The document provides a business plan for a snack bar at Praxis Business School. It includes an environmental scan of the Indian retail sector, describing the growth of organized and unorganized retail. Key drivers of retail growth are identified as changes in demographics, increased credit availability, rising incomes, media exposure, evolving consumer behavior, and the entry of corporate and foreign retailers. Challenges facing the Indian retail sector are also summarized, such as barriers to foreign direct investment, lack of industry status, structural impediments, high real estate costs, and supply chain bottlenecks.

1. Praxis Business School
Retail Business Plan
On Snack Bar
A report
Submitted to
Prof. K. Dashrathraman
In partial fulfilment of the requirements of the course
Retail Management
On 7th August 2011
By
Ashwin Agarwal (B10004)
Deepika Agrawal (B10007)
Nishant Khattwani (B10013)
Sushmita Agrawal (B10035)

2. SUBMISSION: - 1

3. 1. Environment Scan
a. Retail Scenario In India
Finally
Followed by Manufacturing
Kirana Stores era
Hawkers …….. Mom necessitated
carried out and Popup the small
the first Stores stores and
Currency Retailing in specialty
was Push Carts stores .
exchanged
with goods
Barter
and
System
services
Retail word comes from the French word retailer, which refers “cutting off, clip and device”.
Retailing is the interface between the producer and the individual consumer buying for
personal consumption. This excludes direct interface between the manufacturer and
institutional buyers such as the government and other bulk customers. A retailer is one who
stocks the producer’s goods and is involved in the act of selling it to the individual
consumer, at a margin of profit. As such, retailing is the last link that connects the individual
consumer with the manufacturing and distribution chain. Indian retail sector comprises of
organized and unorganized sector.
Organised retailing refers to trading activities undertaken by licensed retailers, that is, those
who are registered for sales tax, income tax, etc. These include the corporate-backed
hypermarkets and retail chains, and also the privately owned large retail businesses.
Unorganised retailing, on the other hand, refers to the traditional formats of low-cost
retailing, for example, the local kirana shops, owner manned general stores, paan/beedi
shops, convenience stores, hand cart and pavement vendors, etc.

4. The Indian retail industry has grown at a Compounded Annual Growth Rate (CAGR) of 13.3%
for the period FY06-10. The growth in the Indian economy since the last decade and the
change in consumption pattern of the Indian populace in terms of higher proportion of
middle class population, greater proportion of working women etc can unarguably be linked
to the growth of the Indian retailing industry. Of all the segments in retail, the contribution
of ‘food & grocery’ remained the highest at 58% of the total retail sales during FY10, with
the ‘clothing & footwear’ segment remaining the second largest contributor occupying 10%
of the total retail pie during the same period. However in terms of growth figures, the
‘entertainment, books & sports goods equipment' segment outperformed the other retail
segments registering a CAGR of 22.5% during the period FY06-10.
In spite of the growth, the industry remains largely fragmented with the organized retailing
still at a nascent stage. In case of overall retailing revenues, the food & grocery segment
accounted for the highest share at 58% of the total retailing pie aggregating Rs.11.49 lakh
crore during FY10. In the organised retailing, the food & grocery segment stood as the
second largest contributor with revenues aggregating Rs.24273 crore during the same
period. However, the organised retail penetration of other segments such as clothing &
footwear, entertainment & books and furniture & furnishing surpassed that of the food &
grocery segment.
The Indian retail industry has witnessed rampant growth over the last decade. However,
during the economic recession since the latter half of FY09, the retailers especially in the
organised segment suffered a set-back in the form of declining revenues and halt in their
capex plans. The unemployment situation, further aggravating the fear of job losses during
the recession, resulted in muted consumer spending with the consumers choosing to spend
on necessities rather than discretionary items; the industry thus witnessed decline in
footfalls, conversion rate, which was especially apparent in the decline of same store sales.
The slowdown in consumer spending led to the inventory being stacked up resulting in a low
inventory turnaround ratio, registering a decline to 4.3 times during FY09 from 4.8 times
during FY08. Before the onset of recession, the large scale expansion plans of the Indian
retailers warranted an increase in inventory and greater store operating expenses in the
form of rentals and staff expenses thus increasing the working capital requirement.
However with the economic recession in effect, the retailers faced a liquidity crunch owing

5. to difficulties in raising funds both from the equity as well as debt markets. Additionally, the
funds raised during the economic boom attracted higher interest rates thereby affecting the
retailers' ability to service the interest as well as principal repayments during the downturn.
The total interest outgo of the retailers as tracked by CARE Research registered a y-o-y
growth of 78.6% during FY09.
Even though, post recession, the industry is witnessing a gradual turnaround, it is met by a
few stumbling blocks that constitute the challenges ahead for the Indian retail industry viz.
higher store rentals as compared to retailers globally, taxation & other policy regulations,
inefficiencies in supply chain management and higher rate of shrinkage.
In spite of the said challenges, CARE Research expects the Indian retail industry to grow on
the backdrop of expectant rise in the country’s Gross Domestic Product (GDP) during the
period FY11-FY13. The rise in income level of the Indian populace, in turn, is expected to
fuel the domestic consumption ultimately resulting in higher revenues for the Indian
retailers. Importantly, CARE Research expects the penetration of organised retail in the total
retail pie to increase by FY13 owing to the expanding reach of the retailers to tier-II & III
cities accompanied by higher consumer spend on discretionary items. Also, in an attempt to
increase margins, CARE Research expects the retailers would restore to adapting measures
such as increasing the share of private labels in the total store sales, reducing store level
operating expenses etc.
Key Players in Indian Retail Sector
Pantaloon Retail (India) – The first Pantaloon store was opened at Gariahat in
Kolkata in the year 1997 covering 8,000-square-feet area. Over the years, the store
has undergone several transitions. When it was launched, the store mostly sold
external brands. Gradually, it started retailing an eclectic mix of external brands as
well as private labels. Initially, it positioned itself as a family store targeted across
age and gender groups but later it shifted its focus towards being a fashion store and
gave more emphasis on the youth. As on Dec 2010, Pantaloons had around 44 stores
spread across major cities in India.

6. Shopper’s Stop- A menswear store owned by K Raheja in the Mumbai suburb of
Andheri in 1991 has now transformed into Shopper’s Stop, with 27 departmental
stores. The company entered airport retailing in a joint venture with the Nuance
Group. It also launched India’s largest hypermarket, hyper city. In 2005, it bought the
Crossword bookstore chain.
Lifestyle-Growing from one store in Bahrain in 1973, the NRI-led Landmark Group
today operates over 5 million sq ft in the Middle East and India. The group’s first
Lifestyle store in India opened in Chennai in 1999. Now it has 325,000 sq ft in
Chennai, Hyderabad, Bangalore, Gurgaon and Mumbai. Its first hypermarket,
branded as ‘Max’, is expected to open soon.
Reliance Retail- Reliance Retail Ltd, a subsidiary of Reliance Industries Ltd, has an
aggressive plan to expand its retail network across India. It entered the food and
grocery segment in November 2006 through its convenience store format Reliance
Fresh. The store offers a range of fruits, vegetables, personal care, home care and
kitchen utensils. It focuses on building a strong relationship with the agri-business
value chain and sources directly from wholesalers. Reliance Retail also plans to
invest Rs 25,000 crore on hypermarkets, supermarkets and specialty stores in the
next four years.
Aditya Birla Retail-The Company, which will operate under the brand ‘More’, has
selected two formats – hypermarkets and supermarkets – for its initial foray. The
first store has opened in Pune. Last January, the company acquired Trinethra Super
Retail, which has given it more than 5, 00,000 sq ft and a strong presence in the
South. The Birlas’ outlay for the business over the next three years is Rs 9,000 crore.
Bharti Retail- The world’s largest retailer Wal-Mart, which is entering India, chose
Sunil Mittal’s Bharti Enterprises as its partner in India. The venture has already
started with the cash & carry (wholesale) format, which could be extended to retail
operations once foreign direct investment is allowed in multi-brand retail, as is
expected.

7. The Indian retail sector can be broadly classified into:
a) FOOD RETAILERS
There are large number and variety of retailers in the food-retailing sector. Traditional
types of retailers, who operate small single-outlet businesses mainly using family labour,
dominate this sector .In comparison, super markets account for a small proportion of
food sales in India. However the growth rate of super market sales has been significant
in recent years because greater numbers of higher income Indians prefer to shop at
super markets due to higher standards of hygiene and attractive ambience.
b) HEALTH & BEAUTY PRODUCTS
With growth in income levels, Indians have started spending more on health and beauty
products. Here also small, single-outlet retailers dominate the market. However in
recent years, a few retail chains specializing in these products have come into the
market. Although these retail chains account for only a small share of the total market ,
their business is expected to grow significantly in the future due to the growing
consciousness of the buyers towards health and appearance.
c) CLOTHING & FOOTWEAR
Numerous clothing and footwear shops in shopping centres and markets operate all
Over India. Traditional outlets stock a limited range of cheap and popular items, in
contrast, modern clothing and footwear stores have modern products and attractive
Displays to lure customers. However, with rapid urbanization, and changing patterns of
consumer tastes and preferences, it is unlikely that the traditional outlets will survive
the test of time.
d) HOME FURNITURE & HOUSEHOLD GOODS
Small retailers again dominate this sector. Despite the large size of this market, very few
large and modern retailers have established specialized stores for these Products.
However there is considerable potential for the entry or expansion of specialized retail
chains in the country.

8. e) DURABLE GOODS
The Indian durable goods sector has seen the entry of a large number of foreign
Companies during the post liberalization period. A greater variety of consumer
Electronic items and household appliances became available to the Indian customer.
Intense competition among companies to sell their brands provided a strong impetus to
the growth for retailers doing business in this sector.
f) LEISURE & PERSONAL GOODS
Increasing household incomes due to better economic opportunities have encouraged
consumer expenditure on leisure and personal goods in the country. There are
specialized retailers for each category of products (books, music products, etc.) in this
sector. Another prominent feature of this sector is popularity of franchising agreements
between established manufacturers and retailers.
b. Key Drivers
1) Changes in demographics- India has the lowest median age of 24 as compared to
developed countries. The composition of the Indian population is shifting towards the
age group of 20-49 i.e. the working population with purchasing power. Thus, India has
the largest ‘young’ population in terms of sheer size and this young segment is the major
driver of consumption as they have the ability and willingness to spend.
2) Increased credit friendliness- There has been a radical change in the Indian
consumers’ mindset regarding credit. With the easy availability of credit and declining
interest rates, personal credit has witnessed growth. The boom in financing has resulted
in an increase in spending on housing and consumer durables such as two-wheelers and
cars etc. Also the use of plastic money has led to a significant increase in consumers
engaging into shopping and eating out.

9. 3) Rising Incomes- India is the second fastest growing economy in the world. A larger
number of households are getting added to the consuming class with growth in income
levels. Increasing instances of double incomes in most families coupled with the rise in
spending power is further fuelling the growth of retail sector. Though this growth is
most evident in urban areas, it has also taken place in rural markets.
4) Media- There has been an explosion in media as well during the past decade. This
media bombardment has exposed the Indian consumer to the lifestyles of more affluent
countries and raised their aspirations and expectations from the shopping experience —
they want more choice, value, service, experience and convenience.
5) Consumer Behaviour- The growth of modern retail is linked to consumer needs,
attitudes and behaviour. Rising income levels, education and global exposure have
contributed to the evolution of the Indian middle class. As a result, purchasing and
shopping habits have been inculcated and are increasing day by day. Today, people are
willing to try new things and look different, which has increased spending on health and
beauty products apart from apparels, food and grocery items.
6) Rural Market- The rural market is beginning to emerge as an important consumption
area, for most key consumer durables and non-durable products. In response,
manufacturers of consumer goods have begun developing new products and marketing
strategies with the rural consumer in mind.
7) Supply Chain- The consumer goods sector has been transformed by increased
liberalization, continuous reduction in customs duty, a shift from quota to tariff-based
systems for imports and sophistication in manufacturing over the past few years. Entry
restrictions for multinationals have been removed in nearly all sectors. All this has
enabled chain retailers to enjoy better range, depth and sourcing options as well as
improved average margins. There has been a proliferation in the range across all

10. categories, with a simultaneous increase in the supply of products and quality retail
space.
8) Entry of Corporate- In contrast to the situation a decade ago, the level of interest in
retailing as a growth opportunity has increased visibly now. Large conglomerates like the
Tata’s & ITC have initiated investment in retailing. Big business houses today are in a
position to provide the Indian masses with shopping satisfaction, entertainment, quality
products, educated salespersons, product information and discounts.
9) Foreign Retailers- The increasing attractiveness of the sector has drawn the interest
of a number of global retailers. With the opening up of the economy, more and more
MNCs have entered the Indian business arena through joint ventures, franchisees or
even self-owned stores.
While foreign retailers cannot start operations on their own mainly because of FDI
restrictions on the sector, a number of companies, are exploring entry options. In
apparel, Benetton, Lifestyle and Zegna are already in business, and Dairy Farm has a
number of retailing joint ventures in India.
10) Technology- The computerization of the various operations in a retail store —
including inventory management, billing and payments as well as database
management, widespread use of bar coding, point-of-sale terminals has changed the
face of retailing drastically. Apart from providing the retailers with better and timely
information about their operations, the technology also performs tasks such as
preventing theft, promoting the store's goods and creating a better shopping
environment. This is done with the help of closed-circuit televisions, video walls, in-store
video networks, and other forms of interactive applications ranging from CD-ROMs to
virtual reality to let customers select and buy products.

11. c. Key Challenges
Factors Description Implications
Barriers to -100% FDI not permitted -Absence of global
FDI -Franchisee arrangement players
allowed -Limited exposure to
best practices
Lack of -Government does not - Restricted availability
Industry recognize the of finance
Status industry -Restricts growth and
scaling up
Structural - Lack of urbanization -Lack of awareness of
Impediments -Poor transportation Indian consumers
infrastructure - Restricted retail growth
-Consumers habit of - Growth of small, one-
buying fresh food’s store formats, with
administered pricing unmatchable cost
structure
- Wastage of almost
20%-25% of farm
produce

12. High Cost of - Pro-tenant rent laws - Difficult to find good
Real - Non-availability of real estate in terms of
Estate government land, location and size
zoning restrictions - High land cost owing to
- Lack of clear ownership constrained supply
titles, high stamp duty - Disorganized nature of
(10%) transactions
Supply Chain -Several segments like - Limited product range
Bottlenecks food and apparel - Makes scaling up
reserved for SSIs difficult
-Distribution, logistics - High cost and
constraints – complexity of sourcing &
Restrictions of purchase planning
and movement of - Lack of value addition
food grains, absence of and increase in costs by
cold chain infrastructure almost 15%
- Long intermediation
chain
Complex - Differential sales tax - Added cost and
Taxation rates across states complexity of
System - Multi-point octroi distribution
- Sales tax avoidance by - Cost advantage for
smaller stores smaller stores through
tax

13. evasion
Multiple - Stringent labour laws - Limits flexibility in
Legislations governing hours of operations
work, minimum wage - Irritant value in
payments establishing chain
- Multiple operations;
licenses/clearances adds to overall costs
required
Customer -Local consumption - Leads to product
Preferences habits proliferation
- Need for variety - Need to stock larger
- Cultural issues number of SKUs at store
level
- Increases complexity in
sourcing & planning
- Increases the cost of
store management
Availability of - Highly educated class - Lack of trained
Talent does not consider personnel
retailing a profession of - Higher trial and error in
choice managing retail
- Lack of proper training operations
- Increase in personnel

14. costs
Manufacturers - No increase in margins - Manufacturers refuse
Backlash to disinter mediate and
pass on intermediary
margins to retailers
2. Choice of Retail Business:
a. Reasons for choice
Fastfood Joint
Name: - Adda
Business description: To open a food joint, serving a variety of fast food. The value
proposition is to make available all kinds of fastfoods preferred by individuals which can be
consumed at any point of time during a day. The attraction factor would be a joint which
would serve the following eatables:-
Chats
Rolls(Veg/Non-Veg)
Puchka
Fruit juices
Different types of sandwiches
Fruit salads
Cold drinks
Mineral water
Jhaal muri
Churmur

15. at cheaper rates and there would be provision for sitting as well as take away. This joint
would be located in Park Street in kolkata as currently there is no such organised retail
providing such a service. The target audience for the above joint would be the working class
having corporate offices nearby and the youth. The joint will be spread on a 1000 square
feet area and will have a wooden floor.
Reasons for choice:
Location: As Park Street is considered as one of the most convenient locations in
kolkata from where every aspect of entertainment is easily accessible and at that
juncture there is no such fastfood joint which provides such a variety of choices.
Urbanisation: With rising media exposure and consumer mobility, hanging out at
food joints in prime locations has been seen as a means of lifestyle in most cities.
Edge over local competitors: The eatables provided by the local competitors are all
scattered in different locations without a proper sitting arrangement. The edge
which we have over these existing players is that we are bringing all the different
types of products which they serve less than one roof along with providing them
with a congenial environment.
Other reasons
o As it is a made to order industry, demand forecasting is less required
o Scope for unlimited innovations according to the taste of the consumers
o Easy availability of raw materials with less initial investment
b. Others evaluated but dropped and why
Laundromat
One of the alternatives was to open a Laundromat. But it was discarded because we feel
that the Indian market is still not ready to accept this concept. Here the local laundries have
captured the major market. There exists stiff competition and hence scope for growth is
limited for a new player. Also, several added expenditures like maintenance, handling of
money which includes collections and loading coin changers, advertising, insurance,

16. licenses, rent, personal property tax, depreciation and interest charges are cutting a major
part of the profits.
We therefore felt that in this sector we wouldn’t be able to differentiate ourselves from the
local laundries already existing and hence opening a Laundromat did not incite us.
Highway cafe
Another alternative was to open a cafe lounge on a highway which would be atleast 4 to 5
kilometres from the city with added facilities like a ps3, foosegame and a wifi facility.
However, there are lots of challenges in pursuing this idea. One challenge we faced was the
security factor where customers would find it unsafe travelling on a highway at night.
Another hurdle we faced was the temperament of the consumers which was not in favour
to drive till highways to enjoy coffee. The plan would incur lots of capital expenditure. So,
we concluded that with an uncertainty of walk-ins, which will lead to less return on per sq.
ft. basis, the plan will not be feasible to carry.
3. For chosen retail business:
a. Environment scan
i. Global
The global fast food market grew by 6.6% in 2008 to reach a value of $154.7 billion. In 2013,
the global fast food market is forecasted to have a value of $200 billion, an increase of
29.3% since 2008. The global fast food market grew by 3% in 2008 to reach a volume of 85.8
billion transactions. In 2013, the global fast food market is forecasted to have a volume of
94.7 billion transactions, an increase of 10.4% since 2008. Quick Service Restaurant segment
leads the global fast food market, accounting for 66.3% of the market overall value.
Americans leads the global fast food market, accounting for 52.4% of the market overall
value.
Since, 1970, Americans spent about $6billion in the growth of fast food industry. In 2013,
global fast food market is forecasted to have a value of $200 billion. A generation ago,
three-quarters of the money used to buy food in United States was spent to prepare meals

17. at home. Today about half of the money used to buy food is spent at restaurants. Americans
now spend more money on fast food than on higher education, personal computers,
computer software, or new cars. Their expenditure on fast food is far higher than what they
spend on movies, books, magazines, newspapers, videos.
ii. India
Upto the year 1995 Indian food market was predominantly dominated by the traditional
dhabas, potential restaurants in the customer’s colony and some restaurants in a five star
hotel. Having fast food i.e., burgers, pizzas etc., was considered to be an option for eating
out. It was not synonymous with the American concept of fast food as a quick takeaway bite
or a substitute for lunch. Apart from fast food being available at the local colony restaurants
and at some five star restaurants, Nirulas was the only fast food chain existing in the country
with its restaurants expanding with every passing year since its inception. Nirula’s was the
first one to bring fast food to India in the 1950’s and since then it has evolved into a
common hangout for all age groups.
The Indian fast food market is growing at around 30-35 percent per annum and generates
over 4800 Crores in sales. Fast Food Market in India is anticipated to reach around INR 146
Billion by 2014, growing at a CAGR of around 34% during 2011-2014 Fast-food restaurants
seem to be big business in India, and so a many foreign chains have made an entry into the
market to joint the early movers like McDonald's or KFC. According to “Indian Fast Food
Market Analysis”, although the market has witnessed a robust growth in the past couple of
years, it remains largely under penetrated and concentrated into metropolitan cities. India is
the world’s second largest producer of food next to china, and has the potential of being the
biggest with the food and agricultural sector. The total food production in India is likely to
double in next ten years. The foreign players look to dominate the Indian fast food industry
and have large plans for expansion. For instance, Domino's plans to open 60-65 outlets
every year for the next three years. With greater plans to explore the Indian market, Yum
Brands plans to open 1000 fast food outlets by 2015. McDonald's has set an invest goal of
nearly $35 Million to double its store count to nearly 350 in India. Multinational chains like
McDonald's, Pizza Hut, KFC or home grown ones like Sagar Ratna, Yo! China, Haldiram's,
Bikanervala or Nirula's, they are all racing to open new restaurants. McDonald's, which had

18. 20 outlets in India till 2002, has 187 today. It plans to open 200 more over five years with an
investment of Rs 500 crore. Yum! Restaurants, owner of the KFC and Pizza Hut brands, plans
to add 15 and 20 outlets respectively.
The eating out market is on an upswing. The rising number of working women and nuclear
households, and an increase in general affluence have led to higher discretionary spending
on food. According to the Food Franchising Report 2009, 30 per cent of working singles eat
out at least once a month, with a majority spending at least Rs 101-150 per outing. Urban
Indians now have a repast outdoor six times a month compared to 2.7 times in 2003. Retail
consultancy Tech-nopak Advisors says the expenditure on eating out at 11 per cent is
second only to groceries for Indian households. Growth isn't the only change in the food
business. The shift from unorganised or street food towards a cleaner, more hygienic
environment is one, even as the proliferation of stalls selling steamed corn, doughnuts and
even sushi across malls, along with the success of South Indian cuisine in Delhi and butter
chicken in the South shows that Indians are willing to experiment.
Each of the foreign food joints that have come into the country has their own strategy lined
up to differ from the rest. Each of these studied the Indian tastes and style and thereby
targeted the Indian customer. An average Indian restaurant goer is no convenience eater,
unlike the Americans.
Growth Drivers of India’s food Industry
The growth of the food industry is driven by:
Higher disposable incomes
Change in spending pattern
Increasing organised food retailing
Increasing export opportunities

19. Porter’s 5 force model
Potential Entry Bargaining Buyer Bargaining Industry Rivalry Threats of
•Relatively high initial Power of Power of Buyers •Low pricing power substitutes
capital outlay Customers •Regional franchises •Low margins •High product
•Growing industry exhibit market power •Market consolidation differentiation (e.g.
•Fragmented
consolidation •Many substitute meal solutions)
customer base
•Economies of scale suppliers •Many local industry
•Relatively low
•Logistics learning average purchase •Low operator brand players
curve loyalty (e.g., independent
•Rising segment of
•Low switching costs •Low switching costs caterers)
discerning consumers
for customers (e.g. distribution •Few global industry
channels) players
(e.g., KFC, McDonalds
etc.).
•Low switching costs
for customers
SWOT Analysis
Strengths
1. Quick Service: - one of the biggest strengths of fast food is that it provides quick
service. The biggest advantage of this is that it saves a lot of time. And in this modern
world time is money hence quick service is the biggest strength
2. Affordable: - Usually fast food is priced at a very affordable rate which starts from
rupees 2. Though the prices are low in the fast food industry, the quantity is more
and hence value for money.
3. Attraction: - The advertisements of fast food are very flashy and appealing
especially to the youth and the younger generation. One of the most important

20. people in the buying decision is the kids who are influenced by ads on TV who in turn
influence their parents. Hence it boosts the sales.
Weakness
1. Different Preferences: - India is a land of diversity. People in India have different
preferences and taste. The fast food industry cannot cater to all the tastes and
preferences of people. For e.g. some people eat Non – Veg and some don’t eat non –
veg, thus creating a problem. Such problems have risen at KFC and McDonalds.
Another difference in preference can be seen in the choice of the type of food. Some
people prefer South Indian while some prefer North Indian. So a south Indian joint
selling masala dosa cannot start selling chole bature as per customers’ preference.
2. Lack of customization: - Fast food is usually pre-made and pre-packed and not
fresh from the oven. So once the dish is made it cannot be altered according to the
customer’s choice or preference. For e.g. a McDonalds burger is prepared much
before the customer purchases it and he has to buy it as it is. Even if the customer
wants the burger without onion or cheese still he has to purchase it due to lack of
customization.
3. Unhygienic and unhealthy: - Most of the times though being tasty the oil
content in fast food is very high. Hence people are now moving away from fast food.
The fast food prepared is also unhygienic especially at the road side joints. Hence
these are considered weaknesses to the fast food industry.
Opportunities
1. Growing nuclear families: - Nowadays it is said to be the age of the fast food.
Parents and kids especially prefer fast food due to its quick service and for its
satisfying appetite at affordable prices. This is a growing opportunity for the industry
because families nowadays prefer eating out, rather than cooking at home.

21. 2. Growing urban lifestyle: - The growth story of India is not limited to metro
cities. Now it has also found its way into some rural areas and some semi– urban
cities. Fast food joints are not a thing of big cities now. People in cities and towns are
now having additional incomes in their pockets. Eating out now is a normal thing for
the homely people in the semi urban areas.
Threats
1. Oppositions from various organizations: - Due to the various preferences in
the food some opposition is received by the fast food industry. As reported in the
papers organizations like PETA are opposing the use of beef fat in the items of
McDonalds. There was also a huge hullabaloo when Kentucky Fried Chicken (KFC)
was being introduced to India. This is a major threat to the fast food industry.
2. Location: - One of the major threats in India is from the location point of view. Fast
food joints can’t be opened in certain locations even though there might be evidence
of major consumer demand in the area. For e.g. a Hindu dominated area might pose
a threat to joints serving beef related products since the cow is considered sacred to
them.
3. Ready- to-eat: - Nowadays ready to eat products are more in demand in the
market owing to the fact that consumers have to take minimum trouble in
preparation out of which the results are healthy food, rich nutritional value, easy on
pockets and higher value for money as compared to the foods available in a fast food
joint.
4. Health Concerns: - Due to the low quality ingredients used in the majority of local
fast food joints, the sanitation and the hygiene factors which are mostly not
maintained, have given cause to various medical and other health related
organizations and certain NGO’s who have taken it up to voice these issues and bring
it to the attention of the general public. Thus directing the attention of the public to
change the tastes to foods that are more hygienic and safe. Here canned foodstuffs
stand to gain advantage.

22. b. Current Players
i. Global
Year 2010 Rs per Month Rs per sqft per Month
Global
McDonalds Yum McDonalds Yum
Average sqft size of a store 3000.00 3000.00
Net Sales 2665394.53 1098243.24 888.46 366.08
Gross Margin 0.77 0.72 0.77 0.72
RGM 2058597.66 793885.14 686.20 264.63
OPEX 1256917.97 632736.49 418.97 210.91
EBITDA 801679.69 161148.65 267.23 53.72
ii. India
Jubiliant Food works Limited(JFL)
No of stores across india 378
Average store size in sqft 2000
For a store
Rs/month in Rs per sqft
Rupees 2011 per Month
Total income 6783300000
Total expenditure 5581600000
EBITDA 1201700000 264925.0441 220.7708701
(Source: http://www.dominos.co.in/admin/en/filestore/9c2b2ac601ce0307f2c48b469b107711.pdf )
* Please refer to the attached excel for further details.
c. Market size in India:
i. Current
India's fast food market is worth US$9.33 billion, registering year-on-year growth of 9% in
2010. The market is stipulated to reach US$12.25 billion, with CAGR of 7% in the next 3-5
years (2010-2014).The moderate growth is primarily attributed to higher regional and local
penetration of fast food outlets in Tier II and Tier III cities along with improved household
disposable income. Demographic segments aged between 25-35 years are the largest
consumers of fast food, with approximately 35% eating out once a month in cosmopolitan

23. cities such as Bangalore, Hyderabad, Mumbai, Delhi, Kolkata, etc. The fast food market
volume sales stood at 455.9 billion transactions, with year-on-year growth of 9.1% in 2010.
ii. Look up in 5, 10 and 15 years and CAGR
Year 2011 2016 2021 2026
Market Size(in 9.33 40.30934 174.1525 752.4084
billion $)
CAGR 34% 34% 34% 34%
According to our new research report, “Indian Fast Food Market Analysis”, the Indian Fast
Food Industry is anticipated to grow at a CAGR of around 34% during 2011-2014.
Anticipating the future growth, many big international players are entering into the market
by making deals with the domestic players. And those already present in the Indian market
are expanding their presence in different provinces of the country. This trend will emerge
more strongly during our forecast period, providing opportunities to local players to widen
their product portfolios.
Key Drivers and Key Challenges
-High cost of real estate
Key -Health related issues: obesity
Drivers -Lack of skilled manpower
-Increased Competition
-Growing disposable income
-Favourable demographics
-Changing lifestyles and
preferences Key
-Increasing proportion of take Challenge
away food
s
-Increasing number of working
women

24. d. Key Drivers
Growing disposable income – emergence of double income group leads to
increase in disposable income. Now people have more disposable income so they
can spend easily in fast food and other activities.
Favourable demographics- Target market of fast food is normally considered
within the age of 15 to 50.The percentage of this age group is increasing very rapidly.
So, fast food players change their policies and products to attract this so much large
sector of population. When population increases, there is also an increase in
references because of large personality differences.
Changing lifestyles and preferences- Change in the lifestyle of demographics
is very important forces which become the cause of change in fast food industry near
in future. Fast food in developing countries is considered as junk but in some it is
considered as a status symbol. So, companies set their rices and other marketing mix
tools accordingly but now the lifestyle of developing countries is changing. So, fast
food chains in these places are changing their ways of doing business.
Increasing proportion of take away food- Nowadays it is said to be the age of
fast food. Parents and kids especially refer fast food due to its quick service and for
its satisfying appetite at an affordable price. This has resulted in an increasing
demand for take away food.
Increasing number of working women- working women have no time for
cooking, and if they have then also they don’t want to cook. Because they want to
come out of the traditionally defined gender roles. They do not want to confine
themselves to household work and upbringing of children’s.

25. e. Key Challenges
High cost of real estate- with the growing economy, land value is appreciating
continuously. Getting a land in a main area would cost a huge sum which would have
a direct impact on the investments.
Health related issues:
a) Obesity: Studies have shown that a typical fast food has very high density
and food with high density causes people to eat more then they usually need.
b) Low calories food: Emphasis is now more on low calorie food. In this line
McDonald has a plan to introduce all white meat chicken Mc Nugget with less
fat and fewer calories.
Lack of skilled manpower- To maintain a proper decorum and serving hygienic,
is not possible without skilled labour. Getting skilled labour in the budget would be a
challenge for the business.
Increased competition- While the fastfood sector has long been regarded as
competitive, the level of rivalry only intensifies. Numerous chains are expanding:
multi-unit development deals are being inked left, right, and centre. Brands like
Subway, Krispy Kreme, Camille's Sidewalk Café, Cosi Inc, Whata burger, Papa
Murphy's, Moes Southwest Grills and Bob's Big Boy are all on the expansion trail.
Meanwhile, a number of incumbent chains and/or their franchisees are struggling to
return positive results on existing operations. One well-known example is Burger
King where one high profile multi-unit franchisee went bankrupt, and improved sales
and profits are vital in turning other franchisees and the franchiser operation
around.
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