Mall or High Street – An ideal Location to start a Franchise

The hospitality industry is always high in demand as now days everyone is paying attention and spending money on their comfort and quality services. Among this industry, entrepreneurs are engaged in the QSR Industry like never before. If you are looking for the fastest way to expand or diversify a business, it’s franchising. If you buy a franchise from a well-known fast food restaurant chain, you'll be provided with a business model that increases your odds of being successful. The brand has already done their research and survey

Now the dilemma is to choose right place of the franchisee – weather Mall or High street. A food franchise in the mall is better than a food franchise on high street. Let’s calculate Pros and Cons of both the option

Pros and Cons of the Franchise in a Mall and High Streets

The foot traffic in the mall is 45 percent higher than that of the high street and the mall goers have a variety of activities to undertake; thus, the customers stay longer in the malls as compared to the high street locations.

The ratio of the rent to service charges are high in the mall as compared to the high street as high street has rent to service ratio of 10:1 while malls have a ratio of 5:1.

The rents in the malls are also very high, standing at 15% more for similar towns like Mumbai and Pune.

The Common Area Maintenance (CAM) charges applies to all outlets in mall and these adds to operating cost of the franchise.

Online delivery services like Swiggy and Zomato which almost contributes 30% of the sales prefer to pick up parcels from high streets than malls as it is convenient and less time-consuming. it ensures timely delivery of orders to customers.

Franchise in mall will have to follow too many rules of the mall including time of operations which is usually from 10 am to 11 pm, however franchise on a high street have flexibility especially during peak and festive seasons.

The cost of setting up the infrastructure of the franchisee is high on a high street as compared to mall due to space constrain. The area of the outlet in mall would range somewhere between 50 square ft to 200 square ft, where as in high street it usually starts with 200 square ft and goes up to 500 square ft and beyond

Sales in mall take a deep dive during weekdays and are soaring on weekends, where as sales in high street are more or less evenly spread.

Not all malls restrict giving space and outlet to similar food items so competition increases among them.

If you want to start your food franchise in a reputed mall there will be a waiting period and location of the outlet weather it will be in food court or ground floor as a kioskis decided by the mall as per the availability, On the other hand in high streets you can choose your own location.

Franchising is a horse race where everyone is betting on the same horse, so one needs to be different and rational in taking decisions. Every decision should be committed but the approach towards change should be flexible

By Dipti Periwal

Assistant Professor - Finance