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May, 04 2015

‘U.S’ brands hungry for growth in India

India's diverse culture and the acceptability for foreign concepts has always attracted foray of international brands across sectors. F&B, services and retail all have taken maximum advantage of the Indian market. The trend, however, continues with a lot

Be it juicy chicken wings, cheese loaded pizzas or mouth watering burgers, all these finger licking, on the- go food items have not only tantalised  the Indian taste buds but has also created its niche among its connoisseurs. Considering the eating pattern and spending power of Indians, a lot of US-based F&B brands have been operating in the country. Their menus are not only savoured by the Indians but have also proven to be part and parcel of Indian consumer's dining habits.

QSR or fast food concept was introduced in India about a decade and a half ago when American brands like McDonald’s, KFC, Domino's Pizza and Pizza Hut entered the Indian market. These brands have undergone the initial challenge of charting the new territory and today have not only found acceptance but have taken a plunge into every Indian heart.

Industry insight

The US-based food brands would like to leverage the Indian QSR market which is witnessing unprecedented Compound Annual Growth Rate (CAGR) of 10 per cent. If experts are to be believed the growth of the QSR sector will multiply in the years to come. Manpreet Gulri, Managing Director, Bedrock Foods Pvt. Ltd, a licensed franchisee of Krispy Kreme Doughnut Corporation for the North India region says: “We feel the Indian market is very receptive to American brands. This is due to the exposure of the brands to Indian consumers through various media (social, digital, mainstream etc). Also a very large and growing TA is the major factor that has led to the success of US brands in India.” Krispy Kreme is an international retailer of premium-quality sweet treats, including its signature Original Glazed(R) doughnut. Headquartered in Winston-Salem, N.C., the company has offered the highest-quality doughnuts and great-tasting coffee since its foundation in 1937. In 2013, it started its operations in India and has three franchise outlets in North India as of now and plans to add 35 in five years in North India.

Franchise the preferred route

Majority of the foreign F&B players prefer to enter the Indian market via a Master Franchisee. This is done to target the local consumers via a regional partner who understands the local flavour attracting consumers to the new brand. A Master Franchisee also helps the foreign franchisor in changing or adding to his menu according to the Indian needs.

North American fast food chain, Burger King has made its debut in November last year in India and the company has opened 12 outlets in the National Capital Region and Mumbai. “All Burger King restaurants in India are Franchisee-Owned and operated. We are extremely pleased with the local response to the Burger King restaurants that have opened since late 2014 and look forward to growing the brand's relationship with our customers in India. Our Master Franchisee in India has confirmed intent to open restaurants in Bengaluru and Punjab,” states Rajeev Varman, CEO, Burger King India. Burger King is present in an approximately 14,000 locations serving more than 11 million guests daily in nearly 100 countries and territories worldwide.

In fact Domino's, whose Master Franchisee in India is Jubilant FoodWorks Ltd (JFL) has gone a step ahead with its services. It has now inked a deal with Indian Railway Catering and Tourism Corporation (IRCTC) to deliver pizzas while passengers are on board. The passengers can order pizza through a phone call or online. Initially, the delivery service is being provided at 12 stations including New Delhi, Jaipur, Agra, Alwar, Ambala, Jalandhar, Mathura, Muzzafarnagar, Pathankot, Vapi, Bharuch and Vadodara, and gradually it will be extended to more stations. While, e-catering facility has been extended to 120 trains to start off with and more of them will also be added in the coming days. “Yes, the arrangement has been made. The passengers can order online or via a phone call and hot pizzas will be served at their seats in the train enroute,” says a JFL spokesperson.

Johnny Rockets the global restaurant chain, founded in 1986, operates more than 330 franchise and corporate locations in 26 countries around the world. The brand offering food and fun reminiscent of feel-good Americana opened their first restaurant in India in New Delhi early last year. The newly appointed President and Chief Executive Officer, Charles Bruce says: “I am honoured to have the opportunity to lead the Johnny Rockets team and excited about working with the leadership team, our employees, restaurant teams, franchise partners and suppliers to contribute to the growth and profitability of the company.”

Factors favouring international players

Potential Indian market: As India has a huge untapped market potential, specially, in the franchise industry, therefore, a large number of foreign franchisors are targeting the Indian markets.

Favourable Government Regulations: Till a decade back, it was difficult for international players to enter the Indian markets. Enforcement of FDI has also proven to be the trigger for growth. Changing preferences of Indians: Change in the lifestyle has led to the factor for the success of these foreign F&B players. Youth Indian population: Almost three-fourth of the nation's population consists of the youth. Youngsters are the main consumers who desire to eat out and try different cuisines.

Success of US brands in India

The US F&B brands have achieved success in India owing to factors like their product development expertise, best sourcing practices, maintaining high standards of quality along with pricing and operational excellence. Locating their outlets wisely within the vicinity of the consumers' reach is the key to their success. Narrating his success mantra, Gulri says: “Awareness, supply chain and high costs are some of the challenges that we had faced initially but customisation in the menu as per the Indian demand has led to our brand's success. Brands have to recognise that Indian consumers eventually gravitate towards Indian flavours and tastes.”

Apart from this, opening outlets in shopping malls, multiplex complexes, metro stations, highways, office spaces, tier-I, II and III cities and by Indianising their menus with no beef and pork have created a long way to success of these US originated brands in India.

Established US-based F&B brands

It can be easily said that F&B brands find India a potential market for their brands by looking at the numerous franchisors that have entered the nation. Domino's, Pizza Hut, Subway, KFC, McDonald's, Dunkin' Donuts, Burger King, Carl's Jr, Johnny Rockets, Taco Bell, Starbucks, Quiznos and many others are among the leading US brands in India.





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