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India seeks fast food novelty

News, 28 March 2016

NEW DELHI: The major international restaurant brands that first benefited from India's appetite for fast food are having to re-assess their strategies as growth slows and smaller local operators bite into their market.

Tastes are changing, the Wall Street Journal noted, and the global behemoths are no longer assured of their prime position. McDonald's, for example, isn't synonymous with burgers any more.

"What used to be a playground for five big global brands has now become a playground for ten big brands and hundreds of smaller players," according to Unnat Varma, head of Pizza Hut in India.

The eating-out market is expected to be worth some $116bn in 2016, representing a respectable 11% year-on-year growth, but down on the 16% of several years ago when ambitious expansion plans were being devised.

"The last two years have been the worst," said Ajay Kaul, chief executive at Jubilant Foodworks which operates Domino's Pizza in India.

He explained that too many stores had been built in anticipation of a "deluge of guys coming into the middle class … [but] that conversion has not happened".

At the same time, Indian brands modelling themselves on the giants – such as coffee chain Café Coffee Day, tea chain Chaayos and potato snack chain Goli Vada Pav – have successfully made inroads into the market and left their mentors' menus and outlets looking tired and dated, a state of affairs these are now rushing to rectify.

McDonald's, for example, has redesigned its signature Maharaja Mac and added a vegetarian Big Mac for the first time.

"Everyone needs to reinvent to stay relevant," said Amit Jatia, vice chairman of Westlife Development, which owns the McDonald's franchise for western and southern India.

"Even though the market is tough, you can still do things that can get you ahead," he said.

Data sourced from Wall Street Journal; additional content by Warc staff