The growing popularity of foreign fast-food brands in India
And why locals lag.
India has always been a food-loving country. While each region has its own special cuisine, Indians, on the other hand, have never been big on eating out. Today, the scenario has completely changed. The fast-food industry has been growing at a very rapid pace and is expected to grow even more exponentially in the coming decades.
Statistically speaking, the current fine-dining market today has around 50 + players, with more than 400 outlets spread across various cities worth Rs.500 crores. This enormous expansion is the very result of growing liberalization, rapid urbanisation, modern lifestyle, and rising disposable incomes.
Consider the year 1996. The entry of McDonald’s into India completely changed the entire consumer landscape. With its colourful mascot, lip-smacking fries, and cheap burgers, McDonald’s established itself in the quick-service restaurant (QSR) industry setting a stage for the entry of many other fast-food chains like Dominos, KFC, and Pizza Hut. And, with the QSR industry thriving, Indians discovered fine dining. The joy of experimental eating sounded new, and consumers were now ready to spend copious amounts of money on dining out. With more dining options abound, the competition in the food industry got severely intense. And while the fast-food purveyors are the dominant players due to an array of advantages like financial resources, better technology, wider choices, and enhanced marketing skills, the survival of local companies today stands hugely at stake.
MAJOR PLAYERS IN THE MARKET
- Dominated by McDonald’s having as many as 350 outlets
- KFC with more than 250 outlets
- Domino’s presents around 150 locations
- Pizza Hut establishing 300+ outlets
- Subway over 100 outlets
The major players have grown at a faster pace than their Indian counterparts — for example, Nirulas, established in Delhi and Noida since 1934 caters to around 20,000 guests every day. But, according to industry estimates, while McDonald’s clocked a turnover of about Rs. 125 crores in a span of 5 years, the home-grown Nirulas, could only garner Rs.100 crores turnover despite being present for decades.
The main reason behind the success of such multinational chains is their expertise in product development, service levels, quality standards, sourcing practices, and superior operating procedures that they’ve developed over years of global experience. Another important factor: these MNCs attract a lot of youngsters. The fast-food chains are revamping their menus to cater to the evolving Indian consumers. The switch in consumer taste is largely because of the wider options that these MNCs bring with them. Pizza Hut, for example, launched its masala range of pizzas and also opened the world’s first 100 percent vegetarian outlet. Subway, that puts a lot of emphasis on fresh and healthy eating, now adds nearly eight new products to its menu annually. The industry is thus very much into reinvention, something that the local companies are yet to understand. Experimenting with the menus and establishing a signature taste is a prime magnet in attracting more and more consumers.
Another big reason is that the fast-food companies know what key customers want and will buy before developing marketing and advertising strategies. These companies often use market segmentation as a marketing tool. Identifying key buying areas that patronizes the company itself adds a major boost to the success in the market. Consider, KFC’s inclusion of rice and vegetarian offerings — the new campaign called “So Veg, So Good” is now heavily appealing to the Indian consumers. This is something that the local companies have to understand — that is, learning the consumer behaviour and tailoring their delicacies accordingly to have a better advantage in the marketing segment. It’s time that the domestic chains now realise the importance of such practices and beef up their organizational structure.
India already is doing great in the food industry. The competition will only increase with time. But, if the local chains understand the market well enough and serve the needs of the distinct niches, the nature of the industry is likely to evolve. Not only will the local enterprises find strategies but will also bring an array of powerful resources that can intimidate even the most established global multinationals. After all, the small competitors are never too afraid to be challenged!
