Wanna get our awesome news?

Subscribe to our newsletter!


Actually we won’t spam you and keep your personal data secure

As the voice of the Indian restaurant industry, we represent the interests of 500000+ restaurants & an industry valued @ USD 4 billion. Whether a chain or independent restaurant, the NRAI is here to help every step of the way. Join us!


Fast food cos try out discount recipe


New Delhi: Forget happy hours, these are happy days for fast food lovers. Outside a Costa Coffee store in Connaught Place, New Delhi, a man hands out pamphlets trying to usher in passers-by. At other ‘quick service’ restaurants (QSRs), banners scream offers like ‘buy-one-get-one-free’ and discounts as high as 50%.

With buyers remaining tightfisted for nearly two years now, big fast-food brands like Costa Coffee, Pizza Hut, Dunkin’ Donuts, KFC and Domino’s are trying hard to bait them with ‘deep’ discounts—weapon of choice in the e-tail industry so far.

“The market is very competitive and everybody is trying to grab a piece of that,” said Ravi Jaipuria, whose RJ Corp owns franchisee rights for Yum Restaurants-owned KFC, Pizza Hut and Taco Bell, and UK-based coffee chain Costa Coffee. “The spending power of people is not what it seems on paper. Everybody is fighting for the same customer” Jaipuria added that he had observed a slight increase in consumer spending April onwards, but wasn’t sure if it would last.

Sales at south Indian cuisine chain Sagar Ratna, which runs about 90 stores, have been stagnant since April last year “It’s typical for Indian consumers to hold back when the economic outlook is bleak. Policy changes by the government are yet to bear fruit,” said Murali Krishna Puna, CEO at Sagar Ratna Restaurants, which is led by private equity firm India Equity Partners.

Although everybody is offering bargains, the strategy varies. Some are bundling different products for a discounted price while others are promoting happy hours on select days to push sales.

“Exclusive weekly offers like ‘Wednesday Special’ increase foot-fall on a particular day of the week. Our latest product offerings such as ‘Friendship Bucket’ and ‘5-in-1 Meal Box’ give KFC lovers a complete meal option at an affordable price,” said Rahul Shinde, MD, KFC India.

Domino’s Pizza, which operates more than 1,000 outlets across the country, is also facing tepid sales growth. “The QSR industry on the whole is noticing more controlled discretionary spending from consumers,” said S Murugan Narayanswamy, senior VP-marketing at Domino’s Pizza India, adding that 66 We are yet to see the effects of policy changes by the government to bear fruit MURAIJ KRISHNA PARNA I CEO AT SAGAR RATNA nrerAiinAmyr it is an opportunity for them to innovate and offer more value to consumers. “Our recent Pizza Mania Extremes range was one such innovation, starting at Rs 79 for value-conscious consumers.”

The long slump is telling on all the QSRs. Costa Coffee has shut down many loss-making stores. Revenues at Jubilant Foodworks, which operates Dunkin’ Donuts and 1111. Domino’s, were 4.2% below expectations during January-March this year, and its profits took a hit of 6.6%. American fast food chain Yum! Brands’ India unit, which operates around 800 KFC, Pizza Hut and Taco Bell outlets, also reported a 5% drop in sales in 2015 due to a 13% decline in same-stores sales.

On ground, the spending power of people is not what it seems on paper. Everybody is fighting for the same customer

“These offers by QSRs are like end-of-season sales by fashion retailers,” said Arvind Singhal, founder of retail consultancy Technopak. “Apart from a wary consumer outlook, the monsoon is a lean time for QSRs because schools and colleges have reopened. They have to resort to discounting for their walk-in customers because online delivery of food has emerged as a large competitor for bricks-and-mortar fast-food chains.”

While some are bundling different products for a discounted price, others are promoting happy hours on select days to push sales

While most QSRs take orders online, the explosion of food delivery marketplaces and internet-first restaurants over the past couple of years has given consumers numerous alternatives. Backed by investor money, food-tech startups like Zomato, Foodpanda and Swiggy are also deep-discounting to shift consumers online.

“Online food delivery has become 50% of the size of the online travel. market in India in a very short-time,” said Saurabh Kocchar, CEO of Foodpanda India. Despite mount-ing losses, Zomato’s Indian operations have doubled revenues, while Rocket Internet-backed Foodpanda, which downsized its India head-count by 300 last year, has become operationally profitable in transaction revenue, meaning each one of the 70,000-odd orders it takes in a day is profitable now

Online food delivery has become 50% of the size of the online travel market in India in a very short time

Source: TOI

Recommended for you