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Jun, 01 2008

US Pizza satisfies Indian palates

Enter the arena in business which you love most because that would ensure you enjoy every bit of what you do. That`s what Akbar Khwaja, Managing Director, US Pizza did. While tasting a pizza to satisfy his hunger pangs, Khwaja actually found a business op

The inception of US Pizza dates back to the year 1988 when a young Iranian food technologist and entrepreneur, Vahid Berenjian, settled in Sweden, set up the first US Pizza outlet in Sweden that year. With five restaurants in that country, he set his eyes on the Indian soil in the early 90s during the liberalization of Indian economy. In India, Vahid joined hands with Akbar Khwaja, an experienced restaurateur to set up the first outlet in Bangalore in 1995. Akbar and Vahid partnered to take the brand pan India. Today, US Pizza is managed by the Indian company United Restaurants Ltd.

Targeting unexplored market

Presently the pizza market in India is estimated at Rs 800 crore. But a large chunk of this forms a part of the unorganised sector. The organised pizza segment doesn`t comprise of many players. There are at the most five or six major players. When US Pizza entered the market there was only one organised player. The potential was huge to be tapped. Even today,with not many organised players in the market, the possibilities in the pizza market are endless. At present US Pizza operates 65 outlets in 26 cities and has 12-15 per cent of market share in the branded pizza area.

Over the years US Pizza has seen an exponential growth. In an effort to make pizzas available to common man everywhere, the company has outlets not just in the metros but also in the tier 2 & tier 3 cities like Bharuch, and Navasari in Gujarat and Belgaum and Bellary in Karnataka – a strategy that has worked wonders for the company. Citing reasons for operating successful outlets in smaller towns, Khwaja gives an example saying, “My sales in Navsari are more than my sales in Bombay and my rent in Bombay is six times more than in Navsari; so in principle, my sales in Navsari are 16 times more than in Bombay. Hence my focus is purely on tier 2 cities where you go and become the best restaurant in town.” It makes sense to stay at the top of the pyramid in smaller towns.

Franchising -- the way to go

Franchising has been at the core of expansion of US Pizza. Franchising is a partnership model in which the franchisee gains by buying into a ready-to-use business model which has been proven to be successful and also an on-going consultation to run his business. On the other hand, the franchisor gains by spreading quickly without having to invest capital and with the help of eager entrepreneurs.

U S Pizza has been into franchising since 1996, when it franchised its first restaurant. Talking about the success gained through franchising, Khwaja says, “Over the years we have developed such a concept that it is efficient both for the franchisee and the franchisor. Today, majority of our outlets are owned and operated by franchisees who come from all walks of life.”

US Pizza follows a multi-level franchise mode, where it appoints a master franchisee for a particular state, who further appoints sub franchisees. The master franchisee has a few of his own outlets and the rest are opened through sub franchisees. Each MF can own 20-30 restaurants in a geographic location and earns from his own restaurants and a portion of revenue from the franchisee`s restaurant.

Taking the master franchise route for a pan-India presence Khwaja says, “We have planned to move ahead with the Master Franchise model as it has proven to be the most efficient in our kind of business. As a company we can concentrate on our core competencies and provide optimum support to the smaller franchisees.”

In this model, the Master Franchisee can own his restaurants or sub franchise the restaurants to other franchisees who may own one or more outlets. The MF operates as the company representative in his region and provides services to the sub franchisees. The company on the other hand, assists the MF in all core areas of training, marketing, product development, public relations etc.

Us Pizza`s operation teams conduct regular audits of all the outlets and ensure compliance with prescribed standards and procedures so as to ensure consistency in all its outlets.

The business proposal

US Pizza operates through various formats of retaurants. Its delivery outlets of 300-500 sq.ft area cost around Rs 25 lakhs and offer the pick up and delivery service and a small place for sitting. It is currently operational in 20 cities. The Express outlet spread in150-200 sq.ft costs around Rs 6 lakhs that offers pick up services. The dine-in covering 1800 – 2500 sq.ft area costs Rs 60 lakhs and offers dining , pick up and delivery services. The Super dine-in costs around Rs 90 lakhs to Rs1 crore and offers multiple services.

The offerings also differ in all formats. A Super dine-in store taking 3000-5000 sq.ft of space would offer a live pasta counter, a live ice-cream counter, 24 item salad bar, pizzas all done outside, in the customer area. A restaurant would only have fruit salads and pizza, not pasta and ice-creams, and would have cocktail counters and it goes up. The Express counter would have limited number of pizza, garlic bread and starters. A dine-in would have a wide variety of pizzas and salads. A Super dine-in would have a wide variety of pizzas, pasta, salads, fruits and almost everything.

Giving a clear-cut business proposal to the franchisees Khwaja says, “We don`t expect the franchisee to know anything about pizza business, we expect him to be having common sense, to give his time and to give his focus to the business, if he can do that and has the money then we have a very good proposition for him.”

Launch of ToastyZ

The parent company United Restaurants is soon going to launch two more brands in India. One of the brands will be the Indian fast food and the other will serve a range of sandwiches called ToastyZ. It is being launched to meet the requirements of consumers who are looking for a healthy alternative to fast food. The menu also offers more healthy options like the bread bowl and delicious salads. For ToastyZ the company is looking for entrepreneurial individuals who are interested in owning and operating their own ToastyZ. QSR. It is being launched in Hyderabad this month. The company plans to make four to six outlets operational in Hyderabad and Bangalore first and then market it to franchisees.

Future Plans

US Pizza is planning to become a 150 restaurant chain by the year end. This year the focus is on opening more of `dine in` and `Super dine in` outlets. The new restaurants will be a mix of franchised and owned units. The parent company will be making capital investment of around Rs 75 crore this year, of which 50 per cent would be for brand US Pizza.

“United Restaurants Ltd has the vision of being the number one fast food company in India in the next five years while partnering with entreprenuers,” announces Khwaja.

In the future, US Pizza is focusing on consolidating its position in the areas it is currently present in, such as western and southern Indian states. To expand further in these states the company has decided to sign up a Master Franchisee for each state. It recently signed up MF agreements in Kerala and Saurashtra region. Post this, the company plans to move towards northern India.

In the next five years US Pizza wants to be the number one fast food company in India while partnering with entrepreneurs to move ahead.

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