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International fast food joints expand in India

International fast food joints expand in India

Various companies including international and domestic players are now making an entry into quick service restaurants – QSR – space. This has given rise to widening of the market due to increasing disposable income of the middle class, rapid urbanisation in the country and influence of western food among the young audience. As per Assocham [i], QSR sector in the country has been growing at a CAGR of 25 per cent and might touch a figure of USD 3.7 billion by the year 2020 from the current USD 1.3 billion.

Other reasons for expansion of the QSR space was because of higher growth seen in the nuclear family system, growing knowledge of international brands by Indian audience, availability of better logistics and availability of products on the Internet.

As per Assocham’s report, around 50 per cent of the population in India – mostly in the urban and semi-urban areas – eats out at least once in every three months. Of this, in the metros, people eat more than eight times from outside in comparison to the US – it is 14 times, in Brazil – it is 11 times, in Thailand – it is 10 times and in China – it is 9 times.

It is believed that with rising income, Indians might be looking at spending more and the competition in the space might get fiercer over a period of time. Foreign chains like Wendy's, Burger King, Johnny Rockets and Carl's Jr. are making it big in the country.

In terms of cities, larger part of QSR market come from the metros as well as mini metros because of high consumption, consumer awareness as most people tend to travel abroad.

With this, QSRs are able to grab their market share in the major cities and are now looking at expanding into smaller cities in various formats.

QSR format was able to take off in India 19 years ago with McDonald’s in the year 1996. Many other brands followed their footsteps, either by having company-owned stores or through the franchisee model, and in some cases, mixture of both.

‘App’ing the business

With increased use of smartphone apps, it now allowing Indians in mostly larger cities to order for wide array of food. Delivery and online food-ordering in India as a sub-sector is growing with players such as Faasos, TinyOwl, and FoodPanda expanding rapidly into the segment.

Players such as Food Panda as well as Zomato, even Grofers, are growing their overall food services as a part of their long term vision as per Citi note [ii]. By operating in more than 200 cities in India, Foodpanda has more than 10 lakh user base for its app alone. It is believed that more than 50 per cent of its users order food from app [iii].

Food companies expanding footprints in India:

• Dunkin' Donuts – the US doughnut chain – is now looking at foraying into packaged products for increasing its sales in India. It has tied up with Grofers for delivering packaged and fresh products.

• Kellogg’s – cereal maker – would be setting up its first research and development centre in the country by the end of this year.

• FAL Food and Beverages – from Australia, manufacturer of Juiced Up, Coco Joy and Aqua Hero beverages – would be setting up its first factory in the next three years.

• After the US, India is Domino's Pizza's second-largest market, according to Jubilant FoodWorks. The company might be looking to add nearly 5,000 employees by the end of the fiscal March 2016. It is already 30,000-people organisation, and is looking at investing around USD 29 million for expanding in India.

• Britannia Industries is now planning to become a total food company. It is aiming at becoming an USD 2.99 billion turnover company in the next six years. According to the company’s strategy, it would be finalising – in the six months – the plans to expanding their dairy segment and also expanding into value-added segment as well.

• Swiggy – food ordering application – has collaborated with Burger King for providing seamless ordering experience to the clients [iv].

Fast forward

The QSR industry has been growing rapidly with the focus mainly being at providing affordable as well as competitive pricing. It is also looking at providing variants to meet the growing consumer needs and satisfying the craving for international food amongst the Indian audience.

India has 1.2 billion in terms of population, but the country has only over 2,700 fast food outlets, thus, most of the people are left untouched, as per Euromonitor International [v].

With young crowd entering into the workforce on a daily basis, robust growing economy, rise in female workforce, and increased mobility, Indians are now becoming more demanding for diverse menu. QSR business has been able to make a remarkable growth with Indian consumers now spending more money on weekends and holidays, eating outside with friends and families.

QSR market is still at a very nascent stage and there is ample space for many brands to enter into the market and earn rapidly.

Planning to enter into the fast-growing QSR market? Connect with our consultants at enquiries@tecnovaglobal.com.

     

[i] http://www.thehindu.com/business/Industry/quick-service-restaurants-market-may-reach-rs25000-cr/article7800597.ece

[ii] http://www.indiainfoline.com/article/news-top-story/food-aggregators-outsourced-delivery-channels-can-jubilant-foodworks-benefit-115112300020_1.html

[iii] http://economictimes.indiatimes.com/industry/cons-products/food/food-apps-like-foodfood-faasos-itiffin-help-people-make-the-right-food-choices/articleshow/46938545.cms

[iv] http://www.thehindu.com/business/Industry/online-ordering-app-swiggy-ties-up-with-burger-king/article7900100.ece

[v] http://www.cnbc.com/2015/04/02/indias-fast-food-industry.html    
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