Thursday, January 19, 2012

Eating out in India

The Indian food retail industry is close to Rs.4.5 lakh crore, but only 2% of it constitutes organised sector. In such a scenario, it is tough to focus on value, and this means recently most of the organised fast food chains are focusing on volumes for growth.

The focus has moved from a menu with limited variety and expensive options to one with a wider variety on the menu and prices even as low as Rs.25/-. This is for those chains which are set at targeting youth - the college goers whose one time canteen meal would be limited to ~Rs.25/-.

Chains like KFC are infact also likely to position themselves as breakfast and after-dinner joints and not just meal hang-outs and is also considering home delivery. A move towards healthier grilled options and not just the deep fried hi-cal version of the chicken are also on the cards. All these will hopefully help them achieve their target of 500 stores across 50 Indian cities (right now the count is 150). Yet another challenge that these chains pose is that of retaining constant prices across stores/ cities when the input costs especially real estate widely vary.

Some of the competitors for KFC viz MCD, south african Nando and more local ones like Bangs, Hot Chix, Chic punch, BFC are eating into its share.

Meanwhile MCD which currently owns 240 stores, is shifting focus from children (through it's Ronald McDonald) to adults. It plans on moving from vibrant red and yellow as brand colours to the more muted ones which are likely to appeal to adults. Its offerings have evolved from the more kiddie friendly burgers and fries to include Mc. Spicy (Veg and Chicken variants). Mc.Flurry - a dessert filling enough to tide you between meals appeals to the adult palate with combination of textures - creamy(ice cream), chunky (chocolate bits), grainy (oreo) and serves as a meal by itself. Right now only prototypes in Delhi and Mumbai are experimenting with the new outlet colours, changed logo. And it is likely to go viral in the next 4 yrs.



Some quick facts about MCD :
  • MCD opens a new outlet every 4 hours
  • Serves over 46 million customers each day (0.5 mn just in India)
  • It has sold well over 100 million burgers till date
  • Ronald McD has different names based on the country - Uncle McD in Singapore, Donald McD in Japan (which has 3000 stores!!! - the largest market for MCD after US)
  • US is the largest market with 14000+ stores
  • In some places the items on the menu vary based on tastes and demand eg - rice burgers in Hongkong, Spaghetti in Philippines, Beers in Germany & Spain

Skeptics are not sure moving from a position of a store that appeals to kids to that for adults, will continue to enjoy strong franchise among kids. Hopefully it won't alienate them :)