On India’s burgers, pizzas & café latte market – III : Pizza Hut + KFC + Taco Bell

This post, the third in a series on India’s fast food services market, is on the three Yum Brands : Pizza Hut, KFC and Taco Bell.

Pizza Hut in India

Pizza Hut has repositioned itself as a casual dining and is thus – strictly speaking – not a fast food restaurant any more. The menu has been expanded (Mumbai menu here!) and a revamp in ambience and décor done. Diners spend more time and spend more, up to INR 600 a visit, as compared to the other brands (being covered in this series). Actor Lara Dutta (the waitress in accompanying Pizza Hut pic) is the one now plugging away for them.

In contrast, competitor Domino’s Pizza has a value for money positioning, not-so-hot actor Arshad Warsi does duty for them, more on Domino’s in a subsequent post.

Some of the Pizza Huts offer an Enhanced Dining In experience, I’ve dined in the one in Juhu in Mumbai opposite the JW Marriot and did find the ambience and the service ‘enhanced.’

There are 147 outlets in 39 cities. Only 103 outlets in 34 cities are for restaurant dining, the rest are ‘Carry Out’ and ‘Delivery Only’. The company has also put up outlets at Hyderabad, Mumbai and Delhi airports. These numbers are small looking at the size of the India market, on this see previous post (Part II) too.

70% sales are for vegetarian items. There is an all- veg Pizza Hut too, a world first for the company, in the Jain-influenced city, Ahmedabad.

20% growth has been witnessed in India in the last one year. 7% growth was reported in same store sales.

Pizza Hut’s been ranked as the ‘Most Trusted Food Service’ brand during each of the last few years by Economic Times, not sure what this really means, could not get information  on these awards and their modus operandi.

Pizza Hut operates through a few master franchises, each of whom has regional territories.

Loyalty & CRM

A fair bit of Pizza Hut’s strategy has focused around discount coupons. Compared to other fast food, theirs is a high priced product / meal, so this is understandable.

In a high frequency (3 times/day !) product like food, there is an opportunity to increase consumption per user. Pizza Hut India seems to have initiated some good CRM (customer relationship management) ideas all right; it has a Facebook Page with over 12,000 fans, a member registration that is done online and that they call VIP (Very Into Pizza). They also have a ‘refer a friend’ feature online. Registering for Very Into Pizza entitles one to e-Coupons.

Unfortunately these e-Coupons do not offer a real benefit i.e. the same discount is today available to a first-time visitor to any Pizza Hut restaurant. Hope they will get it right; there is a tremendous upside possible with good CRM.

Of course, parts of the website itself have not been updated since 2007 !

KFC in India

KFC was the first fast food chain to enter the country in 1995. It got mired in controversy and had to exit. They reentered in 2004.

They now say what they sell is Kentucky Grilled Chicken, not fried chicken; and that it has just 70 to 180 cal & 4-8 g fat (depending on the piece size). In 2005, they changed the brand name  worldwide from Kentucky Fried Chicken to KFC.

There are 55 stores in 12 cities. 18 stores are in Delhi alone, another 12 in Bangalore, 8 in Hyderabad, 6 in Mumbai, 3 in Chennai and 2 in Pune. It gets 1 million footfalls a month. They will touch 70 stores by 2009 end and 100 by end 2010.

The menu’s still pretty much American, such as lots of chicken pieces, coleslaw and corn on the cob, not sure what their plans are on this count.

Sri Lankan cricketer Murlitharan’s finger lickin’ good commercial was used, not sure how much this has helped, building a brand around chicken alone in somewhat vegetarian India is a risky strategy.

Average meal ticket size is only INR 70 – 100. There has been a 22% growth in same store sales.

Taco Bell

This brand is to be launched soon in Bangalore via a company-owned outlet (they will follow the franchise route eventually). Taco Bell should do well in India with it’s burritos, tacos et al. Having eaten at Taco Bell in the U.S., I would say this menu goes well with the North Indian palate, with the rajmah roti type of taste.

Despite having been set up in 1962, Taco Bell is still essentially a U.S. only chain (they have rolled out to 4-5 countries in the last two years).

Looks like the large market there (they claim 54% of the Mexican QSR market in the U.S.) has engaged all their attention.

Their tag line Think Outside the Bun is a pun on Think Outside the Box and a parody on burger giants McDonalds and Burger King, as in ‘here is an alternative’, it’s been around for many years.

Summing up Yum in India

$100 million has been invested in India by Yum so far. By 2015, 1,000 outlets are targeted in 62 cities across the three brands. Cost of setting up an outlet for KFC is INR 20-25 million and for Pizza Hut it is INR 15 – 17 million.

A large part of the increase in outlets, over 50%, is planned for KFC. That means we can expect over 450 KFC restaurants in India by 2015.

Key Question: Why is KFC the driver? Do you see yourself eating more KFC products rather than pizzas?

For some reason, in most international markets, KFC and not Pizza Hut or Taco Bell has been Yum’s growth driver. Maybe (i) KFC products are priced lower (average INR 70-100 per meal) vis-à-vis Pizza Hut (INR 600 per meal), (ii) KFC has a more broadbased menu and (iii) they would like to play in the McDonald’s / burgers market?

One hopes they have more Indian products lined up. Indian tandoori food will go well with the KFC brand. Hope someone from KFC reads this and considers this, there are but few outlets today in Mumbai or other metros where one can buy tandoori chicken or kebabs J   And the Bukharas of ITC and the like have done considerably for tandoori food, what we now need a mass brand for this segment.

As it stands, KFC India’s menu  is fairly quintessentially American.

And I would put a bigger bet on Taco Bell in India than we have seen so far from Yum.

And in case you believe pizzas and KFC food is bad for you, take heart in the fact that their menu will shortly carry calorie information. This is what the Yum’s Global Chairman had to say on calories and other matters during a recent India visit.

Here are additional nuggets on Yum Foods’s India business.

Tagged as: fast food restaurants, MNCs in India, Pizza Hut, QSR restaurants, Yum Brands