The Ironhill Story – Creating Experiences, Not Just Beer

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Ironhill India has established itself as a trailblazer in the craft beer industry, blending innovation with an unwavering commitment to customer experience. With a franchise network that spans Tier 1, 2, and 3 cities, the brand has become synonymous with premium craft beer and exceptional hospitality. In this candid interview, Teja, the visionary behind Ironhill, delves into the intricacies of their franchise models, the challenges of expansion, and the strategies that have fueled their meteoric growth. From adapting to diverse markets to creating unforgettable customer experiences, Teja sheds light on the philosophy driving Ironhill’s success and its ambitious plans for the future.

Ironhill India currently employs a Franchise Owned Franchise Operated (FOFO) model and is considering a Franchise Owned Company Operated (FOCO) model. Could you elaborate on the rationale behind choosing these models and how they align with your overall business strategy?

The FOFO model has worked well for us as it gives franchise partners the responsibility of managing daily operations while we provide end-to-end support. This includes staff hiring, menu design, marketing strategies, and ensuring quality standards. By doing this, we maintain control over the customer experience, which is critical to our brand.

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The shift to a FOCO model aligns with our growth strategy of having greater operational control. Under FOCO, we take charge of daily operations while the franchise partner acts more as an investor. This model allows us to execute decisions faster without needing approval from franchise owners. While FOCO involves taking on more liabilities, it provides the flexibility to implement strategies swiftly and maintain consistent standards across locations. It’s a strategic move that balances operational efficiency with scalability as we continue to expand.

What key qualities and qualifications do you look for in potential franchise partners to ensure they align with Ironhill's brand values and operational standards?

For FOCO partnerships, financial capacity is the primary criterion since their role is largely as an investor. For FOFO, we assess the individual’s ability to grasp our vision, their willingness to follow operational guidelines, and ideally, prior experience in the F&B sector. We also consider the property size. Smaller properties often work well with new franchisees, as they’re motivated to engage deeply in operations. Larger properties, however, benefit from more experienced partners who understand the complexities of managing bigger teams and higher foot traffic.

Could you detail the types of support and training Ironhill provides to its franchisees to maintain consistency and quality across all locations?

Our training process is immersive and practical. From the initial stages of setting up an outlet to hiring staff and planning operations, franchisees are involved in every step. This ensures they gain hands-on experience. Once the outlet is operational, training doesn’t stop. Since the F&B industry evolves rapidly, our support is ongoing, with regular updates on market trends, customer preferences, and operational best practices. For example, our corporate chefs and operational managers frequently visit locations to ensure standards are upheld and to provide additional training if necessary.

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The franchise presentation mentions various fees associated with owning an Ironhill franchise. Could you provide more details on the initial investment, ongoing royalty fees, and any other financial commitments required from franchisees?

The initial investment depends on the size and location of the property. Smaller setups in Tier 2 and 3 cities start at ₹8 crore, while larger properties in metro cities can go up to ₹50 crore. Beyond the initial setup cost, we charge a 6% royalty fee on revenue and an additional 1% marketing fee. The marketing fund is either utilized for promotional activities or refunded if unused for three months. These financial commitments are essential to maintaining our brand’s consistency and providing ongoing support to our franchise partners.

Ironhill's revenue has increased significantly over the past five years, reaching over ₹150 crore. What factors have been the primary drivers of this growth, and how has the franchise model contributed to this success?

The key to our growth has been our focus on delivering an exceptional customer experience rather than just selling products. Every aspect of a visit to Ironhill—from the ambiance and temperature to the quality of food and beverages—is carefully curated to create memorable experiences. Additionally, our franchise model has allowed us to expand efficiently by leveraging the resources and networks of our franchise partners while maintaining operational control to ensure consistency.

Reports indicate that Ironhill aims to achieve ₹200 crore in revenue this fiscal year. How does the expansion of the franchise network factor into achieving this target, and what strategies are in place to support this growth?

The expansion into Tier 2 and 3 cities is a major driver of our growth. These markets offer significant potential due to increasing disposable incomes and a growing appetite for premium experiences. To support this growth, we’ve strengthened our backend operations, implemented rigorous training programs, and introduced innovative menu items to keep customers engaged. Our strategy is to ensure every new outlet replicates the Ironhill experience while catering to local tastes and preferences.

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What is the expected ROI for franchise partners, and within what timeframe can they anticipate recouping their initial investment?

Teja: The ROI varies depending on the property size, location, and market conditions. However, based on past performance, franchise partners have seen returns as early as 9 months, with the longest recoupment period being 18 months. This quick turnaround is a testament to the strong brand pull and operational efficiency we bring to the table.

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There are plans for annual price hikes to offset rising input costs. How do you anticipate these adjustments will affect sales volumes and overall profitability for both the company and its franchisees?

We approach price hikes with caution. Our goal is to remain competitive while ensuring value for money. Before implementing any increase, we assess market conditions, competitor pricing, and customer spending patterns. While input costs may necessitate occasional price adjustments, we focus on optimizing other areas of the business to minimize the impact on our customers. This balanced approach helps maintain sales volumes and profitability.

Ironhill has focused on expanding into Tier 2 and Tier 3 cities. What unique challenges and opportunities have you encountered in these markets, and how has the franchise model facilitated this expansion?

Staffing is the biggest challenge in Tier 2 and 3 cities, as many skilled professionals prefer working in Tier 1 cities. To address this, we have a robust training program to bring staff up to our standards. On the flip side, these markets offer lower real estate and operational costs, making them attractive for expansion. The franchise model is ideal here as it allows us to tap into local expertise while providing the support needed to maintain quality standards.

How does Ironhill ensure that each franchise location caters to local tastes and preferences while maintaining the brand's core identity and standards?

We believe in adapting to local tastes while staying true to our brand’s core. For instance, we introduce seasonal and locally inspired beers, like guava chili and mango wheat, which resonate with regional palates. All recipes are developed and tested at our central facility to ensure they meet our standards before being rolled out across locations.

What have been the most significant challenges in expanding through the franchise model, and how has Ironhill addressed them?

Identifying prime locations has been the biggest challenge. We don’t compromise on location quality, even if it means delaying expansion. Early on, building a capable team and establishing SOPs were challenging, but now our experienced team handles operations seamlessly.

Looking ahead, what are Ironhill's plans for further expansion, both in terms of new locations and potential new markets or product lines?

We have several new outlets in the pipeline, including locations in Mumbai. We’re also focused on experimenting with innovative beer flavors and enhancing the customer experience. Our long-term vision includes expanding into international markets while continuing to strengthen our presence in India.

Ironhill’s journey reflects a perfect blend of innovation, customer-centricity, and strategic growth. With a focus on creating memorable experiences and expanding thoughtfully into diverse markets, Ironhill is redefining the craft beer landscape in India. As Teja aptly puts it, “It’s not just about selling a product; it’s about selling an experience.” With ambitious plans on the horizon, Ironhill continues to set benchmarks in the industry, ensuring that every visit leaves customers with lasting memories.

Manaswita Goswami