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growth 2015-05-01

How global chains are combating drop in sales?

The entry of other global competitors like Burger King, Wendy’s, Carl’s Jr in the same segment may give these iconic chains a stiff competition as these brands have spent a lot of time in researching about the Indian market.

By Deputy Features Editor
How global chains are combating drop in sales?

Ever since global brands have entered the Indian market, they have something lucrative to offer to the hungry Indian customers. And with competition getting tougher at the fast food segment, these brands are coming up with value added offers to shower on customers.

Food giants like Domino’s, Pizza Hut, KFC, McDonald’s and Subway, amongst others, have come up with many such offers to overcome their same stores sales drop which has highly affected the QSR market in India. McDonald’s which was amongst the first global majors to tap the Indian market, entered India by opening its first outlet in October 1996 at Vasant Vihar, Delhi. Since then, it has seen several ups and downs in its operation in the last 19 years. The master franchisee for the brand in India, Hardcastle Restaurants (HRPL) serves approximately 185 million customers, annually, at its 202 (as of December 31, 2014) McDonald’s restaurants across 24 cities in the states of Telangana, Gujarat, Karnataka, Maharashtra, Tamil Nadu, Kerala and parts of Madhya Pradesh, and provides direct employment to over 7,500 employees.

But despite all these growth, the brand has to face repetitive fall in the same store sales, closing few of the outlets and coming up with various techniques to draw fair business from the Indian market. McDonald’s operates through various formats and brand extensions including standalone restaurants, drive-thru’s, 24/7, McDelivery, and dessert Kiosks in the Indian markets. Not only this, the brand included McCafe outlets at a few of its McDonald’s outlet, tapping the cafe customers in the market. The brand recently announced to open over 150 McCafes in 3-5 years by actively opening these outlets in South India. McCafe will take the expression “let's talk over a cup of coffee" to a whole new level with its aromatic coffees and flavoured teas that can be enjoyed in a relaxing ambience. The brand said in a release issued during the launch of McCafe in Bengaluru.

Commenting on the same, Smita Jatia, Managing Director - Hardcastle Restaurants, shares, “With the launch of McCafe, we will strengthen our beverage strategy and build our restaurants as a one-stop destination for all customers to enjoy across all day parts.”

On the other hand, Domino’s Pizza India which enters India in 1995, but began operation in 1996 is successfully running its outlets in the country.  The brand which renamed itself as Jubilant FoodWorks in 2009 has also faced several setbacks in its same store sales. The brands sales in the same quarter, Q3 of FY-15, has seen a 1.9 per cent surge in same-store sales (2.6 per cent decline the year before), despite losses in Dunkin Donuts. Domino's operating in the same space as Yum Brand’s Pizza Hut is bombarding its customers with different offers to maintain its sales in the country. Having claimed that India is the largest market for Domino’s outside the US, the brand has lots more in its menu to offer to the ever rising demands of the customers.

On the same lines, Yum Brands which is struggling globally has announced to close its few outlets globally, operating brands like KFC, Pizza Hut and TacoBell in the country. Yum which competes with Domino’s in the pizza space may threaten Domino’s business speculates experts. On the other hand, its KFC business which has been cold in the last few months is seeing new items on the menu to beat the drop in sales. KFC, fresh off a campaign for a fiery brand of preparation, claims to have met with success with its menu innovations.

Earlier talking to a national daily, Dhruv Kaul, CMO, KFC India, shared, "There is a faster uptake of our menu innovations. In the past, our branded beverage Krushers and Fiery Grilled chicken have done well. Our legacy of consistent innovation is not a reaction to competition."

Meanwhile, the entry of other global competitors like Burger King, Wendy’s, Carl’s Jr in the same segment may give these iconic chains a stiff competition as these brands have spent a lot of time in researching about the Indian market to take on well established brands in the market.  Thus, we can say that the fast food or the quick service space in the country will have lots of spice in their operations competing with each other in the same race.

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