Price drives fast food in India

02 May 2012

NEW DELHI: Global brand owners are locked in a price war as they attempt to tap into the rapidly-expanding Indian fast food market.

The Economic Times reports that companies including Yum Brands and Domino's have adopted aggressive business strategies as they compete for share.

Yum India has unveiled plans to increase its outlets from around 470 to over 1,000 between 2012 and 2015, and will invest approximately $100m in the subcontinent during this period.

According to latest financial results released earlier this month, Yum grew Indian same-restaurant sales by 8% year-on-year. This beat growth of 5% in the firm's home market of the US.

The brand owner is aiming to compete on price, with Pizza Hut, the Yum-owned restaurant chain, launching a new range of 4-5 inch pizzas which sell for as little as 29 rupees (55 cents), undercutting rivals. The mini-pizzas are positioned as a "snacking" option, extending the brand beyond mealtimes.

Speaking to the news source, Sandeep Kataria, chief marketing officer at Yum India, said: "Access to a wider base of consumers and driving volumes further is what led us to launch the new range."

For its part, Domino's, currently the Indian market leader, has launched a nationwide "pizza mania" marketing and advertising campaign, and has priced its entry-level pizza range at 39 rupees.

Meanwhile, Papa John's, which entered the Indian market in 2006, has not ruled out future price cuts to its core pizza range. In a bid to keep operating costs low, the company aims to open 400 delivery-focused, rather than dine-in, outlets in India over the next five years.

Figures cited by the Business Standard suggest that around 250,000 pizzas are delivered every day in India – with this total predicted to double by 2016.

Separate data indicate that the typical Indian consumer spends 20% of their disposable income on eating out – a total that reaches 50% in the US. This gap in consumption points to future growth in the sector as affluence increases in India.

Data sourced from Economic Times/Business Standard; additional content by Warc staff