Market share of major national fast

food chains in India

[Type the document subtitle]

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 five-

spindled 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 ‘Play 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

 Quality

 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 “best 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 well-

received 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® chicken—made 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 products—from 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:-

 1952, Col. Sanders started franchising his recipe door to door financed by his

$105.00 SS Check

 1964, Col Sanders had more than 600 franchised outlets in the US and Canada.

 1964, Sold his interest in his company for $2 million to a group of investors.

 1966, KFC went public

 1969, Listed on the NYSE

 1971, KFC was acquired by Heublein Inc. for $285 million.

 1982, Heublein & KFC Inc. was acquired by RJ Reynolds

 1986, RJ Reynolds & KFC, was acquired by PepsiCo, Inc. $840 million.

 1997, PepsiCo, Inc. spined it into independent Tricon Global Restaurants.

 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

“wow” 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. “It 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

“experiential 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.

Barista CCD Mocha Market Share:-

Qwiky's Georgia
Barista has a market share of around 34% of the
4%2%
Indian Café market. This makes them the second

20% 34% largest café chain in India, and they along with

CCD pretty much dominate this space with a

combined share of close to 3/4ths of the overall

40%
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 ‘Planet M’ and ‘Ebony’ 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.