“The restaurant trade in India is growing exceedingly fast. There will be a few strong groups that will become national players and we are well-positioned to be among them,” says the upbeat executive director and co-founder of JSM Corporation Pvt Ltd, which is a master franchisee for the restaurant brands in India.
Singh has no doubts that the casual dining business in India is the best bet for an F&B entrepreneur. Taking stock of his brands’ performance, he says Hard Rock Café has done well in every market that it has a presence in India. The first café was launched in Bangalore in 2006, followed by Mumbai, Delhi, Pune and Hyerabad, and Singh has planned two more location launches in 2012.
Shiro, an in-house premium lounge bar brand offering Oriental cuisine and exotic drinks, started in Mumbai two years ago and has since moved on to Bangalore and New Delhi. But Singh is cautious about Shiro’s expansion plans. “We are very selective about Shiro’s growth. This year, we are starting one each in Nigeria and Las Vegas,” he points out.
It’s clear that JSM GGC, the joint venture which runs these restaurants, is not keen on churning them out in large numbers. Even in the group’s pizza offering, the California Pizza Kitchen (CPK) chain, Singh intends to open five or six outlets each year.
The American chain, unlike its other well-known players in the business (Pizza Hut and Domino’s) will remain a casual dining restaurant chain offering soups, salads, pizzas and pastas made ‘onsite’ and with ‘fresh ingredients,’ says Singh, making the distinction between CPK and other pizza chains very clear.
Apart from freshness, CPK’s other claim to fame is its celebrity patron guests: Hollywood diva Cameron Diaz or teen sensation Miley Cyrus. While former US President Bill Clinton frequents CPK for his favourite pizza, an outlet in Maryland played host to the first family when President Obama’s daughter celebrated her ninth birthday.
“As a brand proposition, we are unique in India. Apart from the two popular brands, there was no third alternative and now you have a very different proposition. We are far more adventurous than other brands but we will not expand like other brands,” says Singh.
With four CPKs in the country and five more next year, Singh is already looking forward to introducing another restaurant brand to Indian foodies: Trader Vic’s, a Polynesian restaurant chain, and Mai Tai, a line of premium lounge bars. While he’s in the process of tying up with a high-end Japanese restaurant brand with the first of the restaurants to be launched in Mumbai soon, he says Mexican food is also doing well in India.
There’s no doubt that Singh is treading the right path in the food industry. Studies show that Indians, on an average, eat out once in two weeks, while in Jakarta it’s 44 meals a month and in Hong Kong it’s one meal a day. “We have a long way to go in casual dining,” he says.
While there’s no stopping the fast-paced growth of the estimated .3-billion Indian food service industry, growing at about 30 per cent annually, Singh is more worried about the talent needed to run the industry than the rising commodity prices.
“As the country grows, our purchasing power will increase. Therefore our bottom lines may not be impacted, although I wish we could manage our costs better,” he says.
But the challenge staring the industry would be scarcity of skilled talent, he points out. “One has to invest a lot of time and money in training and upgrading skills.” JSM GGC now employs 1,350 people and would double the number next year. There are few training schools and companies have to set up a pretty strong internal training system, is his advice.
Singh is surprisingly averse to experimenting with different formats for food retailing. “I’m not comfortable with the smaller format space.” He’s also not enthused by retailers’ new pet spaces: airports and business parks. “In Hyderabad, we opened an outlet in the airport and shut it and are not very keen on it now. Of course, it’s not an experience that defines airport retail,” he clarifies.
On business and IT parks, he sees the danger of his outlets turning into small niche places. “We have got so much potential for us in traditional locations, so many cities in India. We don’t have to be looking for these kinds of alternative spaces.”
Source: Anjali Prayag, Hindu Business Line, 10 Jan 2012.
Tags:Hard Rock Cafe Franchise, Shiro Franchise, Mai Tai Franchise, CPK Franchise, Trader Vics Franchise, JSM Corporation,
This Blog/Information/Press Release/Information has been posted by Sparkleminds, A Franchise Consulting Company Based At Bangalore, India, Offering Complete Franchise Solutions Nationally and Internationally for more than a decade now.We specialize in Food Franchising In India, amongst our various franchise verticals, providing assistance to the franchise industry at large.Visit www.sparkleminds.com for more details.
There’s something for everybody — at many tables three generations are sitting down together. But that’s not the reason these traditional upstarts have succeeded in storming what was once the bastion of western brands like McDonald’s and Pizza Hut.
Some of the city’s most famous restaurants are represented here — some of them a century old — transformed by smart uniforms, cheery signage and shining show kitchens to look every bit as clean, efficient and modern as their multinational competitors. Welcome to the future of Indian fast food.
“[Quick Service Restaurants or] QSRs are quite successful in India,” said Arun Chanda, founder of New Delhi-based Mint Hospitality Consultancy. “Over the last five years, a lot of Indian companies have started getting into the franchising model and expanding into different cities.”
Credit marketers at DLF for inducing popular brands like Karim’s, Nizam’s, Moti Mahal, Nathu’s Sweets, Rajdhani and Sagar Ratna — which had already launched multiple sit-down restaurants around New Delhi — to experiment with nascent fast-food franchises.
But the revolution is already underway across the country, as global chains seek to woo a broader cross-section of customers by incorporating traditional spices and ingredients into their menus. And local upstarts have begun to attract deep-pocketed financiers in the bid to build nationwide fast-food chains of their own.
“Even people who are into the five-star hotel business are thinking of getting into the QSR concept,” said Chanda.
According to Euromonitor and market-research firm RNCOS, India’s billion fast-food market is already growing 25-30 percent a year, and global players like Domino’s, McDonald’s and Yum Brands (KFC and Pizza Hut) are pushing into second- and third-tier cities.
Hardcastle Restaurants, development licensee for McDonald’s in India, is planning a massive expansion, doubling its India stores over the next three years with an investment of 0 million. Meanwhile, Yum Brands plans to open 1,000 outlets — half of them KFC restaurants — on its way to billion in revenue from India over the next four years. Other multinationals like Burger King, Cinnabon, Dunkin Donuts, and Starbucks are not far behind — with stores already on the ground or aggressive launch plans underway.
With 60 percent of the Indian population currently under 30, it’s no mystery why.
Call it irrational exuberance if you want, but this summer Indian investors judged Jubilant Foodworks — which owns the franchise rights to Domino’s and Dunkin Donuts in India and sold about 0 million worth of pizzas last year — to be nearly as valuable as the U.S.-based parent company.
“We’ve now been in India for over 15 years, and we’ve actually seen the change right before our eyes,” said Amit Jatia, vice chairman of McDonald’s India. “The market is changing very significantly. People are eating out far more often than before, and I think the availability of international QSR brands has brought about that change.”
But as the success of DLF’s “desi food court” suggest, the future of fast food in India isn’t about pizza and burgers.In deference to Indian religious sentiments, McDonald’s doesn’t even offer its signature Big Mac here, or any other beef or pork products. Instead, it offers the Chicken Maharaja Mac and items like the McAloo Tikki burger (a mashup of potatoes and peas, deep-fried and served in a bun), the McVeggie and the Paneer Salsa Wrap — along with the Filet-O-Fish, McChicken sandwich and Chicken McNuggets.
Similarly, Domino’s and Pizza Hut don’t offer any beef toppings, and offer a wide range of pizzas that incorporate traditional Indian ingredients and spices, such as the Domino’s Keema Do Pyazza pizza, with onions, spicy minced goat meat and jalapenos, or Pizza Hut’s Kadai Paneer pizza, with onions, green pepper, paprika, coriander and tofu-like unaged farmer’s cheese. Food industry experts say these flavors are here to stay.
“We believe that we must respect the local culture. Therefore, around the globe we do products that are relevant for the local consumer,” said Jatia. “But we want uniquely McDonald’s products. For example, we don’t anticipate making a McDosa, but we have a Spicy Paneer burger. That has resonated very well with the Indian consumer. I feel that for global brands, a blend of local and international is the way forward.”
At the same time, Indian entrepreneurs are cracking the fast-food franchise model.
“We wanted to get the fundamentals right before we started expanding,” said Kiran Nadkarni the CEO of Kaati Zone, a Bangalore-based chain. “Once you’ve got the back-end in place, you can expand rapidly. But during those early stages there’s not much investment capital. So, for example, I bootstrapped for three years, from 2004 to 2007.”
Now, though, homegrown fast-food companies are expanding rapidly, and some are beginning to attract funding from venture-capital and private-equity firms. For instance, Kaati Zone — which sells Kolkata-style kathi rolls (spiced goat, chicken or vegetarian fillings wrapped in fried flatbread) — plans to add 80-plus new outlets to its 17 existing stores by 2013, with venture capital financing from Accel India, Draper Investment Company and Erasmic Ventures.
Mumbai-based Jumbo King — a 43-store franchise business that offers Maharashtra’s famous vada pav (spicy, deepfried mashed potato on a bun) — plans to open 250 outlets this year. And Sagar Ratna — a 25-year-old South Indian food chain which bridges sit-down restaurants and fast-food outlets — recently sold a controlling stake in the company to New York-based India Equity Partners for million. It plans to add 200 outlets to its 70 existing restaurants over the next three or four years.
“Even Jubilant took 15 years between when they started and their IPO,” said Nadkarni. “Now, the valuation of Jubilant [which this summer nearly matched that of NYSE-listed Domino's Pizza Inc.] is showing investors that anything that’s touching Indian consumers is hot, and they can get extraordinary returns from this.”
That makes India a burgeoning fast-food paradise — where you can get a six-course Rajasthani “thali,” or set meal, in 5 minutes flat, and then dash up the stairs or across the street to top it off with a McFlurry.
But it also means that someday soon, if all goes well, you just might be seeing some of these brands — or at least these flavors — at a shopping mall or street corner near you.
“We already export some of our products to the Middle East,” said Jatia. “We’ve done a lot of innovation work in vegetarian products, and there’s a lot of interest across the McDonald’s countries.”
Source: Jason Overdorf, GlobalPost| Oct. 25, 2011.
Tags:mcdonalds franchise, pizza hut franchise, rajdhani franchise,dominos franchise, nathu sweets franchise, karims franchise, nizams franchise,kfc franchise, starbucks franchise,
This Blog/Information/Press Release/Information has been posted by Sparkleminds, A Franchise Consulting Company Based At Bangalore, India, Offering Complete Franchise Solutions Nationally and Internationally for more than a decade now.We specialize in Food Franchising In India, amongst our various franchise verticals, providing assistance to the franchise industry at large.Visit www.sparkleminds.com for more details.
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Ajay Kaul is hungry for time. The 45-year-old CEO of Jubilant FoodWorks, the master franchise for Domino’s Pizza in India, looks constantly at his watch, the ticking minutes whetting his appetite. And it figures: Kaul’s pizzas have to reach customers in 30 minutes and he wants to open more than 60 new outlets every year.
As he launched Jubilant’s 300th outlet in Delhi’s Pitampura last month, Patrick Doyle, the global CEO of Domino’s Pizza Inc, said, “Our teams in India and Louisiana, USA, are two of the largest and best franchisees.” At a growth rate of nearly 42 per cent for the last five years, the company’s India operations are its fastest in the world.
Doyle’s and Kaul’s appetite for India is shared by competitors. Whether it is multinational chains like McDonald’s, Pizza Hut, KFC or homegrown ones like Sagar Ratna, Yo! China, Haldiram’s, Bikanervala or Nirula’s, they are all racing to open new restaurants. McDonald’s, which had 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 story is repeated across the road with Nirula’s looking to add 120 new points of presence, Sagar Ratna 35 new outlets by December and Delhi-based Bikanervala and Haldiram’s four-five new outlets every year. Even traditional entities like the Bangalore-based MTR Restaurant and the Chennai-based Murugan Idli Shop (MIS) are looking at Delhi and Mumbai, “for the first time in 80 years”, according to Hemamalini Maiya, managing partner, MTR Restaurants.
The temptation was just too hard to resist. Maiya says expanding beyond Bangalore is something her late father (who started the restaurant) would never have approved of, but that makes clear business sense. After all, says Gaurav Marya, president, Franchise India, “India is the biggest consumption market in the world.” Even chains like Dunkin’ Donuts, Popeyes Chicken, Pizza & Co, Swensen’s and Burger King are in talks with local partners to enter India.
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 spend on eating out at 11 per cent is second only to groceries for Indian households.
Even investors are turning to fast food companies. Jubilant FoodWorks’ successful IPO in January, where it raised Rs 329 crore, was oversubscribed 31 times. In March, Cafe Coffee Day raised over 0 million (Rs 920 crore) from three private equity funds. “These are very sizeable investments,” says Raghav Gupta, president, Technopak Advisors, “and reflect a sense of confidence.”
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. “Even in Chennai, 40 per cent of my customers are north Indians,” says S. Manoharan, proprietor, MIS. He plans to have a franchise outlet in Delhi in the next one year.
In the 90s, global fast food firms placed their bets on India, hoping to hook locals on Western food. Yum! entered India with KFC in Bangalore in 1995, but got mired in controversy. Having put that behind, the company worked towards expanding its base and today owns over 60 outlets. KFC has also tailored some dishes for Indian tastes. There’s chicken tikka masala pizza, zinger burger, chana crunch snacker, veg pulao and makhni curry, and the recently launched nimbu crushers.
“One of the biggest questions is whether restaurants can localise as every region of India has a different taste,” says B. Narayanaswamy, president, Ipsos Indica Research. Selling ethnic food on a national scale hasn’t been easy in a country historically used to a variety of dishes. However, localising is not only about the palate, but also about pricing. “Value is a big point,” says Gupta. “Compared to a basic burger, if you get say a thali for Rs 50, people will opt for that.” To counter that, Domino’s re-launched its ‘Pizza Mania’ offer, serving pizzas at Rs 35.
Clearly, India is not all about pizza and burgers. Ethnic Quick Service Restaurant (QSR) chains too have a huge following. However, unlike their Western counterparts, home grown chains have largely been restricted to specific regions. Haldiram’s, for instance, is planning to expand first in and around the NCR region. “That itself can absorb 10-15 more restaurants. Later we will look at Amritsar, Ludhiana and Chandigarh, areas we are familiar with,” says A.K. Tyagi, president of its FMCG business.
Going national isn’t easy. “All McDonald’s burgers taste the same. How many restaurants can do that with a thali” says Gupta. The issue is one of “huge logistics”, says Maiya, who has just hired a food technologist. For instance, making dosa batter and preserving it is a huge challenge. Moreover, raw materials are usually procured from one source, over generations. MTR procures its rice from a particular shop. To change that for Delhi or Mumbai would mean changing the entire methodology, as the different rice would taste different.
“Many of my customers have breakfast in Chennai and supper in Singapore,” says Manoharan, “they expect the same taste everywhere.”
While MNCs have professionalised their back-end through centralised commissaries, where food is merely assembled, Sandeep Kohli, founder of NCR-based Orange Hara chain of restaurants, says that the back-end of many restaurants is primitive, almost like a “big halwai shop”. Instead, the food business should be technology- and process-driven. Even family-run chains are now waking up to ‘heat and eat’.
But all that belongs to the first phase of establishing the brand and looking at growth. Today, most food brands have moved into phase II, which is penetration. Phase III is marked by the saturation point, where companies may need to overhaul menus, at least partially, and innovate. Much of the second phase growth will come from tier II and III cities where eating out is still an occasion.
Says Vikram Bakshi, MD, McDonald’s India and franchisee for the North and East regions, “We don’t plan to tweak our menu too much. Now we will grow to new areas and increase our concentration in areas where we are less spread.” The response from tier II and III cities is overwhelming. Last year the company opened an outlet in Amritsar. Consultants said it was a city which loved Punjabi food, so the company opted for a smaller, 100-cover set-up. Six months later, Bakshi feels a second restaurant is needed.
The other thing is catching ‘em young. Fast food chains are targeting consumers early so that they stay for 15-20 years. Ask Panipat’s Nidhi and Uday Nath. Earlier they would eat out at the local sit-down restaurants over weekends, the few entertainment options available in the city. Today their choice of dining is largely driven by their five-year-old daughter Tara. So the couple ends up giving in to what has become a near-standard experience among parents world over: McDonald’s.
“The children like it, so we end up coming here at least once a week,” says Nidhi. “This is a generation that has grown up on McDonald’s,” says Purnendu Kumar, associate vice president, Technopak Advisors. But that too reflects the lifestyle changes that have taken place over the last decade.
That may not always translate into numbers for the companies. For instance, three years have passed since the opening of the first McDonald’s outlet at Panipat, which was something of a mini cultural spectacle where families lined up to have their pictures taken with Ronald McDonald, but the outlet itself is a laggard in terms of sales.
Bakshi has an explanation for that. Indians eat out far less frequently than other nationals. “Even in urban homes, eating out is seen as an occasion or an indulgence,” he says. Compared to this, countries in South Asia have always had the concept of eating out, either at restaurants or pavement stalls. In Bangkok, people eat out an average 44 times a month, while in Jakarta the frequency is 14-15 times. However, with that changing, companies are more bullish. Says Kaul, “While China had been growing at 5-10 stores a year, the explosion of growth in India is far more recent. In the next five-seven years, we will take our count from 296 to 700 stores.”
With changing lifestyles of young Indians, also comes another opportunity for growth. Catching the consumers where they are. This means the growth of travel retail. After malls, fast food eateries are targeting airports, highways, railway stations, corporate parks, clubs, fuel stations, etc. “With limited time, customers need to be tapped wherever they go,” says Niren Choudhary, MD, Yum! Restaurants India. The company has set up express delivery counters at airports. Even Sagar Ratna is exploring an express model by next year, says CFO K.S. Suresh. “Currently two people spend an average 30 minutes in the restaurant. This will reduce the time to 12 minutes approximately.” Home delivery is another big area, growing at 15-20 per cent.
But the fast food retail industry is faced with many hurdles, too. The main pain point is the high cost of real estate. Add to that rising input costs; companies claim their margins are getting squeezed. While the global standard is 10-15 per cent of sales as rentals, in India it goes as high as 20-25 per cent. Says Narayanaswamy, “QSRs follow a revolving door concept, which is come, buy and leave. But India has more of a dine-in culture, which adds to the real estate costs.” Kaul says that most of the new Domino’s outlets, especially in tier II and III cities, come with a dining area.
“It’s a business of patience, not one of making money,” says Shyam Sunder Aggarwal, MD, Bikanervala. When that is perfected, there are changing customer preferences to deal with. As consumers taste global cuisine, they want the real thing here. Ask Ashish Kapur, founder of Yo! China. Before Yo! came along in 2003, no one had been successful at doing a fast food Chinese restaurant. Changing tastes and dipping footfalls, however, forced them to change their look and feel, which is a more upscale casual dining kind of restaurant.
“Seven years ago we were serving dimsums and combos,” he says, “today it is more khau suey (ingredients served separately) and sizzlers and claypots that people want.” Having changed helped. Today their footfalls are up 35 per cent. Kapur also something else going for him: a bit of diversity. Needless to say, customers are ‘lovin’ it’.
Tags:Food Franchising Report, India Food Franchising, International Food Franchises,Chinese Food Franchise, Pizza Franchise, Italian Franchise,Burger Franchise,food court franchise
Source:India Today, Nandini Vaish.
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