Last
fortnight during my whirling tour of Noida, Ghaziabad and Bhopal, I decided to
visit some of my favorite malls which have been my favourite destinations of
cooling down or spending some free time whenever I am in those cities. To my
surprise, I noticed two common features across all the four malls I visited.
First, many new shops had replaced the older ones and, second, the floors which
had the food courts were more crowded with many new additional outlets.
Customers were in queues at the outlets of both local and international brands
starting from Pizza to Masala Dosa,
and Burger to Daal Baati. I wondered
has the days of quick service restaurants (QSRs) arrived in India?
QSR,
also known as fast casual eatery, usually serves foods faster and efficiently,
and offers minimum table services. Quick service restaurants are usually chains
of outlets with the same management, and their menu, food quality and price are
standardized. The brands which are most visible today in our country are
McDonald’s, Domino’s Pizza, Pizza Hut, KFC, Papa John’s, Subway, Dunkin’s
Donuts, etc. According to an estimated value of QSRs in India currently stands
at over 8,500 crore and is expected to touch Rs. 25,000 crore by the year 2020.
This growth projection is based on the ever increasing demand and is because of
urbanization, changes in lifestyle and family structure, more and more
disposable income, and higher propensity to spend for comfort, luxury, and
tasty foods from across the globe. The above changes have tremendously helped
the informal eating out (IEO) industry to grow and expand.
A visit
to the food court of any mall reminds you that India is a country of youth
where more than 65% of its population is below the age of 40, who are working
and are familiar with global cuisines. Seeing great opportunity in the Indian
cities of different sizes (metro, tier I, II and III), number of international
fast food brands are exploring the possibility of entry in Indian market.
Varying business models like, complete ownership, franchisee, mix of ownership
and franchisee, revenue sharing, etc., and with different levels of successes
make it more attractive. many private equity investers are, therefore, finding
it appropriate business to invest in. The format is also not complex and once
the process is standardized, replication or scaling up becomes easier.
The
dominant QSR brands across the country are still ‘international’. Domino’s with
about 1000 outlets leads the pack (KFC, Subway and Pizza Hut – about 500 each,
and McDonald’s – 325). Besides having their respective brands, international
QSRs have a considerable edge over their Indian counter part because of
their vast experiences across the globe in backend integration, centralized
commissaries, distribution channels, vendor development, training of human
resources and also because of capital. Currently, as per industry estimates,
60% of the total QSR market in India is dominated by foreign brands.
After
being the leaders in local markets confined to small geographical areas for a
considerable period, the Indian QSRs too are fast catching up. Brands like, Ammi’s Biryani, Kebab Express, Goli, Wah Ji Wah, Kaati Zone, etc. are expanding their reach to more and more cities.
The success of Indian QSRs is mainly because these outlets offer diverse menus
which appeal to a cross section of customers, catering to their culture and
taste. Secondly, the Indian offerings also provide a ‘stomach filling’
experience at comparatively lesser price. Also, as 80% of the QSRs are
restricted in metro and Tier I cities of the country, its proliferation in Tier
II and III cities will be a great opportunity for the Indian QSRs to tap.
Further, it is expected that almost 35% of the 1.3 billion Indian will start
living in urban areas by 2022. No doubt, international players are already
moving to Tier II and III cities, and have started targeting the local
population by offering new products which suit the local tastes at competitive
price, but Indian companies will still have an edge because of their netter
understanding of comparatively stronger food preferences of Indians. Now
Indians have started eating out more frequently. According to The Associated Chambers of Commerce and Industry of India
(one of the apex trade associations),
as many as 50% of India’s population eats out at least once every three months
and eight times every month in metros compared to the USA (14 times), Brazil
(11 times), Thailand (10 times) and China (9 times).
However,
there are reports which do not present a very encouraging scenario for QSRs.
Yum! which owns brands like KFC, Pizza Hut, and Taco Bell, reported sales
decrease of 9% for its Indian division. The story of Nirula’s is also not very propitious.
Increasing concerns for health and campaigns against junk food are likely to
affect future growth of these outlets, provided they take proactive measures to
develop new products or modify existing products to ones which are not
considered as unhealthy junks. With increasing competition and ever changing
food preferences, QSRs need to be very innovative to keep themselves in market.
…which many of national QSRs have already proven.
As
the food market has almost remained untouched by economic upheavals in the
country, the QSR market is expected to grow at a rate much faster than that of
the country’s economy and likely to remain the most important part of
Indian food business.
Keep
eating …and enjoying !
*****
3 comments:
what are the prospects of idli.
For me, it is good provided ..
Sir, I feel this change should be seen along with the shift from Street food to food court of malls as the propensity to spend is increasing. I don't have correct estimate of Street foods but I am sure that change will happen and again Street foods will retain its customers from loosing to international brand. As a consumer I like Dominos over Pizza hut because of conveniently availablity and value for money (if you buy with discount coupons) which gives you a different buying experience. Degrowth in sales of few international brand should be tallied with growth achieved by few other international brands. Hardly they will loose to Indian players.
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