MUMBAI: American fast-food chain Burger King, in the first year of its India operations, has posted sales of Rs 141 crore and net loss of Rs 38 crore. In the 2015-16 fiscal, the company generated an average of Rs 3.1 crore from each of its 45 outlets opened till March.
Rival McDonald’s posted average sales of Rs 3.6 crore from each outlet. Burger King, however, notched up higher numbers than Jubilant FoodWorks, where average sales per outlet was Rs 2.2 crore in the 2015-16 financial year. Jubilant Food-Works’ brands are Domino’s Pizza and Dunkin’ Donuts.
Burger King entered India in November 2014 when most quick-service restaurants were struggling with falling sales. “India, for Burger King, has been one of the largest countries it entered in recent times. The growth and finances are exactly as we planned,” said Rajeev Varma, CEO, Burger King India. “Our restaurant EBIDTA [earnings before interest, taxes, depreciation, and amortisation] is positive, which means we are making money,” he added.
The fast-food chain expects to open enough restaurants in India in two to three years to cover overheads and infrastructure expenses and become profitable at company level.
As of December 2016, Burger King India has 70 outlets in nine cities. It has partnered with Everstone Capital which holds a majority stake in the company through subsidiary F&B Asia Venture. It has lined up $100 million for expansion over the next few years and has been launching one new product every two-and-ahalf months.
“Burger King came out with an affordable pricing which has worked for them,” said Abneesh Roy, associate director at Edelweiss. “One disadvantage is that McDonald’s has a larger footprint and can subsidise in terms of ad spends over a larger number of stores.”
Leading quick-service restaurants have seen consistent decline in same-store sales growth since the last two years with consumers cutting back on discretionary spending. In addition, the segment also saw the entry of global companies including Wendy’s and Johnny Rockets, offering customers a wider cuisine range. Hence, quick-service restaurants have been expanding menus and upping promotions to reverse stagnating growth.
India’s food and beverages (F&B) industry is expected to expand at an average annual pace of 24% to reach $3.8 trillion in sales by the year ending March 2017. Fast food joints, which have the largest market share in F&B at 45%, will grow by 16.6% a year, indicates a report by consulting firm Grant Thornton India and Federation of Indian Chambers of Commerce and Industry, followed by casual dining (32% share), which is expanding 10.1% annually.
