Melt 'N' Mellow targets 15 Pune FOCO outlets after flagship

Melt 'N' Mellow plans to open 15 franchise-owned, company-operated Pune outlets after launching a nearly 1,400-square-foot Apte Road flagship, using a structure in which franchisees pay rent and electricity while the company manages the dessert experience. The site was under commissioning after being secured by September-end.

What is Melt 'N' Mellow's Pune outlet plan?

Melt 'N' Mellow plans to use its first Pune Mellow & Co. outlet as a hub, followed by 15 franchise-owned, company-operated, or FOCO, spoke outlets across the city. Management said the flagship has nearly 1,400 square feet of carpet space on Apte Road, between JM Road and Fergusson College Road in Pune.

The first store had not opened at the time of the call. Management said the site had been secured by September-end and was under commissioning, with launch expected “this month”; the proposed 15 FOCO spokes would be opened after the hub starts operating.

The hub-and-spoke design is separate from Melt 'N' Mellow's general-trade ice-cream distribution. Management said an outlet must provide a dessert experience through trained manpower and management of daily fresh inventory, whereas general trade sells products through a broader retail network.

Why is Melt 'N' Mellow using the FOCO model?

Melt 'N' Mellow is using FOCO to retain operating control while shifting the largest cited occupancy costs to franchisees. The franchise owner will pay rent and electricity, while Melt 'N' Mellow will manage the outlet, including customer service, manpower and inventory handling.

Management said a franchise-owned, franchisee-operated format could create a higher risk of brand dilution. Its stated concern is that an ice-cream outlet requires trained staff, fresh daily inventory and consistent execution, rather than simply selling products from a freezer at a retail counter.

The cost split is intended to make store break-even easier from Melt 'N' Mellow's profit-and-loss perspective. Management said the company's direct costs would principally be inventory and outlet manpower, although it did not disclose a sales target, break-even timeline or profit target for the 1,400-square-foot flagship.

How will Melt 'N' Mellow staff and profit from the stores?

Melt 'N' Mellow expects to use its existing distribution organisation to support the new stores. Management said it already has more than 200 field personnel managing distribution across six states, and indicated that outlet manpower would not necessarily become a separate incremental cost base.

Management also said retail-store gross margin is almost double the margin generated by regular sales. It did not disclose the gross-margin percentage, comparison period or outlet-level earnings, but identified higher retail gross margin as part of the economics behind company-operated stores.

The retail format is distinct from Melt 'N' Mellow's segment-level profitability targets. Management described a 15% to 16% earnings before interest, tax, depreciation and amortisation, or EBITDA, target for nuts, and said ice cream could reach a 15% to 16% EBITDA margin when capacity is optimally utilised in FY29.

Where could Melt 'N' Mellow expand after Pune?

Melt 'N' Mellow may consider Navi Mumbai or Hyderabad after completing its initial Pune rollout. Management did not commit to either city, disclose sites or give a timetable, stating only that Pune is the first focus for one hub and 15 spokes.

The proposed retail expansion comes alongside wider general-trade growth in ice cream. Management said Melt 'N' Mellow entered Andhra Pradesh in the previous quarter and started Tamil Nadu in the current quarter after receiving enquiries, while its field distribution network now covers six states.

Management said about 80% to 85% of ice-cream sales are expected to come from Maharashtra, Karnataka, Telangana, Andhra Pradesh and Tamil Nadu. Kerala, Odisha and Chhattisgarh were cited only as possible partial additions, and management said it does not expect to expand substantially beyond these markets before ice-cream revenue reaches Rs 600 crore.

The growth mix provides the operating context for the outlet plan. Management said ice-cream sales in the first six months were about Rs 74 crore, nearly three times the previous year's level, and expected ice-cream growth to be almost double the 20% to 25% growth forecast for nuts over the next two to three quarters.

Conclusion

Melt 'N' Mellow's Pune strategy combines a flagship hub with 15 proposed FOCO spokes, seeking to keep the outlet experience, fresh-inventory management and staff execution under company control. Franchisees would bear rent and electricity, while management expects higher retail gross margin and use of its six-state distribution organisation to support store economics.

The next development to watch is the opening of the Apte Road flagship, which was under commissioning after the September-end site update, and whether the 15 Pune spokes follow. Management has identified Navi Mumbai and Hyderabad as possible later markets, while its broader expansion threshold is an ice-cream top line of Rs 600 crore.