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Quick Service Restaurants in India

The document outlines the rapid growth of Quick Service Restaurants (QSRs) in India, driven by urbanization, rising disposable incomes, and a youth population eager for affordable international cuisine. Key players include global brands like McDonald's and Domino's, with expansion into tier 2 cities expected as the market matures. Challenges facing the industry include maintaining service quality and adapting to local tastes, while opportunities remain abundant due to changing consumer behaviors and preferences.

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QUICK SERVICE RESTAURANTS IN INDIA 2011
Objectives  To identify existing opportunities in the Indian QSR space  To summarize the macroeconomic environment of the industry  To explain the working of a QSR  To indicate the current trends  To summarize key player profiles and understand their positioning vis-à-vis one another  To understand the challenges faced by QSRs in an emerging market like India 2
Contents Sr. No Table of Contents Slide # Executive Summary 4 I Industry Overview 5 a. Introduction 6 b. Market Segmentation 7 c. Growth Drivers 8 d. Challenges 9 e. SWOT Analysis 10 f. QSR Features and Target Audience 11 II Working of a QSR 12 a. Importance of Brand 13 b. Formats and Locations 14 c. Setting up a QSR 15 d. Managing Human Resources 16 e. Marketing Strategies 17 g. Pricing Strategies 18 Sr. No Table of Contents Slide # h. Growth Strategies 19 i. Menu Planning 20 j. Standardization 21 k. Case Study – Dominos India 22 III Key Players 25 a. Key Player Profiles 26 b. Key Players‟ segmentation 29 c. Brand Positioning 31 IV Trends and Future Prospects 33 a. Trends 34 b. Rising Investor Interest 35 c. QSRs coming to India 36 V About D‟Essence 38
Executive Summary  India is witnessing rapid urbanization of small towns and growth of mid-sized cities. This along with rising population in key metros and higher disposable incomes is fuelling growth in every industry. 35% of India‟s population will be in urban centres by 2020 totaling to 53 crores compared to the current urban population of 32 crores.  Consumer markets are being driven by the country‟s youth population. Be it college goers or the young working class, exposure to the international environment and culture, has created a demand for world-class products at affordable prices.  This has led to the rise of Quick Service Restaurants (QSRs) in India, the fastest growing segment in the eating out market. By 2012, there will be at least 2000 more QSR outlets across India.  With QSR giants like Starbucks and Dunkin‟Donuts yet to foray in the market, there is a lot to look forward to. 4
Industry Overview 5
7% of the total restaurant market comprises of QSRs  The Indian fast food market is growing at an annual rate of 25-30 per cent, 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 consumers have also played a significant role.  Organized modern formats like malls, multiplexes and food courts have also become a favoured destination. Larger companies are teaming up with small franchisors to set-up their brand.  QSRs started with big metros, but are now building their presence in Tier 2 cities like Pune, Ahmedabad, Chandigarh and Bangalore. Organized Eating Out Market, Rs. 8600 Cr. (20%) Unorganized Market, Rs.3 4400 Cr. (80%) Estimated Size of the Indian Restaurant Industry QSR Market Rs.3000 Crores 7% Organized Restaurant Market (Except QSRs) Rs.5600 Crores 13% Unorganized Restaurant Market Rs.34400 Crores 80% Growth : 20% Growth : 5-6% 6 Total Restaurant Industry - Rs. 43000 Crore Sources: www.nrai.org,, www.rncos.com
•Road-side location •No technical standards •No accounting standardization Market Segmentation Restaurant Industry OrganizedUnorganized •Accounting Transparency •Organized Supply Chain •Quality Control •Sourcing Norms •Multiple Outlets •Dominated by Global Players Bars and Lounges Full-Service Restaurants QSRs Highest growth segment. Maximum Footfall due to increasing traffic at airports, railway stations, malls, multiplexes and supermarkets Take-away Home Delivery Kiosks/Carts Fine Dining Casual Dining Eat-in 7
Growth Drivers Expanding Middle Class Urbanization Youth Spending Nuclear families Better logistics Mall and Multiplex boom Sources: Marketing Whitebook 2011-12, Economic Times, MGI 86% 64% 11% 29% 2% 5% 1% 2% 2010 2020 Household Distribution By Annual Income Affuent Upper Middle Class Lower Middle Class Bottom of the pyramid A younger and richer India is fuelling rapid growth in the eating-out segment Total population of Gen Next (13-24 Age Group) 300 million Total population of Gen Next living in urban areas 29.5 % or 88.5 million Key consumption areas Clothing & accessories, Food, Entertainment and durables Spending Power Rs.3000-40000 per month Urban youth behaviour • Socially active • Hangs out at coffee shops and malls • Prefers to be seen at the right places • Expresses one‟s identity through choice of brands consumed 25% of population eats out at least twice a month and spends Rs.150-Rs.500 / meal 8
Maintaining Consistency in product and quality of service are the biggest challenges faced by QSRs 9 Demand Side Health and hygiene concerns among buyers QSR customers are very easy to sell to, but also very easy to lose Beating local competition Low entry barriers Supply Side Maintaining Quality of Service Localization of Menu Standardization of product across outlets Monitoring multiple outlets Reducing service time – efficient assembly line Supply Chain Building a cost- effective supply chain Establishing a supply chain in a new region Monitoring quality of products procured from third parties Talent Acquiring Key Talent Managing high attrition rate amongst junior level employees Challenges
SWOT Analysis Internal Factors External Factors Positive Negative • Risk-sharing in a franchise based model • Abundance of cheap labour in India • Burgeoning middle class • Increase in malls and multiplexes • Increasing youth spending • Urbanization • Sourcing Talent • Monitoring franchisees • Maintaining quality standards across outlets • Understanding Indian tastes • Food Inflation • Product imitation • Price Competition • Dependency on third parties • Local Competition STRENGTH THREATSWEAKNESS 10 OPPOTUNITIES
Urban Youth Make Up The Prime Target Audience Particulars Target Audience Profile Category Young Urban Professionals on the move Teenagers Students Multiplex audience Shoppers Age group 16-35 Location Cities and towns Social Class Middle and Upper Middle Class Lifecycle Dependent and Pre-Family* *based on Sagacity Lifestyle Model Target Audience Behaviour Hygiene & Taste conscious Brand conscious Westernized culture Seeking international standards Value seekers Experimental Low Cost in terms of initial investment as well as operating cost Low Risk High Impulse products Best Retail Locations Competitive Prices Key Features of a QSR 11
Working of a QSR 12
Brand Image, Ambience and Overall Experience are important intangible factors for QSR customers  A QSR is meant to create instant interest in the mind of the consumer. It has to have  Mass appeal  A characteristic ambience  A unique experience  A strong brand identity  One cannot find Ronald at any other burger joint except McDonalds.  The service, which is the only human touch, plays a big role in creating a unique experience. A lot of time and resources are spent on training the staff ,as they represent the brand. KFC employees are expected to live up to their 3 F‟s to create to perfect environment – Fun, Friendly and Familiar.  In an effort to maintain the same experience across outlets, the service, interiors and menu items are standardized . Brand AmbienceExperience Intangible parameters that make a QSR successful 13
QSR Formats and Locations Malls Tourist hubs Corporate hubs Shopping Centers Multiplexes Airports/ Railway Stations LOCATIONS Restaurants Food Court Counters Kiosks/Food Carts Take-away/Delivery Drive-ins QSR FORMATS 14
Setting up a Franchise Outlet Initial Qualification • Application Review • Background and Credit Check • Assess training needs • Signing of Franchise Disclosure Document • Verify Assets Operation Plan • Prospective franchisee makes an operation plan which is reviewed thoroughly Site Exploration and Securing Control • Determine Site Selection Strategy • Identify focus areas • Franchisor completes Action Plan for Trade Area • Franchisee negotiates for the site and sends letter of intent Site Registration • Franchisor sends site registration to brand for approval • Franchisee remits funds Franchise On- boarding • Franchisee arranges for Financing • Hires a Team • Franchisor provides Support and Training • Builds Restaurant • Supports in Grand Opening • On-site Training is provided for every procedure. • The Franchisor has an approved vendor list from where the ingredients can be sourced. • They have an annual promotional and advertising plan that they implement with the support of the franchisees. • Quality checks are conducted via Consumer Feedback, Food SafetyAudits and Standard Audits Franchisor’s Role after the launch 15
Managing Human Resources  Acquisition When QSRs come to India, they find it difficult to get experienced talent for strategic positions. There are very few people with relevant experience, especially in a global firm. Poaching employees from competitors would mean huge incentives and salary raises. Thus a lot of companies hire people in the same function but from a different industry.  Support & training The franchisors offer support and training to the franchisees for effectively running the small format franchise business. Training is conducted at 3 stages:  Induction  On-going  Refresher  Retention Out of 10000 emloyees, KFC has to replace 7000 employees each year. This means cost for fresh recruitments, training and relieving employees is very high. Dominos has increased salaries of store front employees by 20% and implemented an incentive plan in order to reduce attrition rate. Restaurant Manager First Asst. Manager Second Asst. Manager Trainee Manager Trainee Floor Manager Training Squad Crew Member Human Resource Tree at at a typical QSR outlet 16
• A large burger chain targeted the value seeker community and created highest value for money as its brand promise. 1 • India‟s largest Pizza chain targeted the customers who wanted fast service at their doorsteps. It created the brand promise of assured fast delivery and communicated it with its “30 mins or its free” campaigns 2 • A large coffee shop chain wanted to position itself as not just a coffee shop but a place to hangout with friends and family. They marketed themselves with the tag line “ A lot can happen over coffee” which clearly communicated that they wanted their customers to have a complete experience much beyond just coffee. 3 Marketing Strategies  QSRs have to play on their strengths to create and communicate a brand promise.  The brand promise can be anything from fast service to low prices to healthy food.  Successful QSR chains have been able to take their brand promise very effectively to the masses. 17
Pricing Strategies Pricing the base product aggressively and keeping higher margins on the side orders This strategy is for the price conscious consumer who sees great value in the base product and can choose to not take the side orders At the same time it allows the QSR to charge the customer for whom price does not matter, much more through the high margin side orders Most QSRs keep fighter brands in their menu to remain competitive.  Its important for QSRs to price their products carefully because of the stiff competition that they face.  The strategy is to price their products in such a way that the maximum number of customers can be retained and at the same time higher margins are abstracted from the customers who do not mind paying more for extra value. This is achieved by: Value combos allow the QSR to sell more no of high margin products with the low margin base products. Eg: QSRs try to sell more French fries and cold drinks through their value meals. Pizza chains sell more garlic bread and cold drinks through their value meals DIFFERENTIAL PRICING VALUE PRICING 18
Growth Strategies of QSRs A coffee trading company who supplies coffee beans, started a retail business of coffee shops all over India. A casual restaurant chain diversified into food court stalls., thus entering the QSR market. A coffee shop chain diversified its coffee shops business by establishing express outlets and coffee machines. A soft drink giant branched out to form a new company with Pizza and Fried Chicken chains in its umbrella. It sold off its stake, but is in a lifetime contract with the firm Forward Integration Horizontal Diversification Concentric Diversification Lateral Diversification 19 A large burger chain in India has the highest foot fall amongst all countries, but the lowest average bill. Growth in India is achieved based on volumes, hence every QSR is looking to expand its presence.
Menu Planning • QSRs do not keep the full menu at all outlets. • Instead they include only a few high volume products at outlets with space limitations like food courts and express kiosks Size of outlets • Depending upon the age group they are targeting, QSRs have to adjust their menus. • QSRs targeting older age groups have to include healthier and more traditional food items in their menus where as QSRs targeting the youth can have more experimental and/or fast food items. Target in terms of demographics • Product adaptation according to customer preferences is really important for QSRs to succeed. • International chains in India have to adjust their menus to include more vegetarian and spicy items. A Fried Chicken brand has the most extensive range of items in India amongst all its worldwide outlets • Most QSR giants avoid using beef and pork due to cultural taboos. Local taste preference Menu Selection is critical, especially when localizing in markets like India and China where traditions, religion and local taste are cannot be ignored. Enlisted below are some of the important factors: 20
The 4 pronged approach to ensure standardization across all outlets 21 Training Equipment Recipes Procurement of Products Standardized aspects of every outlet There are 4 important factors that enable standardization for a restaurant with multiple outlets: •Every new employee has to go through a specific pre-designed training program for that level of employment. •The same machines are used by all outlets for making the dishes. Standard recipes have to be followed by the chefs who receive thorough training for the same. •QSRs have centralized approved vendors from where they procure and process raw materials. They also procure finished products like spices and condiments from the same vendor and distribute it.
Case Study – Dominos India 22 60international markets 9000+outlets worldwide 400million pizzas sold each year 364outlets in India 9000employees in India Jubilant Foodworks Ltd. operates the 364 Dominos outlets in India, pursuant to a Master Franchise Agreement with Domino's International, which provides them with the exclusive right to develop and operate Domino's pizza delivery stores and the associated trademarks in the operation of stores in India, Nepal, Bangladesh and Sri Lanka. The pizza stores in Sri Lanka are operated by their sub- franchisee, DP Lanka. It is the largest Pizza chain in India, way ahead of its immediate competitor Pizza Hut with 50% of market share in the Indian Pizza market and 70% market share in the home delivery market. Source: dominos.com, dominos.co.in, reuters.com
Case Study – Dominos India 23 Particulars Sales Per Day Per Outlet Rs.56600 EBIDTA margin (9M FY2011) 18% Same Store Sales Growth (9M FY2011) 38.7% Market Share 65% 80% 4% 16% Sales Break-up: Cuisine-wise Pizzas Beverages Others Source: indiainfoline.com, dominos.co.in 80% 20% Sales Break-up: Segment-wise Home Delivery Over-the-Counter Market share in the Indian Pizza market – 50% Market share in the home delivery segment –70% 80% of their sales come from the Pizza segment, and the remaining is attributed to beverages and side items. 80% of sales come from home delivery and 20% from OTC sales.
24 Raw Material Supplier (Approved vendor) Regional Centralized Facilities for processing raw material like dough – 4 centres across India Regional warehouse Refrigerated trucks carry the finished items to retail outlets Retail Outlets - Items are prepared based on orders and sent to end consumer Supply Chain of Dominos Critical Success Factors 1. Delivery-oriented model reduces cost 2. Dominos has a vertically integrated supply chain. (as seen below) 3. Franchising model Critical Success Factors of Dominos India
Key Players‟ Profiles 25
Key Player Profiles Name Cuisine Parent Company/ Master Franchisee Origin Location Formats Outlets Expansion Plans in India McDonalds Burgers Hard Castle Restaurants Pvt. Ltd USA PAN-India Dine-In, Food Courts, Drive-in 210 To add 20-25 outlets by 2013 KFC Fried Chicken Devyani International Ltd. USA PAN-India Dine-In, Food Courts 110 500 outlets by 2015 Chicking Fried Chicken Mirah Group UAE South Zone Dine-In 14 - Bangs Fried Chicken Fried Chicken Bangs India India South Zone Dine-In, Food Courts 7 100 outlets by FY2011 Pizza Hut Pizzas Devyani International Ltd. USA PAN-India Dine-In 171 300+ outlets by 2015 Dominos Pizzas Jubilant Foodworks USA PAN-India Dine-In, Delivery , Food Courts 364 To add 70 outlets in 2011 Papa Johns Pizzas Om Pizzas& Eats USA West Zone Dine-In 25 - Pizza Corner Pizzas Global Franchise Architects India South Zone Dine-In, Delivery 50 - US Pizza Pizzas United Restaurants Ltd. India PAN-India Dine-In, Delivery 77 - Smokin‟ Joes Pizzas Smokin‟ Joes Pizza Pvt. Ltd. India PAN-India Dine-In, Delivery 52 - Garcia‟s Pizzas Garcias Famous Pizza India West Zone Dine-in, Delivery 20 To add 20 outlets Slice of Italy Pizzas Green House & Hestoft Foods Pvt. Ltd. India North Zone Dine-In, Delivery 16 - 26
Key Player Profiles Name Cuisine Parent Company/ Master Franchisee Origin Location Formats Outlets in India Expansion Plans in India Barista Coffee Shop Barista Coffee Company Ltd. India PAN-India Espresso bars, High end cafes 230 - Costa Coffee Coffee Shop Devyani International Ltd. England PAN-India Cafes 75 300 outlets by 2014 CCD Coffee Shop Amalgamated Bean Coffee Trading Co. India PAN-India Cafes, Mall & Airport kiosks, Office outlets 1090 To add 200+_ outlets by 2014 Gloria Jean‟s Coffee Shop Citymax Hospitality Australia Metros Cafes 15 40 outlets by 2012 Kent‟s Fast Food Burgers Kents Fast Food India North Zone Dine-In 15 - Subway Submarine Sandwiches Subway Systems India Pvt. Ltd. USA PAN-India Dine-In, Food Courts 200 250 outlets by end of 2011 Tacobell Tex-Mex Yum Restaurants USA Bangalore Dine-In 3 100 outlets by 2015 Falafel Veg. Hummus House Lebanese Mirah Group India Mumbai Dine-In, Kiosks 8 100 outlets by 2011 Wimpy Burgers Famous Brands Ltd. UK Delhi Dine-In 3 - Yo! China Asian Moods Hospitality Pvt. Ltd Delhi, India PAN-India Dine-In, Kiosks 80+ - 27
Key Player Profiles Name Cuisine Parent Company/ Master Franchisee Origin Location Formats Outlets Expansion Plans in India Dosa Plaza South Indian Prem Sagar Dosa Plaza Pvt. Ltd. Mumbai, India PAN-India Dine-In, Food Court 35 - Jumboking Vadapav Jumboking Foods pvt.ltd. Mumbai, India West Zone Express, Restaurant & Takeaway 43 250 outlets by 2011-12 Kaati Zone Mughlai East West Ethnic Foods Pvt. Ltd. Bangalore , India South Zone Dine-In 15 - Mast Kalandar Indian Spring Leaf Retail Pvt. Ltd. Bangalore , India South Zone Dine-In 21 - Nirula‟s Multi- Cuisine Nirula‟s Corner House Pvt. Ltd. Delhi, India North Zone Dine-In, Kiosks 80+ To add 50 outlets by 2012 Kailash Parbat Multi- Cuisine Kailash Parbat Restaurants Pvt. Ltd. Mumbai, India PAN-India Food Court Stalls 15+ - Comesum Multi- Cuisine RK Group Delhi, India PAN-India Dine-In, Delivery 11 - Haldiram‟s Multi- Cuisine Haldiram Snacks Pvt. Ltd. Delhi, India North Zone Dine-In 18 - Bikano Chat Cafe Multi- Cuisine Bikanervala Foods Pvt. Ltd. Delhi, India North Zone Restaurant, Institutional Tuck Shops, Food Cart 68 - Sagar Ratna Multi- Cuisine Sagar Ratna Hotels Pvt. Ltd. Delhi, India North Zone Dine-In, Food Court 53 - Tibbs Frankie Frankie J.Tibbs & Co. Mumbai, India West Zone Kiosks 20+ 28
Key Players‟ Segmentation 29 Local Chain National Chain International Chain Jumboking Comesum McDonalds Nirulas Dosa Plaza KFC Mast Kalandar Kailash Parbat Subway Kaati Zone Yo! China Wimpy Garcia‟s Smokin‟ Joes Dominos Falafel‟s US Pizza Pizza Hut Bang‟s Fried Chicken Barista Pizza Corner Haldiram‟s Café Coffee Day Papa Johns Sagar Ratna Tibbs Frankie Tacobell Bikano Chat Café Costa Coffee Kents Fast Food Gloria Jeans Pizzas Burgers & Sandwiches Coffee Shops Indian Specialty Cuisine Dominos McDonalds CCD Comesum Jumboking Pizza Hut KFC Barista Sagar Ratna Yo!China Pizza Corner Wimpy Costa Coffee Kailash Parbat Tabobell Papa Johns Subway Gloria Jeans Mast Kalandar Falafel Smokin Joes Kents Fast Food Kaati Zone Tibbs Frankie Garcia‟s Haldirams Slice of Italy Nirulas US Pizza Bikano Chat Cafe Segmentation based on Size of the Chain Segmentation based on Cuisine
Geographical Segmentation PAN-India : International Cuisine McDonalds* KFC* Subway* Pizza Hut* Dominos* US Pizza Smokin‟ Joes Papa Johns* Garcia‟s Falafel Jumbo King Pizza Corner* Chicking* Tacobell* Kaati Zone Bangs Fried Chicken Mast Kalandar Nirula‟s Haldiram‟s Bikano Chat Café Slice of Italy Kent‟s Fast Food Sagar Ratna Wimpy NORTH ZONE WEST ZONE SOUTH ZONE *International Brands PAN-India : Coffee Shops Gloria Jean* Costa Coffee* Barista Café Coffee Day PAN-India : Indian and Specialty Cuisine Dosa Plaza Comesum Kailash Parbat Yo! China Tibbs Frankie 30 65% of Dominos‟ revenues are contributed by the top 7 cities out of 70 cities it is present in. 50% of their outlets are in Maharashtra, New Delhi and Karnataka
Key Players‟ Positioning 31 Ethnic Cuisine Zonal PAN-India International Cuisine Café Coffee Day* Barista* Gloria Jeans Costa Coffee Pizza Hut DominosComesum* Dosa Plaza* Kailash Parbat* Yo! China* Sagar Ratna* Haldiram‟s* Mast Kalandar* Jumbo king* Kaati Zone* Bikano Chat Café* Nirula‟s* Pizza Corner Papa Johns US Pizza* Smokin Joes* Slice of Italy* Garcias* Chicking Bang‟s Fried Chicken* Kent‟s Fast Food* Tibb‟s Frankie* *Indian originated chains PAN-India Zonal International Cuisine McDonalds KFC Wimpy Subway Ethnic Cuisine Tacobell Falafel
Dominos and Café Coffee Day are the largest QSRs in India in terms of reach and number of outlets 32 0 5 10 15 No. Of Outlets v/s Geographical Spread of Pizza Chains No.ofOutlets Geographical Spread 15 65 115 No. Of Outlets v/s No. of Cities of top brands in India No.ofOutlets No. of Cities Pizza Chain Outlets Spread Origin Dominos 364 PAN-India International Pizza Hut 171 PAN-India International US Pizza 77 PAN-India Indian Smokin Joes 52 PAN-India Indian Pizza Corner 50 South Zone International Papa Johns 25 West Zone International Garcias 20 West Zone Indian Slice of Italy 16 North Zone Indian Chain Outlets Cities Spread Origin Café Coffee Day 1090 120 PAN-India Indian Dominos 364 87 PAN-India International McDonalds 210 45 PAN-India International Pizza Hut 171 34 PAN-India International Barista 230 30 PAN-India Indian Subway 200 26 PAN-India International KFC 110 21 PAN-India International
Trends and Future Prospects 33
Big brands – Small cities – Small formats 34 Locations Large chains expanding to smaller cities Domestic chains setting up in big cities Formats Express Outlets Smart Carts/Kiosks Cuisines Basic street Foods entering organized market – Vadapav, Ice Gola Regional cuisines– Kebab Lucknow Wale, Malwaneez Integration of concepts – so Mcdonalds serves coffee and CCD serves sandwiches Menu diversification by introducing Indian flavours – Chicken TandooriSub at Subway Technology Online ordering systems IVR system for placing order and making payment via Credit Card Kiosks have managed to attract huge footfalls at sales points. Even big chains are now customizing their outlets to smaller models like „express‟ and „stand-ins‟
Investors are queuing up to get a big slice of the pie  With the number of QSRs growing at 30% per year, the industry is attracting investors‟interest, especially after the IPO of Jubilant Foodworks, the master franchise of Dominos Pizza in India  ICICI Venture acquired 10% stake i.e. $55 Million in Devyani International who is the franchisee of KFC, Pizza Hut and Costa Coffee in India  Also Mast Kalandar, a Bangalore-based QSR chain, secured a second round of investment from Helion Venture Partners, Footprint Ventures and Salarpuria Group.  Chinese cuisine QSR Yo! China received funding of $5.5 Million from Matrix partners  Accel Partners invested in Bangalore-based fast food chain Kaati Zone. Source: vccircle.com 35
QSR giants Dunkin Donuts and Starbucks set to foray into the Indian market  Dunkin’ Donuts- Jubilant FoodWorks is to develop, sub-franchise, and operate more than 500 Dunkin‟ Donuts restaurants throughout India over the next 15 years. The first Dunkin‟Donuts locations are expected to open by early 2012. The Agreement marks the largest international store development commitment in Dunkin‟Donuts‟history.  Starbucks – Tata Coffee is to bring Starbucks , the world‟s largest coffee chain to India through a Joint Venture  Quiznos – The US-based subway restaurant chain has signed a master franchise agreement with Arjun Valluri for setting up outlets in Southern India. 36 Source: www.dunkindonuts.com, www.trak.in, U.S. Franchise Trade Mission Participants Profile, April 10-15 2011
Sources Research firms  Technopak  IBEF  Marketing Whitebook 2010-11, 2011-12  Mckinsey Global Institute  www.rncos.com  www.nrai.org Company Websites  www.yum.com  www.mcdonaldsindia.com  www.dominos.co.in Other websites  Hospitalitybizindia.com  Indiaretailing.com  Franchiseindia.com Newspapers  Deccan Herald  Economic Times  Business Standard  DNA 37
About D‟Essence 38
Our Services D‟Essence Hospitality is Boutique Management Consulting firm based in Mumbai which provides specialty consulting services for the entire spectrum of the hospitality industry with a special focus on hotel operators, builders and investors  Feasibility Studies  Market Viability Management Model Viability  Technical Viability Economic and Financial Model Viability  Business Model Viability Exit Strategy Viability  Site Analysis - We have vast experience in project planning & site selection. In many cases it has been seen that planners & architects normally look into a project from design and land-use perspectives. But we do detailed site and market analysis to determine the viability of the project from financial and investment standpoint.  India Entry Strategy - We help our clients to develop suitable market entry strategies through analyzing entry barriers (ease), geographical factors, incumbents‟ resistance and routs to market.  Management Contracts - Branded operators have very stringent clauses in the contracts. To deal with them needs deep understanding of the domain and effects of each clause on the profit margins. D‟Essence Hospitality Services makes full use of its expertise in understanding the management contracts and negotiating it for best acceptable terms. 39
Our Services 40  Key Recruitments D‟Essence Hospitality is dedicated to becoming India‟s leading executive search firm exclusively serving the Hospitality Industry. Our search team enables you to recruit for executive level management, divisional managers, general managers, culinary, finance, sales and marketing, food and beverage, engineering professionals who will all, directly affect and drive the profitability of your organization  Acquisitions From our years of experience, we advise our clients on which assets to buy and when to buy and based on our recommendations they devise strategies for buying assets. We also provide assistance to our clients to develop assets disposal strategies in order to maximize project performance  Business Model and Business Plan We assist our clients in the business planning process and then prepare a plan based on the available resources and their business objectives. Our Business Planning services include feasibility studies, business formation plans, strategic plans, new product plans, marketing and promotional plans, etc.  Fund Raising  Mentoring  Growth Strategy
THANKYOU D‟Essence Consulting 303, Aar Pee Center, 11th Road, Gufic Compound, MIDC, Andheri (E) Mumbai- 400093 Tel +91 22 28347425 www.dessencehospitality.com

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Quick Service Restaurants in India

  • 1.
  • 2.
    Objectives  To identifyexisting opportunities in the Indian QSR space  To summarize the macroeconomic environment of the industry  To explain the working of a QSR  To indicate the current trends  To summarize key player profiles and understand their positioning vis-à-vis one another  To understand the challenges faced by QSRs in an emerging market like India 2
  • 3.
    Contents Sr. No Table of Contents Slide # ExecutiveSummary 4 I Industry Overview 5 a. Introduction 6 b. Market Segmentation 7 c. Growth Drivers 8 d. Challenges 9 e. SWOT Analysis 10 f. QSR Features and Target Audience 11 II Working of a QSR 12 a. Importance of Brand 13 b. Formats and Locations 14 c. Setting up a QSR 15 d. Managing Human Resources 16 e. Marketing Strategies 17 g. Pricing Strategies 18 Sr. No Table of Contents Slide # h. Growth Strategies 19 i. Menu Planning 20 j. Standardization 21 k. Case Study – Dominos India 22 III Key Players 25 a. Key Player Profiles 26 b. Key Players‟ segmentation 29 c. Brand Positioning 31 IV Trends and Future Prospects 33 a. Trends 34 b. Rising Investor Interest 35 c. QSRs coming to India 36 V About D‟Essence 38
  • 4.
    Executive Summary  Indiais witnessing rapid urbanization of small towns and growth of mid-sized cities. This along with rising population in key metros and higher disposable incomes is fuelling growth in every industry. 35% of India‟s population will be in urban centres by 2020 totaling to 53 crores compared to the current urban population of 32 crores.  Consumer markets are being driven by the country‟s youth population. Be it college goers or the young working class, exposure to the international environment and culture, has created a demand for world-class products at affordable prices.  This has led to the rise of Quick Service Restaurants (QSRs) in India, the fastest growing segment in the eating out market. By 2012, there will be at least 2000 more QSR outlets across India.  With QSR giants like Starbucks and Dunkin‟Donuts yet to foray in the market, there is a lot to look forward to. 4
  • 5.
  • 6.
    7% of thetotal restaurant market comprises of QSRs  The Indian fast food market is growing at an annual rate of 25-30 per cent, 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 consumers have also played a significant role.  Organized modern formats like malls, multiplexes and food courts have also become a favoured destination. Larger companies are teaming up with small franchisors to set-up their brand.  QSRs started with big metros, but are now building their presence in Tier 2 cities like Pune, Ahmedabad, Chandigarh and Bangalore. Organized Eating Out Market, Rs. 8600 Cr. (20%) Unorganized Market, Rs.3 4400 Cr. (80%) Estimated Size of the Indian Restaurant Industry QSR Market Rs.3000 Crores 7% Organized Restaurant Market (Except QSRs) Rs.5600 Crores 13% Unorganized Restaurant Market Rs.34400 Crores 80% Growth : 20% Growth : 5-6% 6 Total Restaurant Industry - Rs. 43000 Crore Sources: www.nrai.org,, www.rncos.com
  • 7.
    •Road-side location •No technicalstandards •No accounting standardization Market Segmentation Restaurant Industry OrganizedUnorganized •Accounting Transparency •Organized Supply Chain •Quality Control •Sourcing Norms •Multiple Outlets •Dominated by Global Players Bars and Lounges Full-Service Restaurants QSRs Highest growth segment. Maximum Footfall due to increasing traffic at airports, railway stations, malls, multiplexes and supermarkets Take-away Home Delivery Kiosks/Carts Fine Dining Casual Dining Eat-in 7
  • 8.
    Growth Drivers Expanding Middle Class Urbanization Youth Spending Nuclear families Better logistics Malland Multiplex boom Sources: Marketing Whitebook 2011-12, Economic Times, MGI 86% 64% 11% 29% 2% 5% 1% 2% 2010 2020 Household Distribution By Annual Income Affuent Upper Middle Class Lower Middle Class Bottom of the pyramid A younger and richer India is fuelling rapid growth in the eating-out segment Total population of Gen Next (13-24 Age Group) 300 million Total population of Gen Next living in urban areas 29.5 % or 88.5 million Key consumption areas Clothing & accessories, Food, Entertainment and durables Spending Power Rs.3000-40000 per month Urban youth behaviour • Socially active • Hangs out at coffee shops and malls • Prefers to be seen at the right places • Expresses one‟s identity through choice of brands consumed 25% of population eats out at least twice a month and spends Rs.150-Rs.500 / meal 8
  • 9.
    Maintaining Consistency inproduct and quality of service are the biggest challenges faced by QSRs 9 Demand Side Health and hygiene concerns among buyers QSR customers are very easy to sell to, but also very easy to lose Beating local competition Low entry barriers Supply Side Maintaining Quality of Service Localization of Menu Standardization of product across outlets Monitoring multiple outlets Reducing service time – efficient assembly line Supply Chain Building a cost- effective supply chain Establishing a supply chain in a new region Monitoring quality of products procured from third parties Talent Acquiring Key Talent Managing high attrition rate amongst junior level employees Challenges
  • 10.
    SWOT Analysis Internal FactorsExternal Factors Positive Negative • Risk-sharing in a franchise based model • Abundance of cheap labour in India • Burgeoning middle class • Increase in malls and multiplexes • Increasing youth spending • Urbanization • Sourcing Talent • Monitoring franchisees • Maintaining quality standards across outlets • Understanding Indian tastes • Food Inflation • Product imitation • Price Competition • Dependency on third parties • Local Competition STRENGTH THREATSWEAKNESS 10 OPPOTUNITIES
  • 11.
    Urban Youth MakeUp The Prime Target Audience Particulars Target Audience Profile Category Young Urban Professionals on the move Teenagers Students Multiplex audience Shoppers Age group 16-35 Location Cities and towns Social Class Middle and Upper Middle Class Lifecycle Dependent and Pre-Family* *based on Sagacity Lifestyle Model Target Audience Behaviour Hygiene & Taste conscious Brand conscious Westernized culture Seeking international standards Value seekers Experimental Low Cost in terms of initial investment as well as operating cost Low Risk High Impulse products Best Retail Locations Competitive Prices Key Features of a QSR 11
  • 12.
  • 13.
    Brand Image, Ambienceand Overall Experience are important intangible factors for QSR customers  A QSR is meant to create instant interest in the mind of the consumer. It has to have  Mass appeal  A characteristic ambience  A unique experience  A strong brand identity  One cannot find Ronald at any other burger joint except McDonalds.  The service, which is the only human touch, plays a big role in creating a unique experience. A lot of time and resources are spent on training the staff ,as they represent the brand. KFC employees are expected to live up to their 3 F‟s to create to perfect environment – Fun, Friendly and Familiar.  In an effort to maintain the same experience across outlets, the service, interiors and menu items are standardized . Brand AmbienceExperience Intangible parameters that make a QSR successful 13
  • 14.
    QSR Formats andLocations Malls Tourist hubs Corporate hubs Shopping Centers Multiplexes Airports/ Railway Stations LOCATIONS Restaurants Food Court Counters Kiosks/Food Carts Take-away/Delivery Drive-ins QSR FORMATS 14
  • 15.
    Setting up aFranchise Outlet Initial Qualification • Application Review • Background and Credit Check • Assess training needs • Signing of Franchise Disclosure Document • Verify Assets Operation Plan • Prospective franchisee makes an operation plan which is reviewed thoroughly Site Exploration and Securing Control • Determine Site Selection Strategy • Identify focus areas • Franchisor completes Action Plan for Trade Area • Franchisee negotiates for the site and sends letter of intent Site Registration • Franchisor sends site registration to brand for approval • Franchisee remits funds Franchise On- boarding • Franchisee arranges for Financing • Hires a Team • Franchisor provides Support and Training • Builds Restaurant • Supports in Grand Opening • On-site Training is provided for every procedure. • The Franchisor has an approved vendor list from where the ingredients can be sourced. • They have an annual promotional and advertising plan that they implement with the support of the franchisees. • Quality checks are conducted via Consumer Feedback, Food SafetyAudits and Standard Audits Franchisor’s Role after the launch 15
  • 16.
    Managing Human Resources Acquisition When QSRs come to India, they find it difficult to get experienced talent for strategic positions. There are very few people with relevant experience, especially in a global firm. Poaching employees from competitors would mean huge incentives and salary raises. Thus a lot of companies hire people in the same function but from a different industry.  Support & training The franchisors offer support and training to the franchisees for effectively running the small format franchise business. Training is conducted at 3 stages:  Induction  On-going  Refresher  Retention Out of 10000 emloyees, KFC has to replace 7000 employees each year. This means cost for fresh recruitments, training and relieving employees is very high. Dominos has increased salaries of store front employees by 20% and implemented an incentive plan in order to reduce attrition rate. Restaurant Manager First Asst. Manager Second Asst. Manager Trainee Manager Trainee Floor Manager Training Squad Crew Member Human Resource Tree at at a typical QSR outlet 16
  • 17.
    • A largeburger chain targeted the value seeker community and created highest value for money as its brand promise. 1 • India‟s largest Pizza chain targeted the customers who wanted fast service at their doorsteps. It created the brand promise of assured fast delivery and communicated it with its “30 mins or its free” campaigns 2 • A large coffee shop chain wanted to position itself as not just a coffee shop but a place to hangout with friends and family. They marketed themselves with the tag line “ A lot can happen over coffee” which clearly communicated that they wanted their customers to have a complete experience much beyond just coffee. 3 Marketing Strategies  QSRs have to play on their strengths to create and communicate a brand promise.  The brand promise can be anything from fast service to low prices to healthy food.  Successful QSR chains have been able to take their brand promise very effectively to the masses. 17
  • 18.
    Pricing Strategies Pricing thebase product aggressively and keeping higher margins on the side orders This strategy is for the price conscious consumer who sees great value in the base product and can choose to not take the side orders At the same time it allows the QSR to charge the customer for whom price does not matter, much more through the high margin side orders Most QSRs keep fighter brands in their menu to remain competitive.  Its important for QSRs to price their products carefully because of the stiff competition that they face.  The strategy is to price their products in such a way that the maximum number of customers can be retained and at the same time higher margins are abstracted from the customers who do not mind paying more for extra value. This is achieved by: Value combos allow the QSR to sell more no of high margin products with the low margin base products. Eg: QSRs try to sell more French fries and cold drinks through their value meals. Pizza chains sell more garlic bread and cold drinks through their value meals DIFFERENTIAL PRICING VALUE PRICING 18
  • 19.
    Growth Strategies ofQSRs A coffee trading company who supplies coffee beans, started a retail business of coffee shops all over India. A casual restaurant chain diversified into food court stalls., thus entering the QSR market. A coffee shop chain diversified its coffee shops business by establishing express outlets and coffee machines. A soft drink giant branched out to form a new company with Pizza and Fried Chicken chains in its umbrella. It sold off its stake, but is in a lifetime contract with the firm Forward Integration Horizontal Diversification Concentric Diversification Lateral Diversification 19 A large burger chain in India has the highest foot fall amongst all countries, but the lowest average bill. Growth in India is achieved based on volumes, hence every QSR is looking to expand its presence.
  • 20.
    Menu Planning • QSRsdo not keep the full menu at all outlets. • Instead they include only a few high volume products at outlets with space limitations like food courts and express kiosks Size of outlets • Depending upon the age group they are targeting, QSRs have to adjust their menus. • QSRs targeting older age groups have to include healthier and more traditional food items in their menus where as QSRs targeting the youth can have more experimental and/or fast food items. Target in terms of demographics • Product adaptation according to customer preferences is really important for QSRs to succeed. • International chains in India have to adjust their menus to include more vegetarian and spicy items. A Fried Chicken brand has the most extensive range of items in India amongst all its worldwide outlets • Most QSR giants avoid using beef and pork due to cultural taboos. Local taste preference Menu Selection is critical, especially when localizing in markets like India and China where traditions, religion and local taste are cannot be ignored. Enlisted below are some of the important factors: 20
  • 21.
    The 4 prongedapproach to ensure standardization across all outlets 21 Training Equipment Recipes Procurement of Products Standardized aspects of every outlet There are 4 important factors that enable standardization for a restaurant with multiple outlets: •Every new employee has to go through a specific pre-designed training program for that level of employment. •The same machines are used by all outlets for making the dishes. Standard recipes have to be followed by the chefs who receive thorough training for the same. •QSRs have centralized approved vendors from where they procure and process raw materials. They also procure finished products like spices and condiments from the same vendor and distribute it.
  • 22.
    Case Study –Dominos India 22 60international markets 9000+outlets worldwide 400million pizzas sold each year 364outlets in India 9000employees in India Jubilant Foodworks Ltd. operates the 364 Dominos outlets in India, pursuant to a Master Franchise Agreement with Domino's International, which provides them with the exclusive right to develop and operate Domino's pizza delivery stores and the associated trademarks in the operation of stores in India, Nepal, Bangladesh and Sri Lanka. The pizza stores in Sri Lanka are operated by their sub- franchisee, DP Lanka. It is the largest Pizza chain in India, way ahead of its immediate competitor Pizza Hut with 50% of market share in the Indian Pizza market and 70% market share in the home delivery market. Source: dominos.com, dominos.co.in, reuters.com
  • 23.
    Case Study –Dominos India 23 Particulars Sales Per Day Per Outlet Rs.56600 EBIDTA margin (9M FY2011) 18% Same Store Sales Growth (9M FY2011) 38.7% Market Share 65% 80% 4% 16% Sales Break-up: Cuisine-wise Pizzas Beverages Others Source: indiainfoline.com, dominos.co.in 80% 20% Sales Break-up: Segment-wise Home Delivery Over-the-Counter Market share in the Indian Pizza market – 50% Market share in the home delivery segment –70% 80% of their sales come from the Pizza segment, and the remaining is attributed to beverages and side items. 80% of sales come from home delivery and 20% from OTC sales.
  • 24.
    24 Raw Material Supplier (Approved vendor) Regional Centralized Facilities for processing raw materiallike dough – 4 centres across India Regional warehouse Refrigerated trucks carry the finished items to retail outlets Retail Outlets - Items are prepared based on orders and sent to end consumer Supply Chain of Dominos Critical Success Factors 1. Delivery-oriented model reduces cost 2. Dominos has a vertically integrated supply chain. (as seen below) 3. Franchising model Critical Success Factors of Dominos India
  • 25.
  • 26.
    Key Player Profiles NameCuisine Parent Company/ Master Franchisee Origin Location Formats Outlets Expansion Plans in India McDonalds Burgers Hard Castle Restaurants Pvt. Ltd USA PAN-India Dine-In, Food Courts, Drive-in 210 To add 20-25 outlets by 2013 KFC Fried Chicken Devyani International Ltd. USA PAN-India Dine-In, Food Courts 110 500 outlets by 2015 Chicking Fried Chicken Mirah Group UAE South Zone Dine-In 14 - Bangs Fried Chicken Fried Chicken Bangs India India South Zone Dine-In, Food Courts 7 100 outlets by FY2011 Pizza Hut Pizzas Devyani International Ltd. USA PAN-India Dine-In 171 300+ outlets by 2015 Dominos Pizzas Jubilant Foodworks USA PAN-India Dine-In, Delivery , Food Courts 364 To add 70 outlets in 2011 Papa Johns Pizzas Om Pizzas& Eats USA West Zone Dine-In 25 - Pizza Corner Pizzas Global Franchise Architects India South Zone Dine-In, Delivery 50 - US Pizza Pizzas United Restaurants Ltd. India PAN-India Dine-In, Delivery 77 - Smokin‟ Joes Pizzas Smokin‟ Joes Pizza Pvt. Ltd. India PAN-India Dine-In, Delivery 52 - Garcia‟s Pizzas Garcias Famous Pizza India West Zone Dine-in, Delivery 20 To add 20 outlets Slice of Italy Pizzas Green House & Hestoft Foods Pvt. Ltd. India North Zone Dine-In, Delivery 16 - 26
  • 27.
    Key Player Profiles NameCuisine Parent Company/ Master Franchisee Origin Location Formats Outlets in India Expansion Plans in India Barista Coffee Shop Barista Coffee Company Ltd. India PAN-India Espresso bars, High end cafes 230 - Costa Coffee Coffee Shop Devyani International Ltd. England PAN-India Cafes 75 300 outlets by 2014 CCD Coffee Shop Amalgamated Bean Coffee Trading Co. India PAN-India Cafes, Mall & Airport kiosks, Office outlets 1090 To add 200+_ outlets by 2014 Gloria Jean‟s Coffee Shop Citymax Hospitality Australia Metros Cafes 15 40 outlets by 2012 Kent‟s Fast Food Burgers Kents Fast Food India North Zone Dine-In 15 - Subway Submarine Sandwiches Subway Systems India Pvt. Ltd. USA PAN-India Dine-In, Food Courts 200 250 outlets by end of 2011 Tacobell Tex-Mex Yum Restaurants USA Bangalore Dine-In 3 100 outlets by 2015 Falafel Veg. Hummus House Lebanese Mirah Group India Mumbai Dine-In, Kiosks 8 100 outlets by 2011 Wimpy Burgers Famous Brands Ltd. UK Delhi Dine-In 3 - Yo! China Asian Moods Hospitality Pvt. Ltd Delhi, India PAN-India Dine-In, Kiosks 80+ - 27
  • 28.
    Key Player Profiles NameCuisine Parent Company/ Master Franchisee Origin Location Formats Outlets Expansion Plans in India Dosa Plaza South Indian Prem Sagar Dosa Plaza Pvt. Ltd. Mumbai, India PAN-India Dine-In, Food Court 35 - Jumboking Vadapav Jumboking Foods pvt.ltd. Mumbai, India West Zone Express, Restaurant & Takeaway 43 250 outlets by 2011-12 Kaati Zone Mughlai East West Ethnic Foods Pvt. Ltd. Bangalore , India South Zone Dine-In 15 - Mast Kalandar Indian Spring Leaf Retail Pvt. Ltd. Bangalore , India South Zone Dine-In 21 - Nirula‟s Multi- Cuisine Nirula‟s Corner House Pvt. Ltd. Delhi, India North Zone Dine-In, Kiosks 80+ To add 50 outlets by 2012 Kailash Parbat Multi- Cuisine Kailash Parbat Restaurants Pvt. Ltd. Mumbai, India PAN-India Food Court Stalls 15+ - Comesum Multi- Cuisine RK Group Delhi, India PAN-India Dine-In, Delivery 11 - Haldiram‟s Multi- Cuisine Haldiram Snacks Pvt. Ltd. Delhi, India North Zone Dine-In 18 - Bikano Chat Cafe Multi- Cuisine Bikanervala Foods Pvt. Ltd. Delhi, India North Zone Restaurant, Institutional Tuck Shops, Food Cart 68 - Sagar Ratna Multi- Cuisine Sagar Ratna Hotels Pvt. Ltd. Delhi, India North Zone Dine-In, Food Court 53 - Tibbs Frankie Frankie J.Tibbs & Co. Mumbai, India West Zone Kiosks 20+ 28
  • 29.
    Key Players‟ Segmentation 29 LocalChain National Chain International Chain Jumboking Comesum McDonalds Nirulas Dosa Plaza KFC Mast Kalandar Kailash Parbat Subway Kaati Zone Yo! China Wimpy Garcia‟s Smokin‟ Joes Dominos Falafel‟s US Pizza Pizza Hut Bang‟s Fried Chicken Barista Pizza Corner Haldiram‟s Café Coffee Day Papa Johns Sagar Ratna Tibbs Frankie Tacobell Bikano Chat Café Costa Coffee Kents Fast Food Gloria Jeans Pizzas Burgers & Sandwiches Coffee Shops Indian Specialty Cuisine Dominos McDonalds CCD Comesum Jumboking Pizza Hut KFC Barista Sagar Ratna Yo!China Pizza Corner Wimpy Costa Coffee Kailash Parbat Tabobell Papa Johns Subway Gloria Jeans Mast Kalandar Falafel Smokin Joes Kents Fast Food Kaati Zone Tibbs Frankie Garcia‟s Haldirams Slice of Italy Nirulas US Pizza Bikano Chat Cafe Segmentation based on Size of the Chain Segmentation based on Cuisine
  • 30.
    Geographical Segmentation PAN-India : InternationalCuisine McDonalds* KFC* Subway* Pizza Hut* Dominos* US Pizza Smokin‟ Joes Papa Johns* Garcia‟s Falafel Jumbo King Pizza Corner* Chicking* Tacobell* Kaati Zone Bangs Fried Chicken Mast Kalandar Nirula‟s Haldiram‟s Bikano Chat Café Slice of Italy Kent‟s Fast Food Sagar Ratna Wimpy NORTH ZONE WEST ZONE SOUTH ZONE *International Brands PAN-India : Coffee Shops Gloria Jean* Costa Coffee* Barista Café Coffee Day PAN-India : Indian and Specialty Cuisine Dosa Plaza Comesum Kailash Parbat Yo! China Tibbs Frankie 30 65% of Dominos‟ revenues are contributed by the top 7 cities out of 70 cities it is present in. 50% of their outlets are in Maharashtra, New Delhi and Karnataka
  • 31.
    Key Players‟ Positioning 31 Ethnic Cuisine Zonal PAN-India International Cuisine CaféCoffee Day* Barista* Gloria Jeans Costa Coffee Pizza Hut DominosComesum* Dosa Plaza* Kailash Parbat* Yo! China* Sagar Ratna* Haldiram‟s* Mast Kalandar* Jumbo king* Kaati Zone* Bikano Chat Café* Nirula‟s* Pizza Corner Papa Johns US Pizza* Smokin Joes* Slice of Italy* Garcias* Chicking Bang‟s Fried Chicken* Kent‟s Fast Food* Tibb‟s Frankie* *Indian originated chains PAN-India Zonal International Cuisine McDonalds KFC Wimpy Subway Ethnic Cuisine Tacobell Falafel
  • 32.
    Dominos and CaféCoffee Day are the largest QSRs in India in terms of reach and number of outlets 32 0 5 10 15 No. Of Outlets v/s Geographical Spread of Pizza Chains No.ofOutlets Geographical Spread 15 65 115 No. Of Outlets v/s No. of Cities of top brands in India No.ofOutlets No. of Cities Pizza Chain Outlets Spread Origin Dominos 364 PAN-India International Pizza Hut 171 PAN-India International US Pizza 77 PAN-India Indian Smokin Joes 52 PAN-India Indian Pizza Corner 50 South Zone International Papa Johns 25 West Zone International Garcias 20 West Zone Indian Slice of Italy 16 North Zone Indian Chain Outlets Cities Spread Origin Café Coffee Day 1090 120 PAN-India Indian Dominos 364 87 PAN-India International McDonalds 210 45 PAN-India International Pizza Hut 171 34 PAN-India International Barista 230 30 PAN-India Indian Subway 200 26 PAN-India International KFC 110 21 PAN-India International
  • 33.
    Trends and FutureProspects 33
  • 34.
    Big brands –Small cities – Small formats 34 Locations Large chains expanding to smaller cities Domestic chains setting up in big cities Formats Express Outlets Smart Carts/Kiosks Cuisines Basic street Foods entering organized market – Vadapav, Ice Gola Regional cuisines– Kebab Lucknow Wale, Malwaneez Integration of concepts – so Mcdonalds serves coffee and CCD serves sandwiches Menu diversification by introducing Indian flavours – Chicken TandooriSub at Subway Technology Online ordering systems IVR system for placing order and making payment via Credit Card Kiosks have managed to attract huge footfalls at sales points. Even big chains are now customizing their outlets to smaller models like „express‟ and „stand-ins‟
  • 35.
    Investors are queuingup to get a big slice of the pie  With the number of QSRs growing at 30% per year, the industry is attracting investors‟interest, especially after the IPO of Jubilant Foodworks, the master franchise of Dominos Pizza in India  ICICI Venture acquired 10% stake i.e. $55 Million in Devyani International who is the franchisee of KFC, Pizza Hut and Costa Coffee in India  Also Mast Kalandar, a Bangalore-based QSR chain, secured a second round of investment from Helion Venture Partners, Footprint Ventures and Salarpuria Group.  Chinese cuisine QSR Yo! China received funding of $5.5 Million from Matrix partners  Accel Partners invested in Bangalore-based fast food chain Kaati Zone. Source: vccircle.com 35
  • 36.
    QSR giants DunkinDonuts and Starbucks set to foray into the Indian market  Dunkin’ Donuts- Jubilant FoodWorks is to develop, sub-franchise, and operate more than 500 Dunkin‟ Donuts restaurants throughout India over the next 15 years. The first Dunkin‟Donuts locations are expected to open by early 2012. The Agreement marks the largest international store development commitment in Dunkin‟Donuts‟history.  Starbucks – Tata Coffee is to bring Starbucks , the world‟s largest coffee chain to India through a Joint Venture  Quiznos – The US-based subway restaurant chain has signed a master franchise agreement with Arjun Valluri for setting up outlets in Southern India. 36 Source: www.dunkindonuts.com, www.trak.in, U.S. Franchise Trade Mission Participants Profile, April 10-15 2011
  • 37.
    Sources Research firms  Technopak IBEF  Marketing Whitebook 2010-11, 2011-12  Mckinsey Global Institute  www.rncos.com  www.nrai.org Company Websites  www.yum.com  www.mcdonaldsindia.com  www.dominos.co.in Other websites  Hospitalitybizindia.com  Indiaretailing.com  Franchiseindia.com Newspapers  Deccan Herald  Economic Times  Business Standard  DNA 37
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  • 39.
    Our Services D‟Essence Hospitalityis Boutique Management Consulting firm based in Mumbai which provides specialty consulting services for the entire spectrum of the hospitality industry with a special focus on hotel operators, builders and investors  Feasibility Studies  Market Viability Management Model Viability  Technical Viability Economic and Financial Model Viability  Business Model Viability Exit Strategy Viability  Site Analysis - We have vast experience in project planning & site selection. In many cases it has been seen that planners & architects normally look into a project from design and land-use perspectives. But we do detailed site and market analysis to determine the viability of the project from financial and investment standpoint.  India Entry Strategy - We help our clients to develop suitable market entry strategies through analyzing entry barriers (ease), geographical factors, incumbents‟ resistance and routs to market.  Management Contracts - Branded operators have very stringent clauses in the contracts. To deal with them needs deep understanding of the domain and effects of each clause on the profit margins. D‟Essence Hospitality Services makes full use of its expertise in understanding the management contracts and negotiating it for best acceptable terms. 39
  • 40.
    Our Services 40  KeyRecruitments D‟Essence Hospitality is dedicated to becoming India‟s leading executive search firm exclusively serving the Hospitality Industry. Our search team enables you to recruit for executive level management, divisional managers, general managers, culinary, finance, sales and marketing, food and beverage, engineering professionals who will all, directly affect and drive the profitability of your organization  Acquisitions From our years of experience, we advise our clients on which assets to buy and when to buy and based on our recommendations they devise strategies for buying assets. We also provide assistance to our clients to develop assets disposal strategies in order to maximize project performance  Business Model and Business Plan We assist our clients in the business planning process and then prepare a plan based on the available resources and their business objectives. Our Business Planning services include feasibility studies, business formation plans, strategic plans, new product plans, marketing and promotional plans, etc.  Fund Raising  Mentoring  Growth Strategy
  • 41.
    THANKYOU D‟Essence Consulting 303, AarPee Center, 11th Road, Gufic Compound, MIDC, Andheri (E) Mumbai- 400093 Tel +91 22 28347425 www.dessencehospitality.com