in a hospital, explains Kwality's Luthra. Part of the reason is the long working hours. "It is a 24-hour outlet. That means our staff works in three shifts; we have three deliveries in a day, 14 vehicles run about town to get fresh food, from commissaries to the cafés," he explains.

Further, in the absence of empirical evidence about footfalls, QSRs tend to overstock, leading to wastage levels as high as 5-7 per cent. "Footfalls at hospitals are unpredictable. If one top surgeon moves base, the entire traffic comes to a standstill," says Luthra. Also, unlike malls, weekdays are heavy at hospitals, while weekends are light, since out-patient departments remain closed. Fast food chain Subway, too, admits that footfalls are lower when compared to malls, but it says profitability is healthy as investment costs in a hospital are lower than at other traditional locations. Even Cocoberry, which spends Rs 35-40 lakh to set up an outlet at a hospital, says hospital outlets are cheaper than malls and commercial complexes. Incidentally, Subway India has been experimenting with its menu.


Fast-food chains with
outlets in hospitals

  • Café Coffee Day (15)
  • Kwality Foods (13)
  • Whole Foods (7)
  • Cocoberry (4)
  • Subway India (2)
  • Nirula's (1)

Note: The list is not exhaustive

"We have developed an all-vegetarian Subway restaurant concept to cater to hospital locations that do not allow non-vegetarian food in their premises," explains Manpreet Gulri of Subway India. Delhi-based fast food chain Nirula's burnt its fingers trying to operate a retail outlet at Sir Ganga Ram hospital. Having shut shop there, it now operates a cafe at Delhi's Moolchand Hospital.

While retail chains are busy figuring out the perfect business model to make a real go of hospital retail, it is a win-win situation for hospitals. Not only does it add to patient care, it is also a revenue earner. Most hospitals, such as Fortis, work on a combination of rental along with a percentage of revenues.

Others, such as Apollo, work on a revenue share model with the vendors. For instance, Kwality Express pays 15-20 per cent of its sales to the hospital. The sales and marketing team at the hospital decides the kind of cuisine and F&B chains to be brought into the hospital. "If any food outlet wishes to partner with the hospital, they need to fulfil certain basic requirements, such as choice of cuisine, effective management of the space, etc.

Also, the space should match the requirement of the vendor — kitchen size, quick food-preparation, hygiene issues, etc.," says Ashish Makkar, head of F&B at Max Healthcare.

Max currently has 10 food outlets across its eight hospitals in Delhi. Further, Max hospitals coming up in cities such as Dehradun, Mohali and Bhatinda in Punjab will have designated eating spaces. With the race to set up food outlets in hospitals hotting up, tastier options are on the menu for both visitors and doctors. And, in days to come, perhaps, for investors too.


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