SCM - Au Bon Pain

8/10/2019 SCM - Au Bon Pain

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GROUP 5

ANANTHAKRISHNAN S (1311077)

DHIVYA LAKSHMAN (1311086)

KARTHIK ARUMUGHAM (1311299)

MANISH KUMAR (1311305)

SHANTHA KUMAR T (1311402)

SUPPLY CHAIN MANAGEMENT


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Table of Contents

Introduction ................................................................................................................................................. 2

Au Bon Pain in India .................................................................................................................................. 3

Competition ................................................................................................................................................. 4

Marketing .................................................................................................................................................... 4

Supply Chain ............................................................................................................................................... 5

Au Bon Pain - IIMB outlet ......................................................................................................................... 6

Day to Day Operations ............................................................................................................................... 6

Forecasting............................................................................................................................................... 6

In-Bound Logistics ...................................................................................................................................... 7

Manufacturing & Sourcing ........................................................................................................................ 8

Data collection & sharing across Au Bon Pain outlets ............................................................................ 8

Layout of the stores ..................................................................................................................................... 9

Recommendations ..................................................................................................................................... 10

List of Exhibits .......................................................................................................................................... 11

Exhibit 1: List of Au Bon Pain Outlets in Bangalore with distance from DC........................................ 11

Exhibit 2: Au Bon Pain Outlet locations in Bangalore ........................................................................... 12

Exhibit 3: Caf spread across major cities in India................................................................................. 13

Exhibit 4: Typical Advertisements by Au Bon Pain............................................................................... 14

Exhibit 5: Production Facility at Yeshwantpur (Au Bon Pain Caf India Ltd.) ..................................... 16

Exhibit 6: Au Bon Pain Outlet Layout in Bangalore .............................................................................. 17

Exhibit 7: Arrangement of food items in a typical Au Bon Pain............................................................ 18

Exhibit 8: Optimal route from DC to IIMB Au Bon Pain outlet ............................................................ 19

Exhibit 9: Typical sales data and Transfer statement of Au Bon Pain.................................................... 20


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Introduction

Au Bon Pain is a fast casual bakery and cafe chain headquartered in Boston, Massachusetts. The

first Au Bon Pain was opened in Boston in 1978. Now, it has emerged as one of the best-loved

caf bakery chains in the world with over 385 cafes worldwide (United States, India, and

Thailand). They are generally located on some of the most visible corners and crossroads, in

urban buildings, college campuses, transportation centers, shopping malls, museums and

hospitals.

While most of their stores in United States are company-owned, international locations are

typically franchised. India is one such location. The Au Bon Pain Cafe India Ltd is a 80:20 JV

between Spencer's and Varin Narula. Au Bon Pain entered India through a master franchise deal

with Spencer Retail Ltd. owned by RP-Sanjiv Goenka Group. The chain in India focuses on

serving a build-it yourself range and assortment of breakfast, lunch and dinner items along with

coffee, baked goods, confectionaries, soup, salads, sandwiches, harvest rice bowls, and also hot

and cold beverages. The menu is usually limited to an extended over-counter display, and

options in the way the food is prepared is emphasized. Au Bon Pain is known for serving healthy

food with hygienic conditions. Now, health-conscious items form a large portion of the menu.

The accent is on freshness, quality ingredients and wholesome offerings. The rates are on par

with competition and average meal for two would cost around Rs. 220-250.

"Fast casual restaurants" would meet the following criteria:

Limited-service or self-service format

Average meal price between Rs 200- Rs 300

Made-to-order food with more complex flavors than fast food restaurants

Upscale, unique or highly developed decor

Most often will not have a drive thru

Services are between fast food and casual dining

Au Bon Pain is looking forward to open cafs in locations that have a significant customer

population, and in some areas with huge potential for sales such as urban markets, hospital cafes,

transportation center cafes, college campus cafes and shopping mall cafes. The size of an

average store ranges from 850 sq. ft. to 1,800 sq. ft.


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Au Bon Pain in India

When the cafe brand was announced in mid-2008, the group had plans of reaching 100 stores in

18 months. But, a cautious approach was adopted which led to slow growth. At present Au Bon

Pain India has a total of 31 outlets - 29 in Bangalore and 2 in Kolkata. The spread of the outletsacross Bangalore is shown in Exhibit 1, 2. Now Au Bon Pain is on a drive to expand as they feel

that they have built brand awareness and has plans to have over 120 cafes across select cities in

India (Bangalore, Delhi, Hyderabad, Chennai and Kolkata) by March, 2015.

With the infrastructure investments being high in installing a backend supply infrastructure, for a

city to be profitable, they need to have at least 10-12 outlets. Hence they adopted carpet

bombing strategy to multiply the number of stores rapidly in a particular city and achieve

economies of scale. The next few Au Bon Pain outlets in Kolkata are to open in Salt Lake SectorV, Rajarhat, Kolkata Airport, Ballygunje and Alipore, with plans to open a few inside the

corporate hospitals and IIM Kolkata campus. As of now Mumbai is ruled out due to the

extremely high and unreasonable rentals and not so high sales.

With the master franchise system followed by Au Bon Pain the responsibility of both the

stakeholders are listed below.

Responsibility of RP-Sanjiv Goenka Group:

Creating a development plan

Selecting all caf locations and negotiating the lease terms

Operate and manage the outlet

Hire and pay staff

Order supplies

Maintain the store appearance

Provide customer service

Responsibility of Au Bon Pain:

Provide assistance in creating the development plan

Develop supply chain

Provide ordering system

Pay for system operation

Provide advertisement

Install and remodel facilities


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Competition

With caf parlors becoming more accepted and adopted, Au Bon Pain has a bigger market as

well as serious contenders to their precious customers. Few of its competitors are given below.

The competitor outlets according to cites is shown in Exhibit 3.

Cafe Coffee Day (CCD):Caf Coffee Day, popularly known as the CCD, is the most popular &

loved coffee shop and is also the largest chain of coffee cafes in India. CCD started operations in

1996 in Bangalore. It grew rapidly and attracted coffee lovers of all the age groups. The quality

and taste of the CCDs coffees along with the interiors and the hospitality were the key factor to

ignite the fame. It has more than 1300 outlets across the twenty-eight states in India, and is

expecting to have 2000 outlets by the end of 2014.

Barista Lavazza:Barista opened its first coffee lounge in 2000 at Delhi. Since then, it has been

called as one of the best espresso bars in India. At present, Barista Lavazza has more than 225

outlets in India.

Costa Coffee:Costa Coffee, the largest British chain and the second largest coffeehouse in the

world, made its way to India in September 2005. At present, it has over 100 outlets across cities

of Bangalore, Delhi, Mumbai, Gurgaon, Noida, Jaipur and Agra.

Tata Starbucks: Starbucks made its way to India in the year 2011, after entering into a

partnership with Tata Coffee and opened its first store in 2012. Starbucks serves delicious

flavors of coffee in every country it operates in. Along with hot and cold varieties of coffee,

Starbucks also serves full-leaf teas, pastries, snacks, packaged foods and sandwiches. It also sells

coffee mugs and tumblers. At present, Starbucks operates 34 outlets in 5 cities of India (Delhi,

Gurgaon, Mumbai, Pune and Bangalore).

Marketing

Au Bon Pain with its presence only in Bangalore and Kolkata has reached entire India by, usingthe power of the ripple effect through social media. They looked to establish its brand image

through Public Relations. By engaging with activities, campaigns and off-beat offers and inviting

people to narrate their experience, theFacebookpage become a story-telling brand site forAu

Bon Pain in India. In fact, theFacebook page was created prior to the opening of the first caf

and was used as a tool to share teaser messages at the launch. The member base continues to
http://www.aubonpain.com/https://www.facebook.com/AuBonPainPageIndiahttp://www.aubonpain.com/http://www.aubonpain.com/http://www.facebook.com/AuBonPainPageIndiahttp://www.facebook.com/AuBonPainPageIndiahttp://www.aubonpain.com/http://www.aubonpain.com/https://www.facebook.com/AuBonPainPageIndiahttp://www.aubonpain.com/


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increase week by week a result of a sustained, effective and insights-driven social media

campaign. Au Bon Pain is now a niche brand committed to quality of the food, nutrition, health-

related information, menu choices, which in its entirety will deliver an enhanced customer

experience. Few of their advertisements are shown in Exhibit 4.

Supply ChainThe supply chain and the value chain of a typical Au Bon Pain is shown below.


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Au Bon Pain - IIMB outlet

The Au Bon Pain outlet at IIMB is setup to create brand awareness by targeting the student

masses than for profit. They are not expecting much in terms of profit margins. Au Bon Pain

pays monthly rent to IIMB according to sales i.e. 10% of sales is paid to IIMB, this is minimal

when compared to other outlet agreements because of the deep discounts offered by Au Bon Pain

on all the menu items. On an average the discount is 45% on the total menu costs. (But the items

are discounted heavily by different amounts from a minimum of 30% to maximum 60%). This

makes the menu prices comparable to or less than other competitive cafes in India. The store

layout is shown in Exhibit 5.

Day to Day Operations

The usual working timings of an Au Bon Pain outlet completely depends on the location of the

store. For example: To cater to the IIMB students, the outlet remains opens till 2:00 am whereas

the usual outlets close at 11:00 pm.

As Au Bon Pain deals mainly with perishable food items, this complicates their operation and

ordering of the ingredient. This is due to the perishable nature of foods, the breadth and

complexity of goods being produced. Au Bon Pain has more than 800 SKUs as input and output

SKUs are around 150.

Forecasting

The huge number of SKUs makes it difficult to forecast the demand and thus the appropriate

production. As the over stocking and under stocking costs are both high for a caf bakery like Au

Bon Pain, the manager has to place the order every day. This forecasting is done by each store

manager on a daily basis depending on the sales data of the corresponding day of the past 3

weeks.

An example for the ordering procedure: To order for Monday, the store manager computes the

average sales for each item with the sales data of the last three Mondays on the previous evening

at around 3pm and make necessary adjustments depending on the seasonality, special occasions

and his experience. The sales are highly variable with the maximum sales on weekends

(Saturday and Sunday).


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Most of the customers (around 80%)) are students and the rest belong to family members,

visitors and IIMB staff. The average daily sales of Au Bon Pain is around Rs 15,000 (after

discount) on a normal day.

At the end of the day as a means to reduce the over-stocking costs Au Bon Pain uses salesgimmicks such as buy one get one free two hours before the closing time . (This is not used in

IIMB due to the heavy discounted price). The rest of the unsold items are discarded on the

expiration of shelf life.

Staff Training for day to day operations

An average outlet is run by 8 members during peak days (or hours) and 6 members during

normal time. This ensures that the customers get the promised Au Bon Pain experience.

For this purpose the staff are trained at an aggregate level starting from the Store Manager who

then trains the staff. Extensive training is required as most of the staff dont have any Hotel

Management experience or certifications.

In-Bound Logistics

All the required items for daily operations of the IIMB outlet are transported from Au Bon Pain

Production and Central Distribution center at Yeshwantpur, Bangalore. All the perishable items

are delivered daily and the other nonperishable items (sugar packets, napkins, plastic items) are

delivered on a weekly basis. All the perishable items are delivered in a chiller vehicle at a

temperate below 5 C to prevent spoilage.

The delivery van leaves Yeshwantpur DC around 4:00 - 4:15 am and reaches the IIMB outlet

around 5:00 - 5:15 am. The goods are transferred into the store after manual checking by an

employee by checking against the indenting document called Delivery Channel. A typical

Deliver channel along with Transfer statement is shown in Exhibit 9. This checking takes

around 15 minutes.

All the logistics required by Au Bon Pain is taken care by third party logistics, payment is done

based on the kilometers covered at the cost of around Rs. 14/km. The logistics service to IIMB is

done through SLN Tempo Services.A single delivery van on an average covers 4 -5 outlets for


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delivery. Thus 4 vans would cover entire Bangalore. In this way ABP achieves economies of

scale.

The route taken for delivery to IIMB is Yeshwantpur DC EGL outlet Koramangala Outlet

IIMB outletFortis Hospital outletBack to Yeshwantpur DC.

The optimal route to IIMB based on shortest distance is shown in Exhibit 8.

Manufacturing & Sourcing

The key to ensuring consistent quality is having the right suppliers. Au Bon Pain sources the best

ingredients from the best suppliers representing good brands in the industry and all the

production takes place at the Yeshwanthpur center which also doubles as the Central Distribution

center. The Exhibit 5 shows the Yeshwanthpur DC.

Data collection & sharing across Au Bon Pain outlets

Although the sales data is tracked at point of sale (POS), this data is not shared across other Au

Bon Pain outlets and also the inventory details are not shared to other Au Bon Pain outlets. Thus

in case of a stock-out for replenishment from the nearest store the store manager has to manually

call each store for details.

Au Bon Pain uses the software solutions such as POS and MMS from Shawman Software.

ShawMan POSworks with typical industry standards devices for touch screens, cash drawers,

printers, etc.

ShawMan POS is used in Au Bon Pain to,

Enable control of remotely located outlets from a central head office and consolidation of

data, which is automated at time of day end.

Remote Printing of bill for the customers

ShawMan MMS (Material management system): Allows Au Bon Pain to manage its supply

chain activities efficiently. This manages various tasks such as indenting, receiving and finally

tracking items consumption from finished good. This supports multi-location operations such as

central warehouse and outlets for the semi and finished goods movement. This has an interface

with the POS.


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ShawMan MMS auto Generates Document Number, Supplier and Raw Material codes. It links

raw materials to multiple stores and provides online information of Items in Stockat any point

of time. It manages materials movement between multiple vendors, warehouses and outlets. Inter

outlet and inter store transfer of semi-finished and finished goods is also monitored. This is done

using Secured User Login Ids and passwords created for the store manager.

A typical sales data of a single day collected through Shawman software is shown in Exhibit 9.

Layout of the stores

The usual layout of an Au Bon Pain outlet is as shown in Exhibit 6. The bright colors of the

outlet acts as a driver to bring people into the store and the clean ambience of the outlet assures

the hygiene conscious customer of the best quality supplied.

The counter at the store is as shown inExhibit 7, the menu is displayed along with the price

behind the counter for easy selection. The food is prepared right in front of the customer thus

enabling the customization choices between ingredients.

Apart from the menu that has to be ordered at the counter, Au Bon Pain has food items that can

be handpicked (by tongs) by the customer as per their choice from the counter. The rates are also

provided for each item for easy selection.


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Recommendations

1. Route optimizationof the delivery vans will reduce travel time and reduce costs. GPS

location data can be used to track trucks get the optimal route, it also improves fuel

efficiency. The increasing number of Au Bon Pain stores will reduce the need of delivery

van per outlet and can help improve profits.

2. At present if a stock out occurs, the store manager has to physically call each store nearby

to order any needed ingredients, this is inefficient and takes time. This can be done more

efficiently by using a centralized IT system.

3. Au Bon Pain has many items which can be handpicked by the customers themselves, this

causes some theft. This reduces profit and is also difficult to monitor. A way to handle

this can be the use of CCTV.

4.

Continuous product innovationis a major challenge for a bakery caf like Au Bon Pain.

With the presence of well-established players like CCD, Au Bon Pain has to offer

different and new innovative items to the highly demanding customer. The competition

from chains like McDonalds and KFC is a serious threat.

5. Sales staff have to be trained in menu, suggestive selling and up-selling.

6. Au Bon Pain has to open more stores as to achieve greater economies of scale and

bargaining power with their suppliers. The plan to reach a target of 100 stores in

Bangalore has to be worked out in a swift manner.


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List of Exhibits

Exhibit 1: List of Au Bon Pain Outlets in Bangalore with distance from DC

Outlet LocationsDistance from Distribution Centre

(Yeswantpur) in km

Bellandur (Accenture BDC-4) 28.1

Bellandur (Accenture BDC-7) 28.5

Bellandur (RMZ Ecospace) 22.5

Jayanagar (Cloudnine Hospitals) 13.9

Malleshwaram (Mantri Square) 4.8

Old Madras Road (Google) 19.7

Ulsoor (RMZ Millenia) 10.8Whitefield (Accenture BDC-6) 27.1

Kalinga Rao Road (HCG Hospital) 10.3

Cunningham Road 7.4

Richards Town 10

Old Madras Road (RMZ Infinity) 19.6

Brigade Road (EVA Mall) 9.6

Indira Nagar 14.5

Koramangala 15.4

HRBR Layout 14.5

Banaswadi (ITC Infopark Ltd.) 19.6

Domlur (EGL) 14.5

Old Airport Road (Cloudnine Hospitals) 16.9

Banerghatta Road (Fortis Hospitals) 18.8

Malleshwaram (Cloudnine Hospitals) 4.5

Whitefield (ITPL) 27.1

IIM Bangalore 18.2

Jayanagar (Cloudnine Kids Hospitals) 13.9

BIAL 34.6

VFS 20.1

Wipro 15.6

Narayana Hrudyalaya 14

Indira Nagar 14.5


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Exhibit 2: Au Bon Pain Outlet locations in Bangalore


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Exhibit 3: Caf spread across major cities in India

Starbucks Au Bon Pain CCD Barista

Mumbai 15 0 192 19

Delhi 13 0 180 19

Bangalore 4 29 241 29

Kolkata 0 2 73 13

Chennai 0 0 84 8

Pune 4 0 73 0


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Exhibit 4: Typical Advertisements by Au Bon Pain


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Exhibit 5: Production Facility at Yeshwantpur (Au Bon Pain Caf India Ltd.)


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Exhibit 6: Au Bon Pain Outlet Layout in Bangalore

IIM Bangalore Outlet

VFS Outlet

BIAL Mantri Square


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Exhibit 7: Arrangement of food items in a typical Au Bon Pain


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Exhibit 8: Optimal route from DC to IIMB Au Bon Pain outlet

Longitude Latitude Au Bon Pain Outlet Distance (km)

77.551463 13.019948 Au Bon Pain Plant, Yeswantpur 0

77.644348 12.949187 Au Bon Pain, EGL 18.82

77.626675 12.937633 Au Bon Pain, Koramangala 4.52

77.60278 12.895521 Au Bon Pain, IIMB 10.14

77.599031 12.895075 Au Bon Pain, Fortis 1.19

77.551463 13.019948 Au Bon Pain Plant, Yeswantpur 18.76

Onward Tri

Return Tri

Le end


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Exhibit 9: Typical sales data and Transfer statement of Au Bon Pain


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References:

http://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/goenka-

plans-to-take-au-bon-chain-national-by-march/27560741

http://aubonpain.com/

https://www.facebook.com/AuBonPainPageIndia

http://en.wikipedia.org/wiki/Au_Bon_Pain

http://www.spencersretail.com/au-bon-pain.php

http://www.indiasocial.in/case-study-au-bon-pain-food-is-just-not-enough-we-want-more/

http://www.business-standard.com/article/companies/goenka-plans-rs-70-crore-au-bon-pain-

expansion-113122300541_1.html

http://www.shawmansoftware.com/
http://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/goenka-plans-to-take-au-bon-chain-national-by-march/27560741http://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/goenka-plans-to-take-au-bon-chain-national-by-march/27560741http://aubonpain.com/https://www.facebook.com/AuBonPainPageIndiahttp://en.wikipedia.org/wiki/Au_Bon_Painhttp://www.spencersretail.com/au-bon-pain.phphttp://www.indiasocial.in/case-study-au-bon-pain-food-is-just-not-enough-we-want-more/http://www.business-standard.com/article/companies/goenka-plans-rs-70-crore-au-bon-pain-expansion-113122300541_1.htmlhttp://www.business-standard.com/article/companies/goenka-plans-rs-70-crore-au-bon-pain-expansion-113122300541_1.htmlhttp://www.shawmansoftware.com/http://www.shawmansoftware.com/http://www.shawmansoftware.com/http://www.business-standard.com/article/companies/goenka-plans-rs-70-crore-au-bon-pain-expansion-113122300541_1.htmlhttp://www.business-standard.com/article/companies/goenka-plans-rs-70-crore-au-bon-pain-expansion-113122300541_1.htmlhttp://www.indiasocial.in/case-study-au-bon-pain-food-is-just-not-enough-we-want-more/http://www.spencersretail.com/au-bon-pain.phphttp://en.wikipedia.org/wiki/Au_Bon_Painhttps://www.facebook.com/AuBonPainPageIndiahttp://aubonpain.com/http://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/goenka-plans-to-take-au-bon-chain-national-by-march/27560741http://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/goenka-plans-to-take-au-bon-chain-national-by-march/27560741

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SCM - Au Bon Pain