A recent CRISIL report estimates the domestic QSR market to double to around Rs 70 billion in 2015-16 from Rs 34 billion in 2012-13. This rapid growth in the country's QSR segment certainly puts profits in the 'fast' lane; only if you know where exactly t
Fast food is the term given to food that can be prepared and served very quickly. It typically refers to food sold on streets or in restaurants and served to the customer in a packaged form for take-away; though seating may be provided. Fast food restaurants or Quick Service Restaurants (QSRs) as they are generally known are characterised both by their fast food cuisine and minimal table service. These restaurants offer a limited menu; cook in bulk in advance; keep the food hot and then package it to order.
These restaurants are typically a part of a restaurant chain or franchise operations.
The first fast food restaurant can be traced back to early 1900's in the United States, though different parts of the world portray a history of fast food (better known as street food once) like Ancient Rome cities with street stands selling bread and wine; East Asian cities lined with noodle shops; Middle Eastern markets full of flatbread and falafel etc.
Though India too has a rich history of its own version of fast food (with lip-smacking snacks like vada-pav, pani-puri, bhel-puri etc making it to the list), over the past few years, the domestic market has thrown its arms open and fully embraced foreign entries like burgers and pizzas. This has led to such a craze for foreign fast food in the country that despite the economy experiencing a slowdown and many sectors struggling to grow, QSRs in the F&B industry have been flourishing.
CRISIL Research, India's largest independent and integrated research house, estimates that the QSR market in the country will double to around Rs 70 billion in 2015-16 from Rs 34 billion in 2012-13, driven largely by new store additions. Over the next three years, new store additions will increase by 16-18 per cent annually, propelled by the rapid expansion of global players into tier II and tier III cities.
Paani Puri vs Pizza; Vada Pav vs Burger
At the moment, foreign fast foods have bitten into the larger portion of the domestic QSR market while the Indian fast foods jostle for space and do their best to match the competition.
Strong foreign hold
Global brands hold an aggregate market share of 63 per cent of the domestic QSR market and show no signs of slowing down in the near future. Within the foreign segment, Domino's Pizza dominates with a 20 per cent share, followed by Subway (12 per cent), McDonald's (11 per cent), Kentucky Fried Chicken (9 per cent) and Pizza Hut (8 per cent).These international brands will continue to ride the success wave, on the back of expansion into smaller cities. Their rise can be attributed to the fact that they have easily adapted their menu and products to the local tastes.
“Over the years, global QSR brands have 'Indianised' their menus. All the major global players have started to lay a lot of emphasis on vegetarian dishes, given Indian demographics,” observes Manpreet Gulri, Country Head, Subway Systems India Pvt Ltd.
CRISIL report further says that in terms of value; pizzas, burgers and sandwiches account for 83 per cent of the domestic QSR market. That's because foreign cuisine can be served quickly, and is more amenable to the cold storage format and a centralised kitchen. On the other hand, it is relatively difficult to adapt Indian food into an assembly line production model.
Slow Indian growth
Indian players in the organised market who serve domestic cuisines are also touted to grow, but not as fast as the global players. They are gearing up for the competition though; like many of them have moved to a centralised kitchen model, in tandem with their global peers. They are re-assessing the supply chain facilities ensuring quality and consistency across outlets while reaping benefits of bulk procurement.
Also, local players clearly score when it comes to Indian fast foods. Foreign players may have adapted their offerings to suit the Indian palate but haven't been able to master any of the local snacks. “We understand Indian taste better. We customise according to the local taste without diluting the authenticity of our Indian street food offerings,” says Prashant Kulkarni, Founder and Director, Chatar Patar.
With the Indian market displaying a huge appetite for fast food, there is place for everyone under the QSR sun! Be it Indian brands like Jumbo King, Goli Vada Pav, Go Chaatzz, Chatar Patar, Rolla Costa, LC Chicken Systems, Panro's Crisp Chicken etc that offer franchise opportunities or international brands like Domino's Pizza, McDonald's, Pizza Hut, KFC, Subway etc that are employing all strategies possible to maximize their presence in the country (since markets in the US and Europe are offering slow growth and China is already exposed to the international chains in a big way).
While Domino's rules the roost with regards to international brands, McDonald's comes next in. “McDonald's operates via Master Franchise route in India. We are looking at opening 75-100 new restaurants across the West and South in next three years,” says Amit Jatia, Vice Chairman, Westlife Development Limited. Another opportunity comes from Subway restaurant chain, which currently has over 400 franchise restaurants in more than 75 cities. The brand has aggressive expansion plans (to have over 500 restaurants by the end of 2014 and 1000, restaurants by the end of 2017 in India) and is committed in providing both practical and theoretical training to its franchisees along with complete support. There are host of other international brands including Pizza Hut, KFC looking for partners to associate with. Slowly, but steadily, the indigenous fast food market is also getting organised and offering promising franchise opportunities.
Home grown Jumbo King has taken on the burger mania by its horns! Along with dishing out yummy vada pavs, the brand is also dishing out hot franchise opportunities. With around 60 franchise stores in the country, the brand expects to register a growth of 50 per cent for the next five years.“Our narrow product range provides us the advantage of having higher volumes around fewer products. This enables mass production through automation, bringing down the manufacturing cost,” tells, Dheeraj Gupta, Managing Director, Jumboking Foods Pvt Ltd. If you think chicken when you think fast food, then consider joining hands with LC Chicken Systems, a brand that offers customised business models for different locations. “We provide full training support from day one, be it marketing, inventory control or supply chain assistance,” asserts Aman Verma, Managing Director, LC Systems Pvt Ltd.
Chatar Patar takes pride in calling itself 'world's first pani-puri brand' and has some tongue-tingling franchise opportunities to offer. “We provide end to end solutions to the franchisee from site selection to designing to marketing campaign. Our training program is a 360˚ solution for any franchisee,” says Kulkarni of Chatar Patar. Also offering promising opportunities are Rolla Costa (providing different biz models like the Kiosk, OTC or a Lounge model with complete support to its associates) and Panro's Crisp Chicken.
Customise or perish!
“Customisation to the local taste is a must. We understood quickly that customer needs are not same. For us to grow we had to serve what the customers need, and not what we want to sell,” opines Kulkarni of Chatar Patar.
Gulri of Subway agrees, “A major challenge, for an international QSR brand, while operating in a domestic market is to engage with the local consumer. Keeping in view the local preferences, Subway has adapted to the local palate by introducing vegetarian and non-vegetarian offerings. Space-permitting, vegetarian and non-vegetarian service counters are kept separate. The chain has also opened fully-vegetarian restaurants at select locations in India.” Standardisation of procedure and products, maintaining quality standards across all outlets and finding skilled staff that understands the core value of the brand are some other challenges that the industry is currently dealing with.
The rapid rise of QSRs is being propelled by a number of factors like increase in nuclear families and working women, steady growth in incomes, changing lifestyle and eating patterns and greater accessibility to QSR outlets. Gulri of Subway adds, “a recent research reveals that an average Indian eats out twice in a month, a trend that would only pick up pace in the coming years. Also, there is a pronounced focus on eating right as more and more people are becoming conscious about healthier lifestyle. This trend helps us as we propagate the value of eating healthy and fresh.”
Tips for entering the QSR market
“Put a cap on rate of growth. 35 to 50% Y-O-Y growth is healthy growth. Trying to grow faster than that can set you up for serious challenges.”
“Please ask the franchisor if there's any hidden charges that may be applicable to you.”
“Every franchise format requires different level of involvement and investment. Understand the same in detail from your franchisor and then take a call as to what format would be most suitable for you.”
“Find the best suitable location at the right cost, give great value and service to the customer.”
“Franchisee must check on the current turnover of existing outlets of the brand and ask existing franchisees about the kind of company support that is being provided.”