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How companies can learn from Burger King’s market entry into India.

thBurger King opened its doors for the first time in India on Sunday 9 Nov. The first day's trading results were outstanding. In a span of just 8 trading hours, 3,500 customers passed through the doors at Select City Mall in Saket, New Delhi. By 7.00pm, the queues traversed two retail floors with wait times in excess of an hour. The atmosphere was euphoric. 'This is amazing, it's the first Burger King in Delhi and the first one in India,' announced an excited customer.

With an average unit value of INR 245, that's a healthy revenue stream from day one for the US company based in Miami, Florida.

Yet, India, whilst rich in opportunity, often proves a difficult market for foreign companies.

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3. Choose your local partners, suppliers, distributors and agents carefully.

Over the years, Burger King held discussions with various potential partners in India but had failed to strike a deal.

It eventually entered into a joint venture with the Indian private equity firm Everstone Capital. Both parties have brought $100 million to the table and are set to launch 12 stores in the next 3 years. If that seems a hefty investment, think again. McDonald's spent this amount in 1995 alone just for the initial set up.

The partner 'fit' seems strong, Everstone already has exposure in the Indian restaurant business with a string of international restaurant brands, although the Burger King investment is its biggest yet.

Burger King is now set to roll out its franchisee-run outlets across the country. To gain further penetration, the joint venture may opt to appoint sub-franchisees to launch additional stores.

The key message is: whatever the size of your company, do the due diligence on potential agents, suppliers, distributors and partners. That's often difficult to do from a home country base. Engaging the right local organisation in India to support you in company set up and selecting the right distribution network can increase your speed to market at reduced cost.

4. Understand the Indian market.

Together with the local partner, the Burger King research team spent months understanding the Indian consumer, their tastes and the need to introduce local Indian flavours. It was key to recognise consumer differences that exist across India's 29 states.

1. Be in it for the long haul.

Burger King, with over 13,000 outlets worldwide, realised India was a long play potential. It had dabbled in India for years. In fact, it first registered the Burger King trademark in India as far back as 1979.

However, India is tricky and companies who are looking to enter this market need to be in it for the long haul. Even for an iconic brand like Burger King it's still not easy.

The fast food giant is currently in dispute with a local company, amid claims that the latter has 'surreptitiously' registered as Burger King India Ltd in direct competition to the international brand. In India, this means that one of two outcomes are likely; either both companies get to keep their trademark because they are considered to be honest, concurrent users or the local company will be asked to remove its trademark based on India recognising the trans-border reputation of the latter. The argument continues in the high court.

The solution for companies irrespective of size is to exercise patience, seek advice on intellectual property rights and look for a route to market with reduced risk.

2. Be proactive in internationalisation, don't be led.

With a stagnant domestic market, it's easy to see why India held such allure - a growing population of 1.2bn, increased consumer spending power and an investment infrastructure poised to open up. Burger King saw huge potential.

Even so, for a number of years India seemed a missed opportunity. After a number of false starts, Burger King is now a relatively late entrant into the market. McDonald's, for instance, has operated in India since 1996. It now has over 300 outlets with a revenue compounded annual growth rate of around 28%.

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So, what can we learn from Burger King's entry into India?

7. Finally, don't underestimate the bureaucracy; get help.

Burger King relied heavily on its local partner to negotiate the bureaucracy of set up. Like other industries, obtaining the required licences can be a major obstacle. For Burger King health and food safety licences were required, police licences and no objection certification. The process is not centralized as yet and requires filing applications with individual stakeholders, which involves a lot of paperwork and is a time-consuming activity. The same can be said for many industry sectors.

Burger King would have found the Indian restaurant industry burdened with multiple taxes like VAT, excise, and service tax, besides different state taxes, which add up to 20-25% of the bill value. An adviser who understands the local tax complexities is essential for any business setting up in India.

Nonetheless, the Organised Quick Service Restaurant (QSR) market is expected to hit $6.5 billion by 2018 ( source: Technopak). Spurred on by urban growth, the trend towards nuclear families, more working women and increased affluence in the tier two and tier three towns, this represents a massive potential market for Burger King and other international companies, currently beating the path into India.

5. Deliver the right product and work on the positioning.

The flame-grilled beef patty, a traditional symbol of the brand, was never going to work in a market which rejects beef and pork for religious reasons. Burger King researched and exhaustively tested different menus with over 5,000 customers across a number of cities. The result is a menu of mutton, chicken and veggie Whoppers®, as well as the paneer melt sandwich, using a fresh cheese popular in Indian cooking.

For India, the strategy may have changed but Burger King the brand remains true to its core values of taste, fresh ingredients and local sourcing.

In emerging markets, and India is no exception where the average wage is only INR 200 a day, retailing the Whopper® at INR 199 indicates that Burger King is positioned as a premium restaurant experience to the growing middle class.

6. Get the communications channels right.

Burger King took full advantage of promoting the brand through burgeoning ecommerce channels including ebay, where advance orders could be placed, resulting in 1,200 Whoppers® being sold in 36 hours.

The brand has engaged with the Indian love of celebrity culture, engaging key TV celebrities in its promotions.

Clearly, understanding the effective communication channels in India is key.

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