pepperfry is looking to expand its offline studio presence even as it charts a strategy to cut costs while spreading its wings the goldman sachs and norwest venture partnersbacked firm has partnered with franchise india to expand its offline studios through a franchise model this year studios are working for us as a model and therefore we want to expand in this direction lesser capital requirement and the idea of empowering entrepreneurs is what led us to this model ashish shah coo of pepperfry told et the mumbaibased firm currently has 18 studios and is looking to expand to 46 studios in 15 cities by the end of fy18 through the fran chise model while the franchisees will own and operate the studios pepperfry will train the staff and ensure the order completion from the booking stage onwards additionally the franchisee studios will allow customers to book and pay for an order from the studio a feature that is not available in the companyowned studios at present the franchise studios will operate on a commissionbased revenue model with margins spanning 813 per order a key driver for this initiative has been the companys strategy to cut costs even as it maintains the pace of offline expansion a move that saw it invest 6 million last yearwe invest rs 70 lakh in capex per studio even as we incur an operating cost of rs 67 lakhs per studio said shah the franchise model will help the company cut costs by over rs 20 crore for fy18 pepperfry is not the only one to scale up its offline model rival urban ladder is following a similar strategy to expand its offline presence through a host of experience centres pepperfry claims the offline studios contribute 2225 of the companys overall sales and is targeting the channel to contribute up to 35 by fy18 end through this model every studio can potentially clock sales of rs 5070 lakhmonth basis on our attribution today some of the flagship stores can clock sales worth rs 1 crore month shah said pepperfry clocked a 4x rise in revenue growth at rs 98 crore year on year in fy16 even as total expenses more than doubled to rs 253 crore as per documents filed with the registrar of companies and sourced from tofler for fy18 we are looking to grow between 70 and 100 estimated shah typically a retail shop may earn business worth rs 2025 lakhs month we estimate that pepperfry will clock rs 5060 lakhs in revenues per month in order to achieve the ambitious growth targets the company has introduced two new services that will add to its revenue muscle pepperfry has tied up with interior designers and architects as channel partners for leads and order fulfilment for every order that is received through these partners the company will offer a 510 commission the two weekold pilot will see a 10x jump in the number of channel partners with a target of 300