Business World – Elargir Solutions views on “Coworking is the Newest Revenue Model for Cafes”

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“…more than 90% of the individuals working from cafes end up generating an average bill value for cafes that is equivalent to or more than the per day rental at a business centre.’’

Cafes, Pubs/Bars/Club and Lounges (PBCL) stand to increase revenue by at least 15,000 rupees per person per month according to COO and cofounder Ruchi Chaudhary of a new startup aggregating workspaces called CoSphere. The CoSphere website features workspaces ranging from formal office space to cafes, bars and pubs for use by anyone needing space to work from.

The rocketing F&B sector

This development comes in the midst of a burgeoning F&B industry in India. The 2013 National Restaurant Association of India (NRAI) report says the food service industry is worth 247,680 Cr and projected to grow at 11% to 408,040 Cr by 2018. The Grant Thornton – FICCI report released in 2015 says the F&B service industry is growing at 25% YOY. The model of coworking will then stand to contribute significantly to the café segment which has about 12% market share while Fine Dining and Pub Bars Club & Lounges (PBCL) segment has about 14% as per market share data from the NRAI report.

How coworking works

The premise is that cafes and the PBCL outlets usually don’t have much footfall during the day and lie idle during work hours, typically 9am to 6pm. The inventory lies idle during much of a work week thereby losing an opportunity to generate revenue during this time. But with the coworking model such F&B outlets have the opportunity to generate some revenue by allowing entrepreneurs, small startup teams, independent artistes and other working professionals to work from the outlet.

So this is how coworking works. You buy a redeemable voucher valid for a month, week or day. Average value for a voucher is 5000 rupees a month but will vary with each outlet. Most of the workspace aggregator sites like CoSphere and Qdesq along with F&Bs adopting this model will allow you to use the voucher at any of their supported cafes and bars in any city during the stipulated work hours, usually 9-6 pm, Monday to Friday. ‘’even if a PBCL or café can get a coworking client to spend an average of 300 rupees on just coffee (or beverages) while working from the outlet for 8 hours a day for a 20 day work month, it will stand to earn an average of 6000 rupees per month per client.

But of course the chances of such a customer needing some breakfast, lunch or tiffin is very high which may come to about another 300-400 rupees for the same time period. This means that a coworking client may spend about 700-800 rupees per day for 20 days. That’s going to come to about 15,000 rupees generated per month per person’’, says Ruchi of CoSphere.

Elargir Solutions Director Ruchi Sally (yes, we know; another Ruchi in the same story) says, “Currently, it is not substantiated directly that cafes would charge a fixed amount for the time spent by a consumer but indirectly more than 90% of the individuals working from cafes end up generating an average bill value for cafes that is equivalent to or more than the per day rental at a business centre.’’ Elargir Solutions is a retail management consultancy with offices in India and Singapore.

In the coming days we’ll be speaking to several F&B outlets to see how the coworking model is working out or them. So keep coming back.

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