Counting On Its Chickens
The restaurant is chilly, but the kitchen is warm and toasty. What looks like artery-clogging amounts of oil is bubbling away in deep-fat fryers. Chunks of chicken are being breaded, fried and then rested on heated counters, small labels indicating t he time until when it is good to be served. There is some staff member or the other, hair tucked away in blue safety cap, scrubbing their hands at a wash basin in the corner. Charts stuck on the wall attempt to predict the demand and estimate the amount of business the day will bring in. For KFC, it’s one more dry run for the day on which its 50th outlet in India, in Chennai’s Anna Nagar, formally opens to the neighbourhood.
The previous day, the restaurant was opened for two hours and did a business of Rs 1 lakh, which is the average takings per outlet per day, says Niren Chaudhary, Managing Director, Yum! Restaurants India. “It’s an incredible time to expand,” he says in reply to a question about the slowdown. The topline has grown 20 per cent over the last year and the number of consumers has grown 10 per cent. Pizza Hut, also part of the Yum! portfolio, is growing, but at a slower pace as it’s much bigger than KFC in spread, with 150 outlets across the country and price points that are “two times that of KFC”. It has grown 6-7 per cent over the previous year and is adding about 15 outlets a year.
The reason for these restaurants thriving, he explains, is the emphasis these concepts place on affordability. KFC is a quick-service restaurant model which aims to be affordable with prices starting at Rs 25 for a sandwich, and Pizza Hut is positioned as “affordable casual dining”, and that makes them “recession-proof”. Further, rentals are seeing a correction, and the group is gung-ho about KFC’s prospects.
Customers, especially the young ones between 19 and 29 that are KFC’s core, are looking for “something new, something different”, says Chaudhary. This trend is one of the dominant drivers of consumption and also the factor driving Yum! to test-market its other big brand, Taco Bell, in Bangalore, where the first outlet will open in November or December. And it’s not as if all this food needs to have an “Indian bent” either. “What’s more important is to be differentiated – the newness of the idea is far more important that the familiarity of the idea,” he adds.
That apart, price and value for money are constants that need the most careful consideration. Our consumers are SEC A & B in big metros and are subset of our market in the entire country. If the country’s one billion, our market is 100 million, so focus is key. Focus on the metros and there is a big likelihood of getting to your target consumers, he says.
Given that KFC’s target customers are youth, the emphasis on affordability is very high, says Chaudhary. Moreover, as it’s a quick service restaurant model, it needs massive throughput at low average spends to be competitive. There’s a selection of sandwiches for Rs 25, a snack box meal for less than Rs 50 and lunch may cost Rs 100-150 per head – and the money-value equation doesn’t end there. There is the price point value, and then the ‘value in totality’ (what one gets for the amount paid) and the third is ‘abundance value’ (the total amount of food that one gets ordering as a group). Further, marrying affordability to innovation, which ties in with the ‘something new, something different’ insight, is key.
Chaudhary says a restaurant has multiple jobs to do – it is not just a place to get a meal, it is also a venue for people to catch up and connect, pretty much ‘the other place’. Therefore, an air-conditioned, smart and affordable place is bound to do well. He points to the explosion of coffee places in the country, saying they multiplied rapidly because they recognised this truth.
Vishwadeep Kuila, CEO of the Chennai-based Oriental Cuisines which runs a host of fine dining restaurants and the Planet Yumm chain of food malls, says the organised food market in India is barely 2 per cent of the total food sales, compared to 12-15 per cent worldwide or 20-25 per cent in developed countries. As such, there is enormous potential available in India “as long as market players understand what India likes”. He says: “Let’s face it, India is starved of such outlets, neat places where people can eat well and catch up. And while people may cry about junk food, be wary about it, we will still grant it to our children.” However, the ambience is always secondary to quality and service, he says. Fast food brands such as KFC and McDonald’s are the top grossers next only to homegrown brands such as Saravana Bhavan at Chennai’s Ascendas Planet Yumm food mall, which Oriental Cuisines runs, he says.