MAHARAJA AGRASEN INSTITUTE OF MANAGEMENT STUDIES

CASE STUDY
A Market Research perspective of Indian
QSR startups
Authored by
Prashant Saxena
MBA 2nd Semester
07214803915
MAIMS
GGSIPU

04/03/2016
National Case Development Competition 2016

EXECUTIVE SUMMARY
Market research is an unparalleled tool that helps in understanding what is available in
the market and what the actual gap is that is being targeted. It is an exercise that will
force the firm to see clearly whether there really is a niche that it aims to create and
whether customers are willing to pay for its product/service. It can help make informed
and well-calculated decisions.
Market research must be conducted prior to launching a new venture. It is also a sensible
idea to conduct another round of market research after the launch of the pilot to garner
acceptability of the initial solution. In fact, it should be an ongoing process built into a
business plan, such that there is a regular flow of information about how the firm placed
in the competitive and dynamically changing market.
QSR has remained a key segment of the Indian food service market and has grown over
the years . A number of QSR chains have flocked into India over the past few years with
specific cuisines and product offerings fuelling the market growth. From metros and
mini-metros, QSR brands are now expanding into smaller cities with smaller formats.
The overall market for QSR is estimated to be around INR 92,000 crore and is estimated
to grow at an annual rate of 16%.
Faasos is a domestic QSR startup which has utilized market research to its full potential
and hence, runs a thriving business which is ever expanding. This report highlights how
the firm was able to achieve success in a saturated market.

INTRODUCTION
Quick Service Restaurants are special kinds of restaurants and form an integral part of the
Indian Food Service Industry. The quick service restaurants or the QSRs have both fast
food cuisines and minimal table services to cater to the needs of various youngsters and
working professionals. The differentiating factor of these restaurants is the quick
deliveries of food items which are an essential component for the working population of a
developing country like India. QSRs generally target people in the age bracket of 16-35
years, as this is the age bracket interested in tasting new cuisines and having fast foods
every day.
The QSR segment though is a very significant segment of the Indian Fast food services
but is comparatively nascent and has a lot of scope for growth in India. In India, a large
number of international QSRs have established their outlets with franchise rights of
various companies. Indian QSRs are also coming up and expanding but foreign brands
maintain their dominance.
The recent surge in domestic QSR startups is due to various funding alternatives, social
acceptance of the startup culture and policy oriented assistance by the Government of
India along with promotion of entrepreneurship mindset through STARTUP INDIA
initiative. However, the success ratio of Indian QSRs is minimal which is caused by
various reasons, including lack of proper market research.
Market Research plays a very significant role in any business development since it
utilizes primary as well as secondary data to assess the current market scenario and
provide a clarity of direction. Its systematic nature is a crucial element that converts raw
data into information which is vital for business decision making.
CASE SCENARIO
According to Crisil Research, the QSR market in India has double to around Rs 70 billion
in 2015-16 from Rs 34 billion in 2012-13, driven largely by new store additions. Global
brands currently have an aggregate market share of 63 per cent of the domestic QSR
market and will continue to grow on the back of expansion into smaller cities. These
players have been successful in adapting their menu and products to local tastes. Indian
players who serve domestic cuisine too will grow, but not as fast as global players.
To compete effectively with their global peers, Indian players such as Jumbo King,
Kaati Zone and Faasos have already moved to a centralized kitchen model. Investing in
centralized cooking and supply chain facilities is critical to success in the QSR space as it
ensures quality and consistency across outlets, and helps players reap the benefits of bulk
procurement.
This paper aims to study one of the domestic QSR, Faasos and its implementation of
market research in business development.

BACKGROUND
FAASOS is an growing Indian fast food chain that primarily sells Wraps. The idea
behind Faaso's is based on the Kathi rolls which according to the owners is a Desi fastfood with Western customer service in a market dominated by sandwiches and burgers.
They are also famous for taking order via Social networking sites and their Sartorial
marketing campaigns.
The firm was founded in 2004 by Jaydeep Barman, Siddharth Joshi and Biswanath
Chakraborty with an initial investment of Rs. 8 Lacs for one air conditioned restaurant. It
attracted customers, but the overheads were high and initial marketing was only word to
mouth. The company broke even in just 14 months after its inception and began gathering
momentum around 2008, by this time, the company was running six outlets, mostly in
and around Pune. In 2009, Lunia Investment and Finance Pvt ltd came in with a Rs 50
lakh second round of angel funding. The founders also raised a term loan of Rs 1 crore
from SIDBI. In 2011, Faasos had 18 outlets when Sequoia Capitals invested $5 million
for further expansion. Currently, the company has 53 outlets across Pune (18), Mumbai
(32) and recently launched in Bangalore (3).
MARKET RESEARCH PERSPECTIVE
Since its inception back in 2004, Faasos has represented the brand as the Marker of
current generation using sarcasm and satire to impress the current mood but they affirm
that market research was essential for formation of their business strategy and its
operational implementation.(Appendix 1)
The following are assumptions of the author are (based on secondary data available on
the internet) that Market Research lead to the following Business decisions

Target Market Identification : Faasos' target audience is students (Graduation

and post-graduation), people who have just bagged their first jobs and newly
married working couples who don't have time to cook. The target audience is
segmented in two groups, 18 - 22 years old and 24 - 32 years old. The co-founders
claim that it enjoys the loyalty of 500,000 customers and clocks nearly 400,000
orders every month. These cities include Delhi, Gurgaon, Noida/Indirapuram,
Bengaluru, Pune, Ahmedabad, Hyderabad and Chennai, including tier II cities
such as Indore and Vadodara.

Market Needs : As per the Grant Thornton report published by FICCI about the
food and beverage sector in India, Consumption of processed food is still nascent
to India and with growing urbanisation and disposable incomes, this trend is now
increasing. The government is also providing incentives for reducing food
wastage and increase the value addition to the end produce. The uniformity and
quality of processed food available is still not at par with global standards which
are required by a buoyant restaurant industry as the sector develops and focused
collaboration starts for farm to fork production, the processed food available in
India would also increase.

The market is in dire need of stable QSR business model that can address the
above mentioned problem. With the help of market research, Faasos has changed
its business model. Instead of dine-in restaurants,which slows down the expansion
process, they are setting up central kitchens to enable demand generation through
a mobile app which connects directly to the store. This reduces complexity and
enables the business to grow quickly. Currently, 60 per cent of its orders are for
delivery, and 70 percent is generated through mobile apps. The entire chain
from click to tap (clicking to place the order to tapping on the door for delivering
the order) is automated.
To cater to the changing buying patterns of the customers, Faasos is also
increasing its menu variety. While many of the dishes will be prepared in its
kitchen, it will also tie up with local suppliers of fresh food, own the quality and
the menu, and deliver to the client.

Forms of IMC in use : Once the target market has been identified, the marketing
strategies employed by the firm to reel in their customers. Since the chief market
segment for Faasos comprise of the individuals in the age group of 18-32 the
company uses many social networks, chiefly Twitter, to take orders and but also
take delivery orders via phone. Faasos is one of the first to completely utilize
social media to reduce marketing costs and gain the first mover advantage in
using social media as a crowd puller. The firm has strategically endorsed online
ordering which helps in reducing their cost for maintaining a dedicated call
centre. They also have an official website and a mobile APP for taking home
delivery orders.

CONCLUSION
BOTTOM LINE : The cut throat competition in QSR industry is unsurmountable, due to
which, a lot of small scale companies have to shutdown operations and yet, for a
domestic QSR to make its mark and continue its evolution according to the needs of the
market and people is worthy of being a case that should be studied further.
CASE QUESTIONS : The following are the case questions that arise after reading the
case.
1. The firm has a dedicated target market, yet for market expansion, it should increase the
products and its market segmentations. How should one go about it without incurring
massive cost ?
2. The business completely dependent on social media for marketing as well as 60 % of
its operations might be profitable in the short run but what is its long term solution ?
3. Is the business model feasible and innovative enough that it can be applied to other
QSR startups ?

References
1. CRISIL Research Report on QSR.
http://www.crisil.com/Ratings/Brochureware/News/CRISIL%20research_pr_qsr_
170913.pdf?cn=null
2. www.ficci.com/spdocument/20589/F&B-Report.pdf
3. Faasos.com/aboutus.html
4. http://forbesindia.com/article/work-in-progress/faasos-the-integrated-foodcompany/41647/2
5. http://www.thesmartceo.in/cover-story/faasos-delivery-mix.html

Appendices
1.

2. QSR break-up