Having provide some food for thought on this blog, it’s probably time to spare a thought for food!
This blog started off as Marketer’s Kaleidoscope, promising to shed light on marketing. This post on the fast food market may well offer the reader a delicious treat.
Food Services industry
India’s food services industry, defined as the sale of food and drink for immediate consumption – including on premise consumption as well as home delivery – has been estimated as INR 580 Billion (Source : Food Franchising Report 2008). It consists of unorganized segments, like dhabas and roadside eateries, as well as the organized sector.
The organized sector comprises fine dining, casual dining, bars and lounges, quick service restaurants (QSR) or fast food outlets, food courts, cafes and kiosks and is estimated to be INR 80 billion or 7.2% of the total food services market. The major segments are QSR and cafes. In practice, there is some overlap between casual dining, fast food (QSR) and cafes. This post covers all three.
Eating out habits
It is said that 2 out of 3 urban households order food from outside once a month. And those who do, place orders multiple times, an average of 5 times a month.
Separately, approximately 80% eat out at least once a month.This frequency is going up; urban Indians now eat out about six times a month,compared with 2.7 times a month in 2003, according to FICCI’s Food Franchising Report 2009.
Here’s a look at 7 brands in these segments: Café Coffee Day, Barista Lavazza, McDonald’s, Pizza Hut, KFC, Domino’s Pizza and Subway. Many of us eat, nay love eating at these outlets, getting to know them better might be satisfying 🙂
And all this is based on publicly available data, past experience with these brands and a marketer’s guesswork.
At end 2008, the fast food pioneer had 32,000 restaurants worldwide in 118 countries. Of these, 55% restaurants were outside the U.S. Over 58 million people visit everyday. It’s the world’s largest QSR chain and it first went international (outside the U.S.) in 1967.
McDonald’s commenced operations in India in October 1996, after taking 4 years to build a cold chain and secure the supply end. Almost all raw materials are sourced locally from HACCP certified vendors. HACCP is the international, ISO-compliant system for food safety.
It operates through two Joint Ventures, with Hardcastle Restaurants – run by Amit Jatia – for the South & West and with Connaught Plaza Restaurants – run by Vinod Bakshi – for the North & East.
McDonald’s India’s forte has been product, service and price innovation. From day one it has had a menu adapted to local tastes. 70% of the current Indian menu doesn’t exist anywhere else in the world.
It entered with a low introductory price of Rs. 20 for a veg. burger (still available for some products). Among all the brands profiled in this post, McDonald’s has had the most aggressive pricing. For less than Rs. 50 all inclusive, one can have a meal on two McAloo Tikkis or 2 Chicken McGrills. A filling meal at any of the other six brands profiled here will set one back by a minimum of Rs. 75-100. Not many other multinationals who have entered India have got their strategies right as seamlessly as has McDonald’s.
India is the first country where neither beef nor pork is served and where only vegetable oil is used. There is a separate cooking area and process for vegetarian products and even the mayonnaise, cheese, sauces and soft serves are all veg. In 2003, they removed lamb from the menu.
A Breakfast menu has been introduced and was available in 5 Mumbai and 4 Delhi restaurants as of July ’09, with a plan to make national by mid-2010. Their waffles are to die for! Now breakfast meetings can take a new meaning 🙂
There are multiple outlet types / service options available: Eat-ins, Food Court, Drive-thrus, Highways, Kiosks, McDelivery, TakeAway and the B’day party. It’s one of 23 countries, where the company has home delivery. In Europe, it’ launched McCafes targeting the beverage market, this hasn’t happened in India yet.
About 18 months back, the chain started its home delivery service, which has helped increase its sales by 14%. Then, it started drive-throughs at select outlets, a move that helped McDonald’s add about 40% to revenues. The chain has subsequently opened kiosks with many of its restaurants with which it claims to have added 9% to its revenues. It has also opened its first 24-hour outlet in India at the New Delhi railway station.
The company is moving all it’s outlets in India to the Made For You platform. Made For You (MFY) is the company’s worldwide cooking method where the food is prepared as the customer places its order. This cooking method has helped McDonald’s further strengthen its food safety, hygiene and quality standards. When last reported, they had around 10 MFY restaurants in India.
McDonald’s is positioned at the family. Their ‘I’m Lovin It’ campaign is global and successful, and has been around since 2003. Had written on this campaign and on McDonald’s too at this blog way back in 2007.
McDonald’s operations in India appears to rank in the second tier of countries in the McDonald’s sytem, ranking around the 20th position by number of restaurants, if this report is to be believed. It currently has about 160 restaurants in India (China has over 1000. Unlike China, India does not rate a mention in the company’s 2008 Annual Report), employs about 4000 people and gets 275,000 orders a day. Here’s a list of cities where it’s currently present.
Another 120 outlets are planned across India in the next 3 years. This is not a particularly aggressive number. It seems to be is in line with a worldwide strategy of “Better, not Bigger” that the company says it has pursued since 2003. They also say they track customer satisfaction and they have data which shows outlets with high employee satisfaction have more satisfied customers and higher sales and profits.
Here’s a prediction for McDonald’s future:
Looking at the entire world movement to go green, given the knowledge that meat products result in higher emissions and given that McDonald’s is a leading producer of meat and poultry products, it will be under pressure to go as green as it can, including moving to an increasingly all-veg menu ! As the industry leader, nothing less will be expected from McDonald’s.
Vegan Kareena says she will never endorse McDonald’s . Given the above, who knows, she might one day change her mind !
More on the other brands Pizza Hut, Cafe Coffee Day et al in the coming posts.
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