Transcript of "Microeconomic study about Dominos and pizza hut"
A Study By Group – 09 MBA (12-15) Section –ARoll Nos – 28,41,43,45,46
The Indian fast food market is growing at an annual rate of 25-30 percent, Foreign fast food chains are aggressively increasing their presence in the country. The market is dominated by global brands like McDonalds, KFC and Dominos specially in the organized fast food segment. Growing trend of consumption of new cuisines and increasing brand awareness has led to the increase of global players. The new age Indian Source - D‟Essence Hospitality report consumers have also played a significant role.
Hard to believe, but the answer is YES !!! Let the numbers do the talking…… Currently, about 250,000 pizzas are being delivered every day in India and this is expected to double in the next three to four years. There were 271 pizza outlets in 2004, and today there are 95o of them - a 300 per cent growth in just eight years. Out of the total organised Quick Service Restaurant industry pegged at about Rs 3,000 crores, the pizza industry alone is estimated at Rs 1,300-1,400 crores QSR Market Pizaa Others Industry Source - D‟Essence Hospitality report 2011 54% 46%
Jubilant Food Works Limited & its subsidiary operates Dominos Pizza brand with the exclusive rights for India, Nepal, Bangladesh and Sri Lanka, The Company is Indias largest and fastest growing food service company, with a network of 500+ Dominos Pizza stores (as of 31st March, 2012) Over the period since 1996, Domino’s Pizza India has remained focused on delivering great tasting Pizzas and sides, superior quality, exceptional customer service and value for money offerings. They have endeavored to establish a reputation for being a home delivery specialist capable of delivering pizzas within 30 minutes or else FREE to a community of loyal consumers from all our stores around the country.
Pizza Hut is an American restaurant chain and international franchise that offers different styles of pizza along with side dishes Pizza Hut is a subsidiary of Yum! Brands, Inc. the worlds largest restaurant company. Today, their India business consists of more than 200 KFCs and nearly 170 Pizza Hut restaurants with strong unit growth.
Franchisee rights Operates through at least Jubilant has exclusive eight franchisees in India rights for the whole including Devyani and country. Dodsal. Marketing strategy Yum! provides significant Jubilant decides and gets support and Devyani it approved by executes it. Domino’s International
Interactions with Franchisor Yum! Brands has a separate Dominos International team office in India to manage visits once every 3-6 months marketing, real estate and other to evaluate business operational parts of the business performance and strategy. in India. Vendor selection Jubilant decides and gets it Yum! decides and Devyani approved by executes it. Domino’s International
Dough preparations Prepared dough distributed from Pizza Hut Dough is prepared fresh commissaries to stores in the store kitchens under controlled temperatures – third party network of cold storage vehicles are used Beverages Domino’s International has signed renewable agreements with Coca Yum! Brands business was owned Cola for most countries around the by Pepsi Co until 1997 and now has world. a lifetime contract with Pepsi Co
Real estate support for store openings Yum! Brands’ real estate Jubilant’s in-house team team carries out the manages and executes process on behalf of their the entire process. franchisees
Dominos by far has the highest penetration in the Indian market. Pizza Hut is currently limited to Metro & Tier I cities, but slowly targeting the Tier II cities Source - D‟Essence Hospitality report
We believe the JFW to command pricing strength (i.e. is a price leader) due to: Association with well-known international brand: Domino’s Pizza Inc has been operational from last 60 years with total 9400 operational stores (as of 31st Sept 11) worldwide and has a presence in more than 70 international market. Thus, Domino’s is a well-recognised international brand and this helps JFW to command premium and thereby pricing strength over other players in this segment.
Delivered in 30 minutes: JFW is the market leader in organized pizza home delivery segment in India with over 70% market share. The service proposition created by Dominos is very difficult to replicate by the small, unorganised players as well as the organised players. We believe the market leadership along with the quick service proposition enables the company to be a price leader.
Deep pockets for advertising and promotion: The well-established brand Domino’s will always have a high recall factor as compared to other small players due to ability of the company to spend heavily on advertising and promotion expense. Having invested into the brand over the last few years, and delivered on the product quality and the timelines, it has build the right perception of khusyion ki home delivery;
Business model similar to FMCG player… Introduced products in all the price range starting from Rs 39 to Rs 455 on the upper side, so as to cater to all strata Has introduced add-ons like to Pastas, Nutty Choco- lava cake and Butterscotch Mousse so as to increase the product range, to counter competition Has recently introduced 3-Cheese Pizza and Cheese Burst Pizza to cater to high end taste conscious consumers
The most recent offering by Pizza Hut is an extended menu of 15 localised pizzas derived from regional tastes like Sev puri, Chettinadu paneer, Chicken achari, Nimbu mirchi, to name a few…… The new offerings, marketed heavily through a 360 degree campaign celebrates the Kansas based chain’s 15 year anniversary in India. It also reflects the brand’s aggression in a market where several new brands have entered the fray.
Pizza Hut wants to focus on more than just pizzas. It has offerings like pasta, appetisers and a larger collection of beverages. This is part of its strategy to make the transition from a quick service restaurant (QSR) to a casual dining. In terms of reach, Pizza Hut is targeting a store count of 250 (existing 171) by 2015 As Pizza Hut expands, a key part of its strategy will be to maintain the in-store dining experience
Domino’s is the market Pizza Hut is playing leader in Home Delivery catch up in the Home of Pizzas Delivery game through its Pizza Hut Delivery Domino’s stores have Stores (PHD) very limited/cramped seating Pizza Hut specializes in No possibility of fine dinning restaurants , parties/events at outlet with good ambience, waiter services
Significant scope of expansion in new cities and within the existing cities… JFW may consider cities with population of at least 3 lakhs and above, so that the city has immediate capacity for 1 store and will have further potential of 1-2 stores over the next 2-4 yrs. This logic is keeping in mind the economic viability, scale and cost of logistic infrastructure to service the store from the nearest commissary Number of cities with population of 3 lakhs and above is 147, indicating that in short to medium term the company can target additional 47 (potential 147 – existing 100) new cities for opening of Dominos stores.
Pizza Hut plans to open 25 more outlets that serve wine and beer along with pizzas. The company currently operates 10 such stores in Delhi and Bengaluru. Pizza Hut has seen a growth of nearly 20 to 25 per cent in this format. The expansion will also help the brand in diversifying their offering and adding more value-added services.
The company, also plans to take its casual dining restaurant presence to 250 stores by 2015. Currently, the pizza chain has 131 stores spread in 34 cities. The expansion plans is part of the global expansion strategy of Yum! Brands
Age Group Above 40 Gender Analysis years 1 Between 8 Female 14 26-40 21 Male 14 Between 16-26 yearsConsumer work class Frequency of visit segmentation 3 1 Business 4 3 1 Housewife 12 Monthly Others Occasionally Weekly Service 14 20 Student
Dine In preference 9 dominos pizza hut 20 Overall rating for 3.31 Pizza Hut 3.79 Overall rating for Domios
The study displays a very good example of Dominos on Pizza hut onmonopolistic competition. increase of price for Pizza increase of price for hut DominosThe study also shows that the Indian customers are Mean Of Responses 6.03 6.45not price sensitive when they get good product,quality and servicesDominos and Pizza Hut offer pizza but they are differentiated on the basis ofingredients, recipes and taste.Companies within the industry can gain monopoly over their competitors byoffering superior products or better service.The differentiated nature of these firms products permits them to chargeprices above marginal cost.
Monopolistic competition is a market structure characterized by alarge number of firms selling products that are close, but notperfect, substitutes. Products across firms are different enough thateach firms demand curve slopes downward.The pizza market seems to fit this description, with a few large firmsbut tens of thousands of Mom-and-Pop operations. One way thatmonopolistic competitors try to differentiate their products is basedon physical differences.