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Jun, 01 2008

Delectable pizza business

When everything is turning global how can the palate lag behind! Most of young Indians love to experiment with different cuisines. No wonder the Pizza is here to stay!

Ever since pizza graduated with the consumer from being a snack to a complete meal, pizza industry has been witnessing hectic activity in India. Estimates reveal a 40 per cent growth in the pizza business every year. Indians now consume three million pizzas per month as compared to 1.5 million in the year 2001. Currently the organised pizza market, comprising of a number of MNCs, is close to Rs 700 crore.

Established names like Domino`s and Yum International own 75 per cent of organised market share. Dev Amritesh, VP Marketing, Domino`s reveals, “We currently have over 190 stores in 34 cities across India and plan to add 50 more stores in this year. We have earmarked Rs.70 crore for this expansion plan and are currently looking at franchising express stores in food courts.” US Pizza targets 1000 units by 2011, and the mode of expansion is through franchising, says Sunil Kumar KV, CEO of US Pizza. Adding to this growth is Pizza Hut , which is expecting more than 50 per cent revenue from home delivery. But competition is tough with Domino`s controlling almost 60 per cent home delivery market and growing at the rate of 50 per cent.

Pizza Corner and Pizza Hut prefer the franchise route for growth; the route at Domino`s is more organic as it leases its own outlets and employs its own people. Smokin Joe`s, which has 60 outlets in 23 cities across India, is planning to strengthen their presence. Papa John`s, which entered the Indian pizza market in 2006, is planning to open 500 pizza outlets across India over the next 10 years.

International pizza brands like Yellow Cab Pizza, Figaro`s Pizza, and Little Caesars Pizza are also eager to establish their brands in India. Sbarro, the Italian leading QSR Company, entered India through a Joint Venture with India-based RTC to open 100 restaurants in India. Pizza Inn Inc, the US-based pizza restaurant chain, has already signed a franchise agreement in Bahrain and is in advanced discussions with an Indian group.

The arrival of pizza chains has not only expanded the market but prodded established players like Nirula`s into action. Other domestic players like Slice of Italy which has six outlets in Delhi, is going to have 20 more outlets by 2008 end, informs Anurag Sharma, VP, Slice of Italy. “Pizza Square wants to add six more outlets through a combination of franchise and company-owned expansion strategy”, reveals Rahul Gupta, MD of Pizza Square

The industry growth

The market size of total branded quick service restaurants is Rs1, 200 crore and pizzas make up the biggest QSR segment with about 50 per cent sales contribution.

The arrival of international brands has somewhat different reasons. With the market saturation back home and the weak dollar, venturing into other countries is turning more lucrative. Profit margins today are generally higher outside the United States and more in BRIC (Brazil, Russia, India and China) countries. The successful lead established by global fast-food giants such as Yum and Papa John`s makes India a delectable market.

The pizza also easily adapts to the country it goes to – something that the pizza chains in India are exploiting to the hilt. A case in point is Pizza Hut at Ahmedabad that serves 100 per cent vegetarian menus. Also, to cater to the Indian palate, most pizza companies have introduced Indian pizza toppings. According to a survey, Indians relish chicken, kebabs and paneer tikka (and not pepperoni) which these pizza companies are offering. Delivery-oriented pizza firms put as much as 20 per cent of their costs on training staff, grooming them to be efficient and courteous.

The potentiality of pizza business in India is escalating. Akbar Khwaja, MD, US Pizza, comments, “The growing young population falling under the earning bracket, rising spending capacity, quality of food, convenience etc. are driving the Indian pizza market to expand significantly.”

Convenience, variety, price and novelty, garnished with a tinge of slick selling are contributory factors to the industry growth. One of the big draws of pizza is that it offers endless variety. With competition heating up, price cuts, discounts and freebies are a natural outcome. It being the most convenient of all fast foods, well suited for delivery, pizza is here to stay.

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