Indian Fast Food Industry Growth and Its Important Players

8/7/2019 Indian Fast Food Industry Growth and Its Important Players

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Indian Fast Food Industry growth and its important Players

New Delhi, India, July 1, 2010: With rapidly growing middle class population and changing

lifestyle, India is blessed with one of the fastest growing fast food markets of the world. TheIndian fast food market is growing at the rate of 30-35% per annum. Almost all big fast foodbrands of the world have succeeded in making their presence felt in the country and most ofthem are posting appreciable growth.

Consequently, all the popular fast food chains have chalked out massive plans for expandingtheir business and presence throughout the country. Moreover, foreign fast food chains areaggressively increasing their presence in the country. For instance, Dominos has planned toopen 60-65 outlets every year for the next three years (2010-2012) while Yum Brands Inc is alsopreparing for massive expansion across the country with plans to open 1000 fast food outlets by2015.

According to Indian Fast Food Market Analysis, although the market has witnessed a robustgrowth in the past couple of years, it remains largely underpenetrated and concentrated intometropolitan cities. However, there is large room for growth in tier-II cities and tier-III cities,which are mostly untapped. Therefore, the future of Indian fast food industry lies in masses thatlive in tier-II and tier-III cities.

The report provides extensive research and objective analysis on the fast expanding Indian fastfood market. The report analyzes all the vital industry trends and possible growth areas for futureexpansion. It also analyzes important driving forces in detail, which will help clients tounderstand the market better.

Moreover, we have also identified the important players operating in the sector and have made aseparate chapter which talks about their business expansion plans in detail. Most importantly, thereport also features forecast on fast food sales in the country. The forecast is based on thecorrelation between past market growth and growth in base drivers such as growth in middleclass, urbanization, cultural shift and lifestyle changes.

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Indian Fast Food Market Analysis

With the rapidly growing middle class population and changing lifestyle, India is blessed with one of thefastest growing fast food markets in the world. The Indian fast food market is growing at an annual rate of25-30%. Almost all the worlds big fast food brands have succeeded in making their presence felt in thecountry and most of them are posting appreciable growth.

Consequently, all the popular fast food chains have chalked out massive plans for expanding theirbusiness and presence throughout the country. Foreign fast food chains are aggressively increasing theirpresence in the country. For instance, Dominos has planned to open 60-65 outlets every year for thenext three years (2010-2012) while Yum Brands Inc is also preparing for massive expansion across thecountry with plans to open 1000 fast food outlets by 2015.

According to our new research report Indian Fast Food Market Analysis, although the market haswitnessed robust growth over the past couple of years, it remains largely underpenetrated andconcentrated in metropolitan cities. However, there is a large room for growth in untapped tier-II and tier-III cities. Therefore, the future of the Indian fast food industry lies in tier-II and tier-III cities. Owing to this,major fast food retailers are on the way to market their brands by using different marketing strategiessuch as campaigns and putting up billboards in tier 2 and tier 3 cities.

The report provides an extensive research and objective analysis of the fast expanding Indian fast foodmarket. The report analyzes all the vital industry trends and possible growth areas for future expansion. Italso analyzes important driving forces in detail, which will help clients to understand the market better.

Moreover, we have identified the important players operating in the sector and have made a separatechapter which talks about their business expansion plans in detail. Most importantly, the report featuresforecast for fast food sales in the country. The forecast is based on the correlation between past marketgrowth and growth in base drivers such as middle class, urbanization, cultural shift and lifestyle changes.


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This research measured and compared the brand identity of Kentucky Fried

Chicken (KFC) in India. Brand identity was defined as the customerimpressions of four different KFC identity elements - properties, products,

presentations, and publications. A survey of young consumers in the

countries (n = 795), showed that the respondents were more apt to eat within

KFC restaurants, and spend more time doing so, than the Americans. The

Chinese also had much more positive impressions of KFC. Brand identity

impressions were correlated with overall customer satisfaction and with

future patronage intentions for both groups. These findings support a model

where differences in cultural frames of reference lead consumers to actively

localize the brand identity of this nominally globalized product.


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Promotion IssuesSales promotionFor the sales pormotion KFC introduced their goods like watches , keychain,e.t.c to the customers.


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Advertisment

The advert titled Pool was done by OGILVY & MATHER, New Delhi advertising

agency for KFC ZINGER BURGER (KFC company) in INDIA. It was released in the

June 2009. Business sector is Fast food outlets & restaurants.

One of KFC's latest advertisements is a commercial advertising its "wicked crunch box meal". The commercial

features a fictional black metal band called "Hellvetica" performing live, the lead singer then swallows fire.

The commercial then shows the lead singer at a KFC eating the "wicked crunch box meal" and saying "Oh

man that is hot".


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In 2007, the original, non-acronymic Kentucky Fried Chicken name was resurrected and began to reappear on

company marketing literature and food packaging, as well as some restaurant signage.


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introduction ofCompany

KFC Corporation, based in Louisville, Kentucky, is the worlds most popular chicken restaurant

chain, specializing in Original Recipe , Extra CrispyTM, and Colonels Crispy Strips chicken

with home style sides and five new freshly made sandwiches. Every day, nearly eight million

customers are served around the world. KFCs menu everywhere includes Original Recipe

chickenmade with the same great taste Colonel Harland Sanders created more than a half-

century ago. Customers around the globe also enjoy more than 300 other productsfrom a

Chunky Chicken Pot Pie in the United States to a salmon sandwich in Japan.

KFC continues reaching out to customers with home delivery in more than 300 restaurants in the

United States and several other countries. And in quite a few U.S. cities, KFC is teaming up with

other restaurants, Taco Bell and Pizza Hut, selling nearly fifty years ago; Colonel Sanders

invented what is now called home meal replacement selling complete meals to harried, time-

strapped families. He called it, Sunday Dinner, Seven Days a Week.

Today, the Colonels spirit and heritage are reflected in KFCs brand identity the logo features

Colonel Harland Sanders, one of the best- recognized icons in the world.


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KFC History

KFC is an internationally renowned fast food industry in the

world. They have the main ambition to increase & maintain

the quality in fast food industry. Their aim is to capture the fast

food market. Basically they want to provide their products to anyone that is

why they expanding their branches in all over the world. They want to

increase their profit

through giving maximum satisfaction & other better facilities to people that they want. Now after

catching such a marvelous position in the International Market, KFC is introducing a new item

Boneless Fried Chicken, with even more attractive and charming taste.

Company overview:

Colonel Harland sanders, born September 9, 1890, actively began franchising his chicken

business at the age of 65. Now, the Kentucky fried chicken business he started has grown to be

one of the largest retail food service systems in the world. And colonel sanders, a quick service

restaurant pioneer, have become a symbol of entrepreneurial spirit. More than two billion of the

colonels finger lickin good chicken dinners are served annually. And not just in America.

The colonels cooking is available in more then 82 countries around the world.

When the colonel was six, his father died. His mother was forced to go to

work, and young Harland had to take care of his three year old brother and baby sister. This

meant doing much of the family cooking. By the age of seven, he was a master of a score of

regional dishes. Ate age 10, his first job working on a nearby farm for $2 a month. When he was

12, his mother remarried and he left his home near Henryville, Ind., for a job on a farm in

Greenwood, Ind. He held a series of jobs over the next few years, first as a 15-year-old streetcar

conductor in New Albany, Ind., and then as a 16-year- old private, soldiering for six months in

Cuba. After that he was a railroad fireman, studied law by correspondence, practiced in justice of

the peace court, sold insurance, operated an Ohio River steamboat ferry, sold tires, and Operated

service station. When he was 40, the colonel began cooking for hungry travelers who stopped at

his service station in Corbin, KY. He didnt have a restaurant then, but served folks on his own

dining table in the living quarters of his service station. As more people started coming just forfood, he moved across the street to a motel and restaurant that seated 142 people. Over the next

nine year, he perfected his secret blend of 11 herbs and spices and the basic cooking technique

that is still used today.


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PHILOSOPHY OF KFCPHILOSOPHY OF KFC

Champs stands for our belief that the most important thing each of us

can do is to focus on the customer. It stands for our commitment to

provide the best food and best experience for the best value.

CHAMPS stand for the six universal areas of customer expectation

common to all cultures and all restaurants concepts.

Champs stands for our belief that the most important thing each of us

can do is to focus on the customer. It stands for our commitment to

provide the best food and best experience for the best value.

CHAMPS stand for the six universal areas of customer expectation

common to all cultures and all restaurants concepts.

THE CHAMPS

These are:

CleanlinessHospitalityAccuracyMaintenance of Facilities

Product Quality


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Speed of ServiceCHAMPS is the philosophy to ensure that the

customer has the consistent quality experience in every restaurant, everyday, on

every occasions and you will be playing role in delivering CHAMPS to our

customers.

Current target market

Segmentation

KFC has divided the market of India into distinct groups of customers with

different demands, tastes and behavior who require separate products or

marketing mix.

In India the niche marketing is being used for particular classes of people.They have made segments of the market on the following bases.

Demographical

Behavior

Geographical

By using these three bases they segmented the market as under.DEMOGRAPHICAL BASIS

In demographics their first segment is consisted of the income factor i.e.high income, average income and low income


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MARKETING STRATEGIES OF KFC

There are different strategies adopted by KFC for different events. They market their products ondifferent events and in different activities as they are helping SOS village.

According to KFC, kids become the future permanents customers and we know very well that

without any marketing strategy no marketing program and no product is successful because we

depend upon customers, customer not depend on us.

KFC is following Niche Marketing and Societal Marketingtechniques.

KFC possess a western culture because some of the Indianpeople are also following that culture.

KFC are moving from Divisional Level to the District level

by opening branches

KFC also offer free home delivery.

KFC open their outlets on reachable places.

KFC menu consists of more than 30 products.

KFC gives more priority to Family


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M ARKETING

Since 1982, KFCs All-American salute to Mothers national card contest has been KFCs way

of honoring moms and their families for making mothers Day KFCs biggest sales day of the

year. The contest encourages children to creatively express their feelings for their moms bymaking a homemade card and give them chance to compete for more than $10,000 in cash and

prizes. Educational packets, including language, history and art exercises highlighting Mothers

Day, were sent to thousands of schools nationwide.

There are 4 Ps of Marketing:

1. PRODUCTION

2. PRICING

3. PROMOTION

4. PLACEMENT

Production:

Basically the product is anything that be offered to a market for attention, acquisition, use, or

consumption that might satisfy a want or need. KFC is specially dealing in the chicken products;

Basically, KFC has the special raspy for chicken products that is why, KFC known as a chicken

specialist allover the glob. KFC target the Asia and east side because they observe that they

people are like the chicken products, so they enter in the market due to the demand of their

chicken products. KFC product variety of product in the chicken, those products are:

PRODUCTS:

Original recipe chicken

Extra Tasty CrispyTM chicken

Hot WingsTM pieces

Tender Roast chicken

Chunky Chicken pot pie

Kentucky Nuggest

Colonels Crispy Strips

Honey BBQ sandwich

Original Recipe Sandwich

Tender Roast Sandwich

Triple Crunch Sandwich

Triple Crunch Zinger Sandwich


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BRAND

There are three brands of the KFC:

1)Taco bell2)Pizza Hut3)Long john silvers

Pricing:

KFC during pricing their products keep the different points in the mind like they adopt the cost

base price strategy. Pricing of the product includes the Government taxes and excise duties andthen they come at final stage of determine the price of their products. KFC prices of products are

a bit high according to the market segment and it is also compatible to the stander of their

products.

Calculation of the price under Cost Based Pricing Strategy:Total Pounds of Chicken Served in KFC Restaurant Annually=1.914 BillionTotal KFC Chicken Pieces Sold Annually = 5.89 BillionTotal Retail Sales = $8.9 BillionSales Price of per Chicken Piece

= Total Retail Sales / Chicken

= $8.9 Billion / $5.89 Billion

=$1.51

We assume that Fixed Cost is = $6000000000Variable Cost= $675000000Profit Margin is Or Mark Up = $225000000(25% of Sales)Per Unit Variable Cost = $675000000 / 5890000000

= $ 0.115Unit Cost = Variable Cost + Fixed Cost / Chicken pieces Sold

= 0.115 + 6000000000 / 5890000000

= 0.115 + 1.02

= $1.135

Now suppose manufacturer wants to earn 25% mark up on sale. The


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manufacturer mark up price is calculated:Mark Up Price = Unit Cost / (1 Desired Return on Sales)

=1.135 / (1-.25)

= 1.135 / 0.75

= $1.51

Promotion:

Promotion is one of the necessary plates in any form of business or in other words you can say

that promotion is the key of success. If you promote your product at the right time. KFC also

known the importance and significance of promotion so they uses the bill boards the major

source of advertisement and one of the most important thing that they uses media especially the

newspapers to promote their products. They are also creating awareness among the masses about

their existing product range as well they tell us about the future product.

Marketing efforts to be taken by the restaurant: Paste delivery posters at petrol pumps, flats, colleges, plazas, and

departmental stores.

Distribution of delivery flyers in residential areas, markets, plazas

and institutions (as per the plan)

Visit offices and business places.

4.Placement:

In the case of the KFC the placement of the product is not important but the placement of the

restaurant is important. The products of the KFC is cooked at the sport and then served after that.

KFC Cavalry branch opened in June 1998, in the main commercial zone of Cavalry

Grounds near the Jinnah Flyover. The restaurant is a three-story building including the basement

(where the chicky play area is located). It is ideally located in the center of a main commercial

and residential area of Lahore. The area that KFC Cavalry caters for is the residential and office

area of Cavalry Grounds and Cantt, as the main target market. Another branch the KFC opened

in the Lahore is in Garden Town (opposite to Barkat Market). KFC also target the Faisalabad and

open its branch in D ground. Now we can easily judge that the KFC target the place for their

restaurant, which is well known and is in the Porsche area where the income level of the people

is high then the middle class level. Because the prices of the KFC products is high with

comparison to the local products manufacturer who are dealing in the same kind of product inwhich KFC is dealing but the prices of the KFC is high due to special taste, high quality, and due

to international brand, it is the world recognized fast food restaurant all around the world. So, for

the placing strategy, KFC chose the well income class area for their restaurants.


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STRENGTHS

Goodwill and reputation: The company certainly has earned a good

name and reputation by its previous products and services in the market. It is even more

recognised in other markets outside India, where the company is among the leading fast food

giants. The brand is recognised and trusted in India for its quality products, price, and customer

service. It therefore has a good head start and enjoys a good chance of becoming a leader in

Indian fast food industry.

Employee Loyalty: Employee Loyalty is one of the major strengths

of KFC. The turnover rate in the company is amongst the lowest in theindustry.

Customer Loyalty: Despite gain by Boston Market and

Chick-fill A, KFC customer base remained loyal to the KFC brand because of its unique taste.

KFC has continued to dominate the dinner and take out segment of the Industry.

Ranks highest among all chicken restaurant chainsf orits convenience and menu variety. It generates $1B revenue eachyear.WEAKNESSES

KFC was losing market share as other Chicken chainincreased sales at a faster rate.

KFC share of Chicken Segment sales fell from 71 percent 1999 , to less than 56 percent in

2009 , a 10 -years drop of 15 percent.

Hugecompet it ion in this segment.

India is still mostly a vegetarian dominated culturedsociety. South India is especially very much so. This may reducethe market share of the company.


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KFC has not yet invested much on R&D, and innovating new products for Indian Markets. This

may lead to failure of their products as they are not in line with the Indian mind set, peoples taste

and preferences and their likes and dislikes. This may prove fatal for the

company.OPPURTUNITIES

New Markets: Globalisation has opened doors for new markets for

the company. As the developed markets are mostly saturated, the developing countries like India

and China promises a good market and generation of demand in the future. With more than 70%

of the markets in india being unexplored and un organised, KFC has a good scope of expanding

its operations in the country.

Cross Culture: Generally there is a good acceptance of American

culture of fast food in India. People are opening up to fast foods more regularly in their daily

lives and not just keeping it a once in a month affair. Thus Indian mindset is fast changing.

Large Youth population: India has a very large share of youth

population a compared to other countries. More than 60% of the population is under the age of

30yrs. As the young generation are

more open to fast foods and demand it more, this is a good news for the company.

New variety:Company can also come up with new variety in themenu like Pizzas, garlic breads to attract more customers.

THREATS

Competition: Competitor companies like McDonalds are

fast catching up with the market.McDonalds with sales of more than 19 billion in 1999,

accounted for 15 percent of the sales of the nations top 100 restaurant chains.

Organisations like PETA People for Ethnic Treatment for Animals have given a bad name

to the company which may prove disastrous to the image of the firm. Currently, KFC is under

massive attacks from animal organisations, questioning the way KFCs suppliers are threatening


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the chicken, before they got slaughtered. Anti-KFC campaigns, such as the one from PETA are

affecting KFCs brand image in a negative way and result in direct dollar losses, as less people

are consuming KFC chicken

Saturated US Market: Now KFC cannot rely on just its

home market to generate sales. As the US markets are already saturated and leave no or little

scope for growth, company necessarily needs to look at offshore foreign markets to generate

sales

Competitive analysis Population density is higher in Urban Areas as compared to Rural Areas, so the

number of customers are more in Urban Areas.Competitors

You cannot enjoy the business without competitors. No organization can afford to ignore there

competitors. It is very important for a marketing managers to monitor the activities of there

competitors, what they are doing? KFC adopted such sort of strategy that there is no competitor

for spicy chicken, which is made by KFC.

KFC beats its competitors through the revising marketing strategy at every movement but

the main competitor of KFC are


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Pizza Hut is one of the flagship brands of Yum! Brands,

Inc., which also has KFC, Taco Bell, A&W and Long John

Silvers under its umbrella. Pizza Hut is the worlds largest

pizza chain with over 12,500 restaurants across 91

countries Pizza Hut entered India in 1996, and opened its first restaurant in Bangalore. Since

then it has captured a dominant and significant share of the pizza market and has maintained an

impressive growth rate of over 40 per cent per annum. Pizza Hut now has 95 outlets across 24

cities in India; and employed nearly 4,000 people by end of 2004. Yum! has invested about US$

25 million in India so far; this is over and above investments made by franchisees.

Yum! Brands Inc is the owner of the Pizza Hut chain worldwide. A Fortune 300 company, Yum!

Brands own Kentucky Fried Chicken, Pizza Hut, Taco Bell, A&W and Long John Silvers

restaurants worldwide. Yum! Generated more than US$ 25.9 billion in worldwide sales in the year

2003, and has more than 33,000 restaurants in over 100 countries.


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A major player in the Indian fast food and beveragesectorMarket sharePizza Hut is believed to have close to 50 per cent marketshare of the organized pizza-retailing segment in India.

Financial performance

According to an article in Financial Express, the market size of the pizza segment is around US$

87 million and currently growing at the rate of 15 per cent to 17 per cent per annum. According

to Pizza Hut sources, most of their

outlets are financially successful, encouraging further expansion. In India, the average

investment for each outlet is US$ 275,000-335,000 and is borne by the franchisee.

Factors for SuccessOffering value food

Employing economies of scale, Pizza Hut has made its offerings more affordable. Its delivery

offer of US$ 4.4 for four personal pan pizzas has been very successful; helping it grows the

business by 25 per cent. They have recently introduced a range of vegetarian personal pan pizzas

for US$ 1.1. Most Pizza Hut restaurants are located in the metros and smaller metros. In taking

long strides across the country, Pizza Hut is consolidating its position by opening more

restaurants in the metros where it already has a presence as

well as opening outlets in new markets.

Moving beyond metrosAccording to company sources, Pizza Hut is moving beyond the metros and foraying into 12 to

13 new markets including Trichy, Nagpur, Bhubhaneswar, hiruvananthapuram and Pondicherry

to increase


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penetration.Aggressive marketing and tie-ups with local andpopular brands

Pizza Hut has increased its visibility by launching a well- received TV campaign aimed at the

young crowd. It has formed partnerships with recognized brands such as Nestle and Pepsi. It alsoholds regular promotional campaigns targeted at children and uses these alliances to offer

packages during these campaigns

Developing the local supply chain

The local supply chain for Pizza Hut was developed by Yum! and currently 95 per cent of the

ingredients they use are locally produced. They now import very few specialty items like

pepperoni.

Conclusions: -

Keeping up the sentiments of Indian customers and services offered by Pizza-houses and

Keeping our study focused on some of the key areas of sensitivity of customers preferences

(analysis of factors which affects the preferences).

We come to a conclusion that : -Pizza hut is preferred() over dominos in terms of

Varity of Pizzas

Good ambience

Services offered

Quality of pizzas

Location of the Outlet

Waiting time in the outlet


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Documents

Indian Fast Food Industry Growth and Its Important Players