Market share of major national fast food chains in India [Type the document subtitle] 3/20/2010
BY
:- MANISHA GUPTA
TO :- Col. Vaid Sir
Fast food industry Fast food industry has become an emerging industry not only in developed countries but even in developing countries like India. It is currently growing at a high rate of approximately 40% Y-o-Y in the developing countries. The reason for such high growth rate is attributed to its chief characteristics of being cheap,heavy promotion In india fast food industry is growing by 40% every year. The growth in nuclear families, particularly in urban India, exposure to global media and Western cuisine and an increasing number of women joining the workforce are main reasons.
TRENDS IN INDIAN MARKET Marketing to children's: Fast food outlets in India target children¶s as their major
customers. They introduce varieties of things that will attract the children¶s attention and by targeting children¶s they automatically target their parents because Children¶s are always accompanied by their parents. Low level customer commitment: Because of the large number of food retail outlets
and also because of the tendency of customer to switch from one product to other, this industry faces low level customer commitment. Value added technology services: There is continuous improvement in the
technology in fast food market in India because food is a perishable item and in order to ensure that it remain fresh for a longer period of time. Attracting different segments of the marke:- They are introducing all categories of
product so that people of all age, sex, class, income group etc can come and become a customer of their food line. The success of fast foods arose from the changes in our living conditions: 1. Many women or both parents now work 2. There are increased numbers of single-parent households 3. Long distances to school and work place. 4. On weekdays, fast food outside the home is in trend Major players in fast food in india are: · MCDONALDS · KFC · PIZZA HUT · DOMINOS PIZZA. · COFFEE DAY · BARISTA.
McDonald¶s
Raymond Albert Kroc, A Salesman mortgaged his
home and invested his entire life savings to become the exclusive distributor of a fivespindled milk shake maker called the Multimixer. Hearing about the McDonald's hamburger stand in California running eight Multimixers at a time,he packed up his car and headed West. It was 1954. He was 52 years old. Today McDonald¶s is the world¶s largest fast food chain serving 47 million customers daily,worth more than $25 billion. McDonald¶s entered India in 1996. McDonald¶s India has a joint venture with Connaught Plaza Restaurants and Hard Castle Restaurants.
Segmentation, Targeting and Positioning:McDonald¶s uses demographic segmentation strategy with age as the parameter. The main target segments are children, youth and the young urban family. So to attract children McDonalds has Happy Meal with which toys ranging from hot wheels to various Walt Disney characters are given. At several outlets, it also provides special facilities like µPlay Place¶ where children can play arcade games etc. It is aimed
to McDonald¶s a fun place to eat.. To target the teenagers, McDonald¶s has priced several products aggressively, keeping in mind the price sensitivity of this target customer. In addition, facilities like Wi-Fi are also provided to attract students to the outlets like the one at Vile Parle in Mumbai.
Market share Some facts:1) 540million snack wraps were sold in 2007 . 2) 24,500 restaurants around the world offer extended or 24-hourservice. 3) 1billion more customers were served in 2007 than in 2006. 4) McDonald¶s is the Eighth Most Poweful Brand in the World. 5) McDonald¶s has 132 restaurants in India of which 79 are in North & East India and 53 in West & South India. 6) Market share of 18 percent in north India.
PIZZA HUT
Introduction:Pizza Hut¶s Says,´We want to satisfy our customer by offering them The Best´. Pizza Hut is one of the flagship brands of Yum! Restaurant Int. It is the world¶s largest pizza chain with over 12,500 restaurants across 91 countries
.
History:Pizza Hut was started in 1958, by two brothers Frank and Dan Carney in Wichita, Kansas. They had the idea to open a pizza parlor. They borrowed $600 from their mother, and opened the very first Pizza Hut. Almost ten years later, Pizza Hut was serving one million customers a week in their 310 locations. In 1970, Pizza Hut was put on the New York Stock Exchange under the ticker symbol PIZ. In 1986, Pizza Hut introduced delivery service. By the 1990's Pizza Hut sales had reached $4 billion worldwide. In 1998, Pizza Hut celebrated their 40th anniversary,and launched their famous campaign "The Best Pizzas Under One Roof." In 1996, Pizza Hut sales in the United States were over $5million.
Segmentation:Pizza Hut is Working on segment of higher income and age group of 12-30 years
Positioning:Pizza hut has done their positioning in the target market by keeping in view two basic factors y
Quality
y
Frequency
MARKET SHARE The first Indian outlet was opened in June 1996 in Bangalore. In India,Pizza Hut has 139 restaurants across 36 cities. Pizza Hut has been voted the ³best family restaurant´ for the second year running at the 2007 Tommy¶s Parent Friendly Awards. "Pizza Hut is known for quality, innovation and category leadership. It has maintained the growth rate of 40% per annum for some years. It has employed nearly 4,000 people by end of 2004. Yum! has invested about US$ 25 million in India so far. Yum! Brands Inc is the owner of the Pizza Hut chain worldwide.Pizza Hut has 48% of market share in India.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 good, so encouraging further expansion. In India, the average investment for each outlet is US$ 275,000-335,000 .The market has become greatly competitive and the customer has become more adventures This however has not affected Pizza Hut loyality customers. Pizza Hut always try to add something new in their menu and tries to reach new markets. Pizza Hut was the first multinational brands to enter the food retail sector in
India. When the first Pizza Hut restaurant opened in Bangalore the quick service industry was at a nascent stage and Pizza Hut play a significant role in the development of this categoryin India. Worldwide and in India, Pizza Hut has become the best pizzas under one roof. This is because at Pizza Hut the belief is that every pizza has its own magic, thus make it best which everyone seeks. It is this belief that has ignited the passion to create ,innovate and serve the finest product while setting standards for others to strive to repeat . Pizza Hut is committed to provide customers product quality, offering customers the highest value for money and giving service that is warm, friendly and personal. A critical factor in Pizza Hut's success has been its unique dining experience. Crewmembers at Pizza Hut strive each day to provide 'customer mania' i.e. the kind of service that ensures that every visit of the customer is a memorable. Pizza Hut was the first pizza chain to open a 100% vegetarian restaurant in India in Surat and later in Ahmedabad and Chowpatty. Pizza Hut has increased its visibility by launching a wellreceived TV campaign aimed at the young crowd. It has formed partnerships with Nestle and Pepsi. Pizza Hut is expanding in smaller cities like Cochi, Nasik, Bhubaneswar, Lucknow and Madurai . It is strengthening its roots in the Indian market by tieing up with local and popular brands such as Reliance Communication. It is also developing local supply chain.
KFC
Introduction:Yum! Brands Inc. is the world's largest fast food company and is owner of KFC¶s. KFC Corporation, based in Louisville, Kentucky, is the world¶s most popular chicken restaurant chain, specializing in Original Recipe, ExtraCrispy and Colonel¶s Crispy Strips chicken with home style sides and five new freshly made sandwiches. Every day, nearly eight million customers are served around the world. KFC¶s menu everywhere includes Original Recipe® chicken²made 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 products²from a Chunky Chicken Pot Pie in the United States to a salmon sandwich in Japan. It was founded by Colonel Harland Sanders in 1952.KFC have more than 11,000 outlets all over the world.and is entered in 85 countries and territories in the world and servicing 8 million customers each day.KFC Division is run by Cheryl Bachelder,President and Chief Concept Officer .
History:y
1952, Col. Sanders started franchising his recipe door to door financed by his $105.00 SS Check
y
1964, Col Sanders had more than 600 franchised outlets in the US and Canada.
y
1964, Sold his interest in his company for $2 million to a group of investors.
y
1966, KFC went public
y
1969, Listed on the NYSE
y
1971, KFC was acquired by Heublein Inc. for $285 million.
y
1982, Heublein & KFC Inc. was acquired by RJ Reynolds
y
1986, RJ Reynolds & KFC, was acquired by PepsiCo, Inc. $840 million.
y
1997, PepsiCo, Inc. spined it into independent Tricon Global Restaurants.
y
In 2002, Tricon changed its corporation name to Yum! Brands, Inc.
Market share KFC has divided the market of India into distinct groups of customers with different demands, tastes and behavior who require separate products. They have made segments of the market on the following bases: Demographical Behavior Geographical From the outset, expanding into a foreign market such as India looked like it could only be accompanied by huge gains forKFC. A booming Indian economy and millions of the population hungry for consumerism meant that KFC could expand rapidly into the market to beat their competitors to the punch and capitalise on such a promising opportunity. Unfortunately for KFC, they were met with large scale problems along the way which they had never anticipated. KFC used franchisee as the preferred entry mode to expand into India It is common knowledge that most consumers in India are vegetarians by tradition, with regular meat-eaters comprising less than 30% of the country¶s population., KFCH chairman Tan Sri Muhammad Ali Hashim said the group¶s KFC outlets in India would have a 30% vegetarian menu to cater to vegans. KFCH is the franchisee of the KFC chain of restaurants in Malaysia, Singapore and Brunei. In April, KFCH was given the rights by Yum! Restaurants (India) Pvt Ltd ± the franchisor of KFC restaurants in India ± to open and operate KFC restaurants there.
Due to limited scope for expansion in its existing markets, it is just a natural progression for KFCH to look elsewhere. And one analyst said that india is the largest markets in the world, with a population of 1.1 billion, the company will have good prospects for organic growth. With only 52 KFC outlets currently operating in the whole of India (under other local franchisees), compared with around 450 outlets in Malaysia (under KFCH), the large Indian market is considered largely untapped. It has been reported that there are only three KFC outlets in Mumbai and two in Pune, and these are owned and operated by Yum! and other local franchisees.While analysts favour KFCH¶s venture into India, they do not expect to see any significant returns within these few years.In fact, KFCH¶s management had earlier announced that it expected its operations in India to post losses of up to RM2mil next year, before breaking even in 2011.Even though the subsequent years may see positive returns to its Indian investments, an analyst says their contributions to the group¶s bottom line are unlikely to ³wow´ investors. He explains that while revenues from its Indian operations are likely to be high, given its huge market size, margins are expected to be tight due to the high cost of operations there. To put that into perspective, the analyst explains that the average cost of operating an outlet in India amounts to US$500,000 per year, compared with the average cost of RM800,000 per year for an outlet in Malaysia. Another analyst considers it as still early days to judge the potential return on KFCH¶s investments in India. ³It takes time to churn out earnings. Even so, we maintain our stance that it is the right move to expand its operations in India for the long-term growth of the company,´ she explains, adding that she does not expect KFCH¶s Indian ventures to be a drag to the group¶s overall financial results in the interim period.
Solid performance
Despite the economic slowdown, KFCH managed to post considerably solid performances during the first two quarters of the year. For its second quarter (2Q) ended June 30, 2009, KFCH posted an operating profit of RM44.9mil on revenue of RM561.4mil. Both figures represented a growth of 3.9% and 6%, respectively, from the same period last year. For 1QFY2009, the group¶s operating profit and revenue stood at RM40.9mil and RM526.6mil respectively, compared with RM40.1mil and RM495.6mil in the same quarter . Meanwhile, although the local market may seem to be reaching its saturation point for KFCH, the group plans to open 30 more KFC outlets in the country next year, involving a total investment of RM15mil. KFC opened 15 new outlets in the country during the first half of the year. In terms of the number of fast-food outlets in the country, KFCH is already a leader commanding around 35% market share. The group¶s local expansion programme is obviously a strategic move to strengthen its market leadership in the country. In general, KFCH is a fundamentally sound company, given its strong market leadership but KFCH is not a strong dividend play, despite its healthy net cash position. Its dividend yield has been averaging at 3%.
Most of the acquisitions were done through related party transactions involving the subsidiaries of state investment arm Johor Corp (JCorp), such as Sindora Bhd and Damansara Realty (Johor) Sdn Bhd. JCorp holds an indirect interest of 50.25% in KFCH through QSR Brands Bhd and QSR Ventures Sdn Bhd. Lembaga Tabung Haji is the second largest shareholder in KFCH with a stake of 20.55
Barista Introduction:Barista coffee was established with the aim of identifying growth opportunities in the coffee business. Increasing disposable incomes and global trends in coffee
indicate immense growth potential in one particular segment. More significantly, they believe they have been quick to spot a latent need waiting to be trapped; Coffee lovers seek a complete experience. One that combines intelligent positioning with the right product mix and carefully designed cafés. In other words, customers seek an ³experiential lifestyle brand´. As of 2009, the chain has 2009 stores in India, with estimated annual revenue of Rs 200 crores. In the last 2 years, Barista has opened over 100 outlets in the country and with a new outlet opening nationally every 10 dates; Barista is currently experiencing phenomenal growth. With outlets opening in Sri Lanka and Dubai, Barista is looking at potential growth opportunities in Asia, making it highly competitive international brand.
History:Barista was founded in 1997 by Amit Judge and was part of his group of companies. He sold part of the equity to first Tata Coffee. Then after he and Tata Coffee fell apart, Sterling then bought over the firm. In 2007, Sterling divested their entire stake to Lavazza. Barista Coffee Company is currently owned by Lavazza, Italy¶s largest coffee company.
Market Share:Barista has a market share of around 34% of the
Barista
CCD
Qwiky's
Georgia
Mocha
4% 2%
Indian Café market. This makes them the second largest café chain in India, and they
34%
20%
along with CCD pretty much dominate this space
40%
with a combined share of close to 3/4 ths of the overall market. Every Barista outlet is owned by the company, and not franchised out to anyone. Barista can thus control and make quick changes to its entire retail chain. Barista currently operates in over 120 outlets all over the country. They have a market presence in over 20 cities. Mumbai alone has over 30 outlets, and the number of outlets in the city is increasing at a phenomenal pace. They had initially targeted cities like Delhi, Mumbai, Bangalore, Chennai and Hyderabad. Chandigarh and Ludhiana were later added due to tie- ups with µPlanet M¶ and µEbony¶ to set up store-in- stores at their outlets. They are also pursuing an equally aggressive international business expansion strategy. They have over 50 overseas locations presently under their consideration. Market leader Barista appears to be targeting college students aged 16-20, with an eye to developing lifetime brand loyalty over the longer term. Although the company is attempting to enhance the proposition by partnering with petrol stops and adding music to the product mix, a blogger saw through the gambit, chiding Barista for building its franchise on "all fun and no value." Barista is still the biggest player in the market, and may keep its foothold by sheer aggression and numbers. Indian companies are learning that coffee is not enough- a location's success depends on sales of other drinks like badam milk and smoothies, not to mention an ever-changing mix of product innovation. In such a competitive environment, cost remains a critical factor of success. In the retail arena, evolution matters: a social venue today needs to transmute into a restaurant space tomorrow, sensitive to the needs of its loyal clientele. The greatest challenge to any business is retention, and coffee bars face an uphill battle in this quest.
