Fast food Industry

Jaipuria Institute of Management, Lucknow
2013-15
Fast
Food
Analysi
s of
Fast
Food
Industr
y
Submit
ted to:
Prof
Amit
Sharm
a

Submitted by
Pratyush Kumar
Srivastava
Saarah Kaazmi
Kunal Singh
Divya Agrawal
Richa Pragya
Ritu Raj

Section- C

Table of Contents
Origin of the fast food market in INDIA.......................................................................2
The Indian Fast Food Market - An Overview................................................................4
Indian Fast Food Market Analysis................................................................................ 8
Key player in Indian fast food industry.......................................................................9
KFC (Kentucky Fried Chicken)................................................................................... 13
Why Indian market is critical for KFC in long run?.................................................13
Sales promotion campaign adopted by KFC:.........................................................13
MCDONALDS:............................................................................................................ 15
Dominos................................................................................................................... 23
BRAND BUILDING THROUGH ADVERTISING...........................................................24
Core Competencies of Dominos............................................................................25
Product & Service Design...................................................................................... 26
Dominos Business Strategy................................................................................... 29
PIZZA HUT................................................................................................................ 32
Marketing Strategy................................................................................................ 32
CORE COMPETENCE.............................................................................................. 32
Sustaining, building relationships and Exploiting Changing Conditions.................33
PESTEL.................................................................................................................. 34
How KFC & McDonald's plan to target each other in India........................................35
Fast food growth rate set to be a whopper in India..................................................42
Growth spreading to the heartlands......................................................................42
Growth prospects of Fast Food industry in India.......................................................43

Origin of the fast food market in INDIA

Traditionally over the ages, fast food for the average Indian customer meant having
breads i.e., paranthas, rotis etc. with sabzi or achaar. These were the traditionally
available snacks or in the form of samosas etc. All the items were available at the
roadside dhabas or the local sweet shops. There were no established eating places
or restaurants for the average Indian customer.
It was the Nirulas family way back in 1920’s that started the trend of opening good
eating places in the city. Nirulas initially when they entered the restaurant business,
were more into catering and hotel business. It was only in the late 50’s and early
60’s that they decided to open up a restaurant serving snacks and fast food. By 70’s
they had a pastry shop, snack place and Hot Shoppe. This started the trend of
eating joints in the city and over the country. Nirula’s was considered to be the
pioneer in fast food business. Seeing its success in the country other local fast food
joints and restaurant started coming up in the 80’s. With the coming up of these
local joints Nirulas was not left behind. It had a well-established fast food chain over
the next decade. However seeing the potential in the country in the 90’s due to the
changing life styles, the established chains world over made their entry into the
Indian food market. However the tastes and the style of the kind of food which
these MNC’s we offering the Indian customer has been made familiar to him by
Nirula’s only.
Although the concept was introduced to the Indians way back, but in the true sense
market for fast food has been developed only after the entry the various MNC’s
starting with Wimpys to McDonald’s, Pizza Hut, KFC, Dominos etc., with many more
to come over the next few years.
Upto the year 1995 Indian food market was predominantly dominated by the
traditional dhabas, potential restaurants in the customer’s colony and some
restaurants in a five star hotel. Having fast food i.e., burgers, pizzas etc., was
considered to be an option for eating out. It was not at all synonymous with the
American concept of fast food as a quick takeaway bite or a substitute for lunch.
Apart from fast food being available at the local colony restaurants and at some five
star restaurants, Nirulas was the only fast food chain existing in the country with its
restaurants expanding with every passing year since its inception. It has been
almost 50 years now since its set up and there is hardly anyone who doesn’t know
that Nirulas exists. Nirulas was the first one to bring fast food to India back in the
50’s since then it has evolved into an eating place with a tremendous brand equity
and brand recognition. It proved to be a perfect eating place for an average middle
class who wants to eat out at an affordable price who cant afford the five-star
restaurants and would not want to go to the local dhabas.

Nirulas almost had a monopoly for decades due to the way it has been placed. It is a
place where a person from an average middle class group to upper class group can
go to eat out. Its popularity has increased over the decades. With the trends
changing and the incomes rising almost anybody who can afford to eat out could go
for a snack at Nirulas.
However the year 1995-96 witnessed a drastic change. 1996 is considered to be the
year of India’s entry into the world food market. International giants such as
McDonalds, KFC, TGIF, Dominos, Pizza Hut all bombarded the Indian food market.
Before these, UK-based joint called Wimpy’s had established its chain in the country
in 1990. By year 1996 it had about three to four joints established in Delhi. However
it did not pose much of a threat to Nirulas reason being lack of variety and that
Wimpys was looked at more of a hangout place rather than eating out with the
family.
Its been the American international giants i.e., McDonalds, Pizza Hut etc., who have
targeted their restaurants to the families. Apart from the foreign and Indian fast
food chains setting up shop, there are a range of specialty restaurants offering
varied fare such as Chinese, Mexican, French, Italian etc. These places however
offer range of items different from burgers, pizzas etc, but they definitely are
competition to both foreign and Indian fast food chains.
However, restaurant business is such which is surrounded by threat from
everywhere be it Indian joints or foreign joints.
It is only these international joints and specialty restaurants which are gradually
coming up and some Indian restaurants which have made up the food market. Prior
to this it was only the local restaurant that became visible while passing by or
through local banners etc., and the five star restaurants were for the elite class out
of reach by the average middle class customer. There was hardly any awareness or
promotion to beat competition.
Each of the foreign food joints that have come into the country has their own
strategy lined up to differ from the rest. Each of these studied the Indian tastes and
style and thereby targeted the Indian customer. An average Indian restaurant goer
is no convenience eater, unlike the Americans.
If he is paying, he is paying for food that tastes good (Spicy, soft, savory etc.), not
for how pleasantly the stuff is served or how spotless the widows are. He wants food
for that can make him come back to the restaurant. An Indian food joint owner
would definitely understand this but an American company, which comes and
places it directly without knowing the customer is definitely in for trouble. Customer
loyalty in a restaurant business is essentially low. A customer when he comes to a
restaurant usually looks at the quality of food, variety, ambience, speed of delivery
and the location. The variety would influence the frequency of visits since taste is a
dominating factor to the Indian customers.

Almost all the fast food chains both Indian i.e., Nirulas and foreign i.e., McDonalds
etc., are targeting the families. This serves to be an advantage because the
turnaround time is short and family has higher propensity to spend because
different members order larger variety of dishes.
Each of these restaurants delivers quality, value and services in its own way
through its line of strategies. The emphasis is on the value that the restaurant is
delivering to the customers.
The foray of multinational fast food retailers into India has impacted the taste buds
of Indian consumers significantly. Instant food is scoring over traditional food due to
influence of Western countries, and rise in income & subsequent standard of living,
convenience, etc. As a result, fast food menus are gaining wider acceptance from
the Indian consumers.

The Indian Fast Food Market - An Overview

Dryer has witnessed high growth strides in the past years, with increasing
disposable income; exposure to a number of cuisines; and consumers’ willingness
to experiment a mix of both Western and local menu. It has not only provided
convenience to people who shuttle between home and work for a bigger part of the
day but also eliminated the requirement of conventional cutlery. This industry at
the moment thrives on international appeal endorsed by niche chains. The
development of nutritious and healthier replacements for the traditional servings at
fast food restaurants has transformed into mass promotion of portable foods.
As per a new research report titled ‘Indian Fast Food Market Analysis’, currently the
Indian fast food industry stands at a massive size of ` 47 billion, driven by a
growing number of working professionals and increasing westernization. Apart from
this, busy life schedule, standardized food, and less time- consuming processes are
also fuelling the demand from domestic consumers in the industry. As demand for
all types of fast food items are consistently on the rise, pizza, burger, and French
fries have become the all time favorite among young Indians, more so with some of
the well-known burger and pizza restaurants like McDonald’s, Domino’s, KFC, Pizza
Hut, Nirula’s etc, operating in India.

a. Consumers’ first choice
As far as products are concerned, instant noodles and pasta are at a nascent stage
but are fast evolving in the Indian fast food business. Demand for these food items
are growing as consumers with hectic lifestyles do not want to spend much time in
cooking. Besides, a variety of noodles and pasta is easily available in the

international fast food makers’ menu at an attractive price range, pulling various
consumers to add these delicious foods into their palates. The instant noodles and
pasta segment has thus turned out to be a big hit among fast food lovers, resulting
in the entry of many leading players into this segment.
As per an ongoing study on the Indian fast food industry, there has been a major
shift in food habits in the metropolitan cities encouraging the manufacturers to
introduce innovative flavors in noodles and pastas to suit Indian consumers. Further,
the enhancement of fried instant noodles’ condiment, good performance of nonfried noodles, and the subsequent release of coarse cereal noodles are some of the
main trends currently prevailing in the Indian market. About 86 per cent of
households prefer to consume instant food over traditional food due to steep rise in
dual income level & standard of living, convenience and influence of Western
countries. As a result, fast food menus comprising pizza, burger, sandwiches, etc
are gaining wider acceptance from the Indian consumers.

b. Competitors’ zone
On the competitive front, the fast food market in India is poised for rapid expansion
and higher efficiency with the entry of international giants. It has also been
observed that with the increasing popularity of dining out in India, restaurant
operators want to safeguard their share of improved consumer spending by offering
all types of cuisines. This provides a significant opportunity to players in the food
and beverage industry.
Major players in this sector are creating a competitive environment for future
growth. And in order to cater to this augmented customer base, Nirula’s is
increasing its existence in metro cities along with the Tier-2 and Tier-3 cities through
different formats. The new outlets in cities, such as Amritsar, Patna, Bhopal, Pune
and Ludhiana would mainly be Family Style Restaurants (FSR), ice cream kiosks and
parlors. Likewise, KFC has plans to increase its existence from 21 cities at present to
around 75 cities through its objective to operate 500 restaurants in India by 2015.
The company is eager to spread wings to new cities such as Hubli, Madurai, Salem
and Mysore in the south, and in the north in Kanpur, Allahabad.
Similarly, McDonald’s is targeting 1,000 restaurants by 2020. Hard castle
Restaurants, which runs
McDonald’s in the south and west, plans to open up to 70 stores next year. It will be
the franchisee’s biggest expansion in the past 15 years. McDonald’s also plans to
invest ` 10 billion to boost growth. Most of the food chains are busy in innovating
and customizing their products. For instance, in order to boost revenue and offer
different varieties to the tastes of various cross-sections of people, Domino’s Pizza is
planning to customize its range of products. The company is taking initiatives to
come up with a new assortment of diet pizzas for Indians, who are health-conscious

and intends to introduce different specialties in pizza for people residing in different
parts, like North and South India. Further, the acceptance of fast food has grown
faster as several players have well-understood the basic requirements of Indian
food and served more vegetarians & selected no vegetarian meal options (excludes
pork and beef from their menu).

c. Franchise outlets
On the strategic front, it has been found that the franchising concept in India is
continuously rising, with the increase in the number of international players opening
more franchise outlets in India. The increasing revenue figures from franchise
outlets encourage the players to opt for the concept. As a result, many international
fast food giants are opening up their franchise outlets in India to grab the huge
untapped potential in a fast emerging market. In a recent development, Nando,
South Africa-based Afro-Portuguese, global restaurant chain is starting up around 35
outlets by 2013 in various parts of India through the franchise route. The company
expects to expand enormously in the northern parts of India.
d. Varying consumer behavior
Talking about consumers, it has been a noticeable trend that food consumption
pattern of urban Indian families has changed dramatically with times owing to the
growing influence of Western culture. Indians have started dining out and moved on
to accept different varieties of delicious food from the world. Further, studies
indicate a radical change in the consumption patterns of Indian consumers, who
have traditionally been known for their price sensitiveness. Middle-class families as
well as the youth prefer to have a burger worth ` 25 rather than that worth ` 50-75.
This reveals that despite looking for taste and brand, consumers in India are still
inclined to low-price and health issues. As per a survey conducted in
2010, nearly 80 per cent of the fast food consumers expect the fast food owners to
implement required measures for reducing the harmful impact of fast food. To tackle
this issue, these owners have adopted innovative cooking styles, such as baking
and grilling that retain the flavor of food and also require lesser quantity of oil.
Besides, major retailers in this area are now providing all necessary information like
ingredients, nutrition and fat contained on the product pack. These measures have
helped Indian fast food consumers select healthy and nutritious meal as well as
protect them from the dangerous effect of unhealthy fast food.
e. Government inventiveness
As far as the role of government is concerned, various initiatives in the recent past
have resulted in the entry of many international Fast Food Retailers in the country.
With the economic liberalization in 1991, nearly all tariff and non-tariff barriers have

been removed or minimized from the Indian boundary that has helped many
retailers to enter the growing Indian fast food industry.
As per the Food Safety and Standards Authority of India, the new rules and
standards will make it mandatory for street food vendors to register with state
health departments that are into policing hygiene. It requires the food authority to
issue licenses to food vendors only after ensuring that their products are safe and
hygienic. Vendors with products that are found unhygienic or unsafe will face
monetary penalties. Moreover, user friendly and IT-enabled licensing system will be
created to improve governance and compliance.
To try to ensure that India has the capacity to implement the new law, the
government has increased the number of state laboratories for testing eatables and
appointed more food safety officers to check food quality & hygiene instead of
merely monitoring adulteration.
Besides, the Indian government has also directed state governments to prohibit
sales of fast food and carbonated drinks on school premises & check out all such
items that lead to unhealthy eating from cafeteria within a 1,500 feet radius of
schools. In addition, the country’s regulators have ordered food chains to provide
product nutritional labeling at the time of sale, so that customers can know about
what they are eating and what effect it can have on their health. This step is a result
of various studies that have shown that a typical fast food has very high density
that causes people to eat more than they usually require, causing people to fall ill
with many health-related problems like obesity, diabetes and heart diseases.
f. Shortfalls and remedies
India has witnessed a massive increase in the consumption of fast food over the
past few years. Indeed, the country has come out as one of the rapidly growing fast
food markets in the world. Although the country offers lucrative opportunities to
new entrants due to rapid urbanization and changing lifestyles, there still exist
some roadblocks, which may hinder the exponential growth route of this industry in
future.
Competition from local street vendors remains the biggest threat to the growth of
the fast food industry in the country. There is an increase in raw materials cost and
fuel charges, which is causing a lot of strain to the players in this segment. Lack of
proper infrastructural facilities, with respect to roads and electricity, has also
hampered the development of fast food market in India. Besides, the industry will
have to tackle a number of roadblocks including the rising consumer concerns
regarding obesity and health-consciousness to maintain the ongoing trend.
g. On a fast track
If the challenges are met with serious considerations, the Indian fast food industry is
anticipated to achieve glorious milestones in the coming years. Increasing

inclination of people to eat outside (restaurants) will be the major driving force
behind the projected growth. Besides, healthy food options and low-price menu will
also contribute to its growth, to attain a CAGR of around 33 per cent during 20102014. Moreover, continuous economic growth and improving employment situation
will lead to higher personal expenditures on outside food by 2014. Fast food joints
will also need to maintain their stance on pricing because the environment will
remain extremely competitive. Hence, it is believed that the fast food industry will
experience modest improvement in the coming years.

Source – Modern Food Processing (Infomedia18)

Indian Fast Food Market Analysis
The Indian fast food market has been witnessing rapid growth on the back of
positive developments and presence of massive investments. Currently, market
growth is largely fuelled by the rising young population, working women, hectic
schedules, and increasing disposable income of the middle-class households. Some
of the unique properties of fast food like quick served, cost advantage, etc are
making it highly popular among the masses. Thus, India offers enormous
opportunities for both domestic as well as international players.
According to our new research report, “Indian Fast Food Market Analysis”, the
Indian Fast Food Industry is anticipated to grow at a CAGR of around 34% during
2011-2014. Anticipating the future growth, many big international players are
entering into the market by making deals with the domestic players. And those
already present in the Indian market are expanding their presence in different
provinces of the country. This trend will emerge more strongly during our forecast
period, providing opportunities to local players to widen their product portfolios.
Our research further revealed that there is a large scope of growth in the untapped
tier-II and tier-III cities, owing to which, major fast food retailers have already started
applying various marketing strategies in popularizing their brands in these cities.
Furthermore, they are aiming to provide affordable and customized products to suit
the needs of people that would ultimately provide necessary boost to the Indian fast
food industry.
The report also provides extensive information on the country’s fast food market,
besides discussing the growing segments like Noodle market, Pizza market, and
others food market. Thus, it provides valuable information about the Fast food
companies and provides necessary insight for investors looking to enter this market.
Moreover, the report features forecast for fast food sales in the country. The forecast
is based on the correlation between past market growth and growth in base drivers,
such as middle class, urbanization, cultural shift, and lifestyle changes. Due
consideration is given on competitive landscape to enable clients to understand
market structure and growth prospects.

Key player in Indian fast food industry
The size of McDonald’s, Domino’s Pizza, Pizza Hut and KFC in following terms –
Sales, Production
 McDonald’s Corporation had annual revenues of US$27.5 billion and profits of
$5.5 billion in FY year 2012. McDonald’s is present in 40 Indian cities with 217
restaurants and serves 650,000 customers daily
 Domino’s Pizza delivers an average of 1 million pizzas per day sales of $8.2
billion.
 KFC had annual revenues of US$20 billion.
 Pizza Hut had annual revenues of US$12 billion.
Employees
 McDonald’s India employs a sizable complement of staff numbering 9,000
people.
 Pizza Hut India employs a sizable complement of staff numbering 8,000
people.
 KFC has 180,000 employees across the world.
Market Share
 Among McDonald’s has 42% market share
 Among Pizza Hut has 46.4% market share and Dominos has 21.67% market
share.
 KFC has 42.11% market share.
Segmentation
1. McDonald’s segmentation in India has three different bases:
a. Demographic Segmentation: Kids, Family and Students
McDonald’s offers different products like Happy Meal which includes a free toy for
kids. For families it has made different outlets and meals which are suitable for
takeaways and drive-thru. McDonald’s has made its environment which is suitable
for students of school to hang out with their friends and can get their lunch at
McDonald’s.
b. Psychographic segmentation: Convenience and lifestyle
McDonald’s has adopted itself according to the convenience and lifestyle of the
Indian consumers, as India has a huge vegetarian population so McDonald’s came
up with a different and new product line which includes items like Mc Veggie burger
and Mc Aloo tikki Burger. They also made McDonald’s as a place to relax and even
for entertainment.

c. Behavioural segmentation: Occasions, for e.g. Birthday Parties of kids
McDonald’s can get more customers by whom they can get most of the share of
India Fast Food Industry but they should emphasis on their Targeting technique.
McDonald’s has segmented their products according to bases of Demographic,
Psychographic and Behavioral.


McDonald’s target segments are children, youth and the young urban people.



Children are more interested in toys and delicious meals.



Youth prefer those places which are entertaining.



Urban family select McDonald for various occasions like birthday party,
placement treat etc.



For teenagers and young youth , McDonald has priced several products.

2. KFC‘s segmentation in India
a. Demographic Factor
Age: Generally there is no age limit focus by the KFC. The target and focus is on
each and every individual in a society. KFC finds its largest demographic in the
young
of
any
society.
Gender: Both male and females are focused by KFC, gender does not play any role
here.
Household Size: This plays a vital role in the demographic factor of the KFC.
Generally they target whole families rather than single persons. This being the
reason for their Family Meals which are basically bundled items served at a
nominally cheaper rate.
b. Economic Factors
Income: Income is an important key factor for KFC. This factor decides which class is
to be targeted. In the early rise of KFC they focused on the upper class but slowly
are introducing economy meals that attract the lower to middle class.
Consumption Behaviour: It estimates the behaviour of people, their liking and
disliking towards the pricing of the products.
c. Behaviour Factors
In behavioural aspect they segmented the market on the basis of quality, taste and
price. Following are the different possible segments in this regard: taste conscious,
quality conscious, class conscious, and combination of price and quality.
d. Geographic Factors

On the basis of the geographical factor we have divided our market in two main
segments, urban and semi urban.
e. Political Factor
The operations of KFC are affected by the government policies on the regulations of
fast food operation. Currently government are controlling the marketing of fast food
restaurant because of health concern such as cardiovascular and cholesterol issue
and obesity among the young and children in the country. Governments also control
the license given for open the fast food restaurant and other business regulation
need to follow such as for a franchise business. Good relationship with government
in giving mutual benefits such as employment and tax is a must for the company to
succeed in any foreign market.

3. Pizza Hut‘s segmentation in India
a. Geographic:
 Region – pizza hut outlets in different countries is a way of segmenting their
market according to region and finding out potential markets.
 City – they also segment the cities as class i, class ii, metros, small towns.
b. Demographic
 Age – under 10years, 10 to 18 years, 18 to 25 years, 25 to 40 years, 40+
years.
 Family income – middle class, upper middle class, high class
 Dual income earners – yes/no
c. Psychographic
 Socio-economic class – urban (a1, a2, b1, b2, c, d)
d.




Behavioural
Occasions – birthdays, corporate lunches, marriages, parties, receptions
Loyalty status – low, medium, high
User status – first time, regular, non-user

Targeting
 In geographic segment they targeted countries where there were no pizza hut
outlets. Initially opened in class I cities and then have now moved to metros.
 In demographic segment their main target is the young adults ranging from
25 years to 40 years and also dual income earners family. They aim basically
at the uppermiddle class and the high class income families.
 In psychographic segmentation they targeted a1, a2, b1 socio-economic
classes.

 In behavioral segmentation they targeted for occasions such as birthday
bashes, corporate lunches. It was also found that they were targeting the first
time users because they felt that their quality and taste would automatically
make them a loyal customer.

Positioning
The ambience and decor of all pizza hut outlets are good and the outlets are
spacious. When customers think of party and decide to have pizza, pizza hut only
comes into their mind. Pizza hut also arranges kitty parties, birthday parties and
business meetings in their outlets. Pizza hut has customized birthday party invites
with different themes for the customers to choose and use it as invitations. Though
pizza hut is costlier than dominos, they have their own customers, who do not
bother about spending, but look for quality and personalized service. When we visit
pizza hut, they have restaurant hostess who will assign us tables and introduce the
steward who will be taking care of us. This is generally a procedure that is followed
in five star category hotels and pizza hut is also following it to emphasize on service
quality.
Pizza Hut has come to become synonymous with the ‘best pizzas under one roof’.
They have positioned themselves for their unique dining experience

KFC (Kentucky Fried Chicken)
KFC has been a late entrant in the Indian market. Even they have unique offering
with “Crispy Chicken”, it faces stiff competition in fast food segment from organized
player like McDonald which competes with its range of value meals and Dominos
which is symbolized by its 30-minutes delivery of Pizza. In fact, in all major market
across the globe, KFC competes with these two companies. Both the brand has look
at catering their product offerings suited to Indian tastes. KFC has also included
item such as Rizo (Rice) which is served only in south East Asian countries. The
company is owned by yum brands! And has several license in India including KFC
Malaysia with Kolkata forming a major sourcing destination.

Why Indian market is critical for KFC in long run?
More than 50% of sales and profits are generated from the Chinese market.
However, the recent food scandal in china has affected KFC adversely, thereby the
emphasising the need to grow in other markets. India forms the perfect answer to
this requirement with a young population and growing spending power.

Sales promotion campaign adopted by KFC:
KFC has a tie-up with Freecharge.in through which it offers food coupons currently.
The various offers that it has are:




Get three piece hot wings with any meal
Get a Choco cake on purchase of Rs. 300
Value Snacker meal at INR 70 (veg) and INR 80 (non-veg).

In term of in-store sales promotion, KFC offers a special offer to promote breakfast
sales. If a meal is ordered in the breakfast slot, the customer can avail another
piece of crispy chicken for an additional INR 20 instead of INR 75 in normal case.
This can been seen in direct response to McDonald which is promoting its breakfast
menu quite heavily with its loyalty cards that offer free McMuffin during breakfast.
Both the freecharge.in and in-store campaign is not valid for home delivery order.
However, there is a slightly fallacy in this assumption on KFC’s part as Indian are
not likely to consume chicken in breakfast.
If we closely analyse the three offers above, the third coupon is redundant as the
snacker meals are available at these prices even without the coupons. The second
coupons ensures a minimum ticket size of INR 300 in order to avail the offer, which

is possibly only in groups of 2 or more generally. The only value coupon appears to
be three piece hot wings free which can be availed with meals starting from INR 70.
KFC recently started its home delivery service in India, for which it has similar
offers. However the minimum order size for home delivery has to be INR 150. In
addition to it, KFC was also offering 2 Litre Pepsi free with chicken buckets for home
delivery. As a consumer, there is enormous value in the deals as KFC is often
perceived as a premium product due to its unique offering.
In fact, the value deals can also be looked at as targeting the college student and
the family market to change its perception from a fast food to family food. If we
analyse the monetary value of the deals, KFC has a significant cushion as margins
are quite high due to the price difference between the final product and the raw
materials. The only problem for KFC though will be who redeems it and how it is
being redeemed. For instance, the coupon for three piece hot wings free might pose
serious challenge towards the profitability in case it’s redeemed with the low priced
meals. However, there is little doubt that the strategy is bound to increase market
share for KFC in the last food segment in short run.

KFC India has launched its first ever digital only campaign,
promoting its Krushers at net-savvy teenagers in the country.
The fast food brand has launched the first ever ‘User Generated Graphic Novel’ in
India, that allows consumers to input their pictures, names, and a couple of favorite
catchphrases into a storyline. The consumer can then read his/her own personalized
graphic novel, and share it with their friends on Facebook. This engaging application
has already seen 17,000 consumers creating their own “Krushers Komics” within 7
days of launching the application.
Each day, the best male and female entries will get a print version of their novels as
memorabilia. Weekly winners with the best novels get the opportunity to win an
Xbox 360.
On YouTube, KFC has created a digital interactive brand channel. Users logging on to
the channel will see an endless video of two teenagers sitting in a library, looking
infinitely bored.
They ask the user to liberate them from the boredom, the user has to do so by
dragging them a Krusher from the bar above. The protagonist instantly comes to
life, pulls out the video timeline, and uses it as a straw to drink the Krusher. He/she
then goes into a Krushers world, where events unfold basis the Krusher selected.
Speaking on the first-of-its-kind online campaign, Tarun Lal, General Manager - KFC
India and Area Countries said, “With the launch of a dedicated social media
campaign for Krushers, we are taking forward our journey of fan engagement on
digital platforms to the next level. The youth of today, our core TG spends most of

their time online and our initiatives in the past like “Currycature’, ‘KFC Wow’ and
‘Design Your Own Bucket’ have done very well for us. Going forward, we are hoping
to achieve deeper engagement with more and more consumers, making KFC the
Most Social QSR brand in the country.”
KFC currently has around 3.8 million Facebook fans in India.

MCDONALDS:
Introduction
1940: FIRST MCDONALDS
1953: BEGINS TO FRANCHISE
1960: RENAMED AS MCDONALDS CORPORATION
1965: WENT PUBLIC
1971: FIRST ASIAN MCDONALDS
1980: FIRST POULTRY ITEM
1984: SPONSOR OF OLYMPICS
1996-97: BABY PROMOTION
2005: CALL CENTERS

McDonald’s IN INDIA
1996: FIRST INDIAN MCDONALDS OPENS
1997: FIRST DRIVE THROUGH
2000: FIRST HIGHWAY RESTAURANT
2003: FIRST DESERT KIOSK
2004: MCDELIVERY SERVICE
2006: MCDELIVERY ON BICYCLES
2007: FIRST 24 HOUR MCDONALDS RESTAURANT
2013: NATIONAL BREAKFAST DAY

4P’s of McDonald
PRODUCTS:
In India McDonald’s has a diversified product range which focus more on vegetarian
products because most customer in India is Vegetarian. The happy meal for children
is more in demand among others. It has lots of item in their menu which increases
its popularity. McDonald’s studied the behavior, taste and preferences of Indian
customer and then provided menu which is very different from other international
market. It removed beef, pork and mutton from the menu.

It bring best quality product.
Various items are as follows:






Breakfast Menu
Regular Menu
Beverages
Desserts
Happy Meal

India is a first country were McDonald’s serve non-beef and non-pork products.
It also serves special sauces that use local spices and chillies.

PRICES:
Pricing is very important as it decide the revenue of a particular company. The
pricing strategy of McDonald’s is to attract middle and lower class people. It uses
value pricing and bundling pricing strategies such as combo meal, happy meal etc
to increase the sales of a product.

PROMOTION:


McDonald’s used extensive advertising campaign.



It uses various media to attract large number of customer at a time. i.e
television, radio and newspapers. Television played a important role in
advertising.



It also uses billboards , posters.



McDonald also uses co-branding strategy . In this coca cola have a tie up with
McDonald from many years.



Some of the famous marketing campaigns of McDonald are-



You deserve a break today, so get up and get away- To McDonald



“Aap ke zamane mein, baap ke zamane ke daam”.



“Food ,Folks and Fun”



“I’m loving it”.

It also use personal selling, advertising, sales promotion, public relation and direct
marketing.
Sales Promotion- it consist of activities by organizing events, programmes,
function, distribution of free coupons, contest, providing offers etc.
Public relation-the employees in the outlet interact with customer face to face.

PLACE:
It consist of distribution channel. It is very important so that product can be
available to the customer at the right place at right time and the right quality.
McDonald's now in India has a network of over 250 restaurants across the country.
McDonald's India is a leader in the food retail space, which has more than 250
restaurants serving more than 6.5 lakh customers daily in India

Strategies in India:
McDonald entered into India in 1996.
They had joint venture with Connaught plaza restaurant and hard castle restaurant.
Connaught plaza restaurants manages operations in North India whereas Hard
castle restaurant in western.
McDonald in India is a joint-venture under the ownership and management of two
Indians, Amit Jatia and Vikram Bakshi.
Four main pillars of McDonald are fresh food, affordable prices, fast service and
limited
menu.
McDonald think about Indian customer taste, lifestyle, languages and perception.
McDonald products in India neither contain beef nor pork in it.
It survived only due to keen understanding of the Indian economy.
They want to make McDonald as a favorite place for customer.
The strategy focuses on people, price, customer experience, promotion and place.
McDonald’s success is the quality standards as they have been able to maintain all
over the world .

They developed new menu items which always attracting new customer and giving
more reasons to old customer to be attached.
They operate on franchisee basis.
India have large vegetarian customer so they came with completely new menu of
vegetarian like McVeggie burger and McAloo Tikki which suit the Indian customer.
McDonald's Corporation as it enhances its trust in the local partner.
McDonald's India has an aggressive expansion plan - including market expansion,
new customer outreach formats and menu expansion.
It also re-engineered its operations to address the special requirements of
vegetarians. Special care is taken to ensure that all vegetable products are prepared
separately, using dedicated equipment and utensils. This separation of vegetarian
and non-vegetarian food products is maintained throughout the various stages of
procurement, cooking and serving.
McDonald's have a philosophy of Quality, Service, and Cleanliness & Value for
Money. They provide customers high quality products, served quickly with a smile,
in a clean and pleasant environment at an affordable price. This effectively means
that the McDonald's menu is priced at a value that the largest segment of the Indian
consumers can afford, while at the same time ensuring that quality is not sacrificed
for value - rather, McDonald's leverages economies to minimize costs while
maximizing value to customers.
It also promote family –dining experiences.

Dominos
Dominos has positioned and established itself as the pioneer in the pizza delivery
service. They are giving different offerings for different segments like local favorites,
Global favorites, Premium pizzas, kids’ corner and designer’s pizza .A fair degree of
flexibility is available where customers can customize their pizza and can choose to
purchase “combos” thereby providing better value for money. Additional items such
as soft drinks accompany these choices. Dominos has successfully implemented
this concept of mass customization by catering to customer’s individual needs
through unique combinations. Dominos standard product and services offering is
universal across the world – quality pizza delivery in approximately thirty minutes.

Corporate Vision
The Dominos Corporate Vision statement Passionate focuses on the following key
areas:


Being better than the competition



Ensuring a quality product



Providing excellent service



Creating lasting relationships with its employees and the communities within
which it operates.

A clear corporate vision ensures that the company and its franchises can work
towards meeting common goals thereby increasing its business in a potentially
virtuous cycle overall global vision translates into specifics at a country level in a
seamless manner so that the overall strategic vision is kept in mind at all times.
Mission
“Domino’s pizza is the pizza specialist who consistently delights the customer with
great taste and choice pizza with friendly, courteous team members providing
prompt, safe delivery service”
Domino’s values
During our visit to Islamabad franchise following five values were seen written on
white board where all the employees was working
Domino’s vision
Exceptional people on a mission, to be the best pizza delivery company in the
world.
Jubilant Food Works Ltd. (formerly Domino's Pizza India Ltd) was incorporated in
March 1995 as the master franchisee for South Asia Pacific, of Domino's Pizza

International Inc., of USA. Moreover, the company holds the master franchisee
rights for Sri Lanka and Bangladesh through its wholly owned subsidiary. Mr. Shyam
S.Bhartia and Mr. Hari S. Bhartia of the Jubilant Group are the promoters of the
company. Since inception, Domino's Pizza India Ltd. has proceeded to become one
of the largest and fastest growing international food chains in South Asia. The first
Domino's Pizza store in India opened in January 1996, at New Delhi. Today, Domino's
Pizza India has grown into a countrywide network around 411 outlets in 95 cities.
POSITIONING WAR
When Domino's entered the Indian market, the concept of home delivery was still in
its nascent stages. It existed only in some major cities and was restricted to delivery
by the friendly neighborhood fast food outlets. Eating out at 'branded' restaurants
was more prevalent.
GOING PLACES
Domino’s has selected their store locations wisely with focus on shopping malls,
multiplex complexes, metro stations, highways, offices spaces not only in Tier-1 but
has also extended their foot print in Tier-2 and Tier-3 cities reaching out to a larger
consumer base.
LOCALIZING THE MENU
Since its entry into India, Domino's introduced new toppings for Pizzas to cater to
the local tastes. Different flavours were introduced to cater to local population.

BRAND BUILDING THROUGH ADVERTISING
Domino's and Pizza Hut initially restricted their ad strategy to banners, hoardings
and specific promotions. In August 2000, Domino's launched the
'Hungry Kya? (Are You Hungry)' sequence of advertisements on television. In
2009 Domino’s rolled out a new campaign 'Khushiyon ki Home Delivery', to promote
the home delivery service of its latest offering. The campaign has been created by
Contract Advertising and positions the home delivery of pizza and pasta as a very
convenient service.
PRICING AND PROMOTION WARS
Through its 'Fun Meal for 4’ pack the Domino’s Pizza India offers four pizzas at the
rate starting at Rs 156. This has helped the specialty food franchise to enhance the
strength of its customer base. Domino's has introduced price cuts, discounts to
attract the customers. They offer comeback value to their customer.

Core Competencies of Dominos
Dominos core competencies have evolved over time. Their unique sets of strengths
have helped the Company dominate the pizza food service industry, and a leader in
the home delivery / take away.
Unique
Supply
chain
model :
Better
quality &
consistency

focussed
on the
core
competen
cy of
delivery

Dominos
competitive
advantgseglobal leader
in pizza take
away/home
delivery

level Leaner
Stores :
Better
operating
margins

unique
global
model:allow
s flexibilty
at the
regional
level

Product & Service Design
Failed Product and Product Re-design:
Dominos openly acknowledge shortcomings and use customer feedback to revise
their strategy and approach. In an effort to design their product again, the company
reconfigured its recipe. They tested several combinations of cheeses, sauces and
crust to finally arrive at a recipe that was welcomed by the public. It is useful to
note that the end customer was heavily involved in the process of the product being
re-designed and influenced the outcome largely. This approach of using customer
feedback can be credited the company witnessing an increase in sales following the
redesigning of their product.

Operations Challenge of the Product/Service Mix
Additionally the thirty minutes delivery guarantee that was initially introduced but
later cancelled due to a relatively high incidence of accidents and snatching of pizza
on roads. This is an example of a service delivery challenge the company faced.
Recognizing that the thirty-minute delivery was an attractive option for the
customer, Dominos reintroduced the concept, however allowing itself some leeway
and positioning it as a “gift” to the customer.
Process Design
Transformation &conversion process in term of 4Vs:
Volume: high volume-trained staff following same standard procedures in massive
quantity as it is efficient way to produce special equipment leading to continuous
operations
Variety: the customers have a choice to select their own topping or can add more
ingredients. Dominos moreover redesign operational strategies on the basis of
customer feedback
Variation in demand: dominos has low demand in daytime but demand variation
is high at lunch and dinner time
Degree of visibility: when the customer comes for dine in or for take away
kitchen is highly visible, but in case of delivery at door step visibility of production
process is low
Assembly line approach
Dominos were the pioneers to use the assembly line approach to prepare pizzas and
other items at high degree of consistency .They has chosen to use the assembly line

approach to produce its pizzas, while at the same time they have retained the
flexibility of a batch flow process.
The production process at a Dominos kitchen utilizes the consistency and
efficiencies that comes from using an assembly line approach while retaining the
flexibility that comes from adopting a batch type manufacturing process. Dominos
calls “make line” to its assembly line. This make line methodology also facilitates
dominos to produce higher volume in rush and peak hours
The Production Process
The production process is very streamlined and structured - from the order
placement to thefinal delivery to the end customer.
O rd e r
p la c e m e n t
A s s e m b ly lin e
C o o k in g
p a c k in g

p ro d u c t is s e r v e d to
en d co n su m er or
d e liv e re d

7 steps of production process
Step 1: The customer initiates the order. It could be through the phone, internet or
a walk-in to the restaurant.
Step 2: The Dominos representative takes the order and enters it into the Dominos
PULSE system (a proprietary system that streamlines the order taking process).
The PULSE system increases efficiencies at a store level. The key functions of this
system are:
(a) Touch screen ordering: Improves order taking accuracy and efficiency especially
during busy periods.
(b) Delivery driver routing system: Improves delivery efficiency.
Step 3: The order displayed on the screen on the assembly line along with the
customer “specifications.
Step 4: One of the team members in the assembly line picks up the work order,
prepares the dough and applies the sauce and cheese accordingly.

Dominos: dough making

Dominos: assembly line

Step 5: In the next step of the “make line” another team member add the
appropriate type /amount of toppings, and then places it into the oven.

Dominos: oven baking
Step 6:After the allotted baking time, a third member of staff removes the pizza
from the oven, and places it in a box (which has the order type & number displayed
to ensure accuracy of delivery). The pizza is then ready for delivery.

Dominos: packaging
Step 7: The pizza box is put into a hot-bag and is dispatched through a delivery
driver or handed out for collection by the waiting customer.

Dominos Business Strategy
We intend to achieve further growth and strengthen our competitive position
through the continued implementation of our business strategy, which includes the
following key elements:
• Continue to execute on our mission statement. Our mission statement is
“Exceptional people on a mission to be the best pizza delivery company in the
world.” We implement this mission statement by focusing on four strategic
initiatives:
• People First. Attract and retain high-quality Company employees, who we refer
to as team members, with the goals of reducing turnover and maintaining continuity
in the workforce. We continually strive to achieve this objective through a
combination of performance-based compensation for our non-hourly team
members, learning and development programs and team member ownership
opportunities to promote our entrepreneurial spirit.

• Build the Brand. Strengthen and build upon our strong brand name to further
solidify our position as the brand of first choice in pizza delivery. We continually

strive to achieve this objective through product and process innovation, advertising
and promotional campaigns and a strong brand message.

• Maintain High Standards. Elevate and maintain quality throughout the entire
Domino’s system, with the goals of making quality and consistency a competitive
advantage, controlling costs and supporting our stores. We believe that our
comprehensive store audits and vertically-integrated distribution system help us to
consistently achieve high quality of operations across our system in a cost-efficient
manner.
• Flawless Execution. Perfect operations with the goals of making quality
products, attaining consistency in execution, maintaining the best operating model,
making our team members a competitive advantage, operating stores with smart
hustle and aligning us with our franchisees.
• Grow our leading position in an attractive industry. U.S. pizza delivery and
carry-out are the largest components of the U.S. QSR pizza category. They are also
highly fragmented. Pizza delivery, through which approximately 75% of our retail
sales are generated, had sales of $11.9 billion in the twelve months ended
November 2004 and grew by 1.6% during that period. As the leader in U.S. pizza
delivery, we believe that our convenient store locations, simple operating model,
widely-recognized brand and efficient distribution system are competitive
advantages that position us to capitalize on future growth.
Carry-out, through which approximately 25% of our retail sales are generated, had
$12.2 billion of sales in the twelve months ended November 2004. While our
primary focus is on pizza delivery, we are also favorably positioned as a leader in
carry-out given our strong brand, convenient store locations and quality, affordable
menu offerings.
• Leverage our strong brand awareness. We believe that the strength of our
Domino’s Pizza® brand makes us one of the first choices of consumers seeking a
convenient, quality and affordable meal. We intend to continue to promote our
brand name and enhance our reputation as the leader in pizza delivery. For
example, we intend to continue to promote our successful advertising campaign,
“Get the Door. It’s Domino’s.®” through national, local and co-operative media. As
part of our strategy to strengthen our brand, each of our domestic stores
contributed 3% of their retail sales to our advertising fund for national advertising in
addition to contributions for market-level advertising. Additionally, beginning in
2005, each of such domestic stores increased its contributions to our advertising
fund for national advertising from 3% to 4% of retail sales.
We intend to leverage our strong brand by continuing to introduce innovative,
consumer-tested and profitable new pizza varieties (such as Domino’s Philly Cheese
Steak Pizza and Domino’s Doublemelt Pizza™) and complementary side items (such
as buffalo wings, cheesy bread, Domino’s Buffalo Chicken Kickers ® and Cinna Stix®)
as well as through marketing affiliations with brands such as Coca-Cola ® and

NASCAR®. We believe these opportunities, when coupled with our scale and share
leadership, will allow us to continue to grow our position in U.S. pizza delivery.
• Expand and optimize our domestic store base. We plan to continue
expanding our base of domestic stores to take advantage of the attractive growth
opportunities in U.S. pizza delivery. We believe that our scale allows us to expand
our store base with limited marketing, distribution and other incremental
infrastructure costs. Additionally, our franchise-oriented business model allows us to
expand our store base with limited capital expenditures and working capital
requirements. While we plan to expand our traditional domestic store base primarily
through opening new franchise stores, we will also continually evaluate our mix of
Company-owned and franchise stores and strategically acquire franchise stores and
refranchise Company-owned stores.

• Continue to grow our international business. We believe that pizza has
global appeal and that there is strong and growing international demand for
delivered pizza. We have successfully built a broad international platform, almost
exclusively through our master franchise model, as evidenced by our nearly 2,750
international stores in more than 50 countries. Our international stores have
produced positive quarterly same store sales growth for 44 consecutive quarters.
We believe that we continue to have significant long-term growth opportunities in
international markets where we have established a leading presence. In our current
top ten international markets, we believe that our store base is less than half of the
total long-term potential store base in those markets. Generally, we believe we will
achieve long-term growth internationally as a result of the store-level economics of
our business model, the growing international demand for delivered pizza and the
strong global recognition of the Domino’s Pizza ® brand

 Directional Srategy: Stability
Stability strategy involves the maintenance of status quo or, achieves growth in
a methodical, but, slow manner. The main reasons for an organization, to adopt this
strategy are when it wants to take low risk, choose stability and anticipate the
changes, to recover in the business. Domino's is an example for stability strategy.
Its commitment on providing quality and quick service delivery has created respect
and loyal customer base. The company's management has little or no interest to
diversify into other areas.

 Porter’s Generic Strategy: Differentiation
Differentiation is aimed at the broad market that involves the creation of a
product or services that is perceived throughout its industry as unique. The
company or business unit may then charge a premium for its product. It attempts to
develop products that are unique in the industry. Uniqueness can be in the form of

service Domino’s strategy to differentiate has been by its 30 minutes or free
delivery service which is a competitive specialty and advantage towards its
competitors. It was the one who came up with this different strategy after
aggressive research.

 Competitive Position: Market Leader
The market leader is dominant in its industry and has substantial market share. If
you want to lead the market, you must be the industry leader in establishing an
innovation-friendly organization, developing new business models and new
products or services. You must be on the cutting edge of new technologies and
innovative business processes. Your customer value proposition must offer a
superior solution to a customers' problem, and your product must be well
differentiated. Domino’s has clearly positioned and projected itself to be a market
leader through its strategy to be fastest pizza delivery chain in industry, with 45%
market share.

PIZZA HUT
Pizza Hut entered India in 1996, and opened its firstrestaurant in Bangalore. Since
then it has captured adominant and significant share of the pizza marketand has
maintained an impressive growth rate of over40 per cent per annum. Pizza Hut now
has 95 outletsacross 24 cities in India; and employed nearly 4,000people by end of
2004. Yum! has invested aboutUS$ 25 million in India so far; this is over and
aboveinvestments made by franchisees.

Marketing Strategy
Pizza Hut’s Pricing Strategy
Pizza Hut is committed for providing uncompromising product quality, offering
customers the highest value for money and giving service that is warm, friendly and
personal.
• They stress heavily on the dining experience and the ambience
• Thus at each point company charges a premium
Thus Pizzas from Pizza Hut costs a premium hence their customers also changes to
high income groups.

CORE COMPETENCE
a. Tracing footsteps
Pizza hut is akin to the Indian heart and taste buds. Pizza hut has been able to
capture the heart and soul of Indians. They achieved through rapid Indianization of
pizzas. Chicken tikkas, tandoori range and spicy korma were welcomed by pizza
lovers. In addition to this, pizza hut takes pride in having the only 100% vegetarian
pizza hut in the world at ahmadabad, surat and mumbai’s chow patty. It also has a
special jain friendly menu without root based ingredients and even serves salad
dressings without eggs.

b. Through the looking glass
Thinking out of the box was never new at pizza hut. With the “palat” campaign, they
even nudged Indians to eat pizza backwards. The vehicle for this change was the
stuffed crust Pizza which has become a huge hit. The pizza’s outer crust has a
stuffing of mozzarella cheese and one can run into people eating these pizzas

backwards in many outlets. Talk about bringing changes Pizza hut is really going
global. Tuscani pastas that is truly italian is now at every pizza hut outlet. With
changing tastes of Indians and greater acceptance of international cuisines, pizza
hut has introduced 30 new items on its menu for this festival season. These include
beverages, pasta and desserts. Pizza hut express outlets were launched at malls,
airports, department stores and gas stations which offers a reduced version of the
menu for globe trotters and busy bees. Moreover pizza hut is not just a hangout
zone for youngsters. It organizes birthday bashes, kitty parties and corporate
lunches. Pizza hut express outlets were launched at malls, airports, department
stores and gas stations which offers a reduced version of the menu for globe
trotters and busy bees.

c. Dream Big
Pizza hut aims to be the number one restaurant chain in India and expects a
turnover of 1 billion by 2015. The YUM restaurants plans to invest $150 million in
the next 5 years to expand the number of outlets from 1000 from existing 230.

Sustaining, building relationships and Exploiting Changing
Conditions
Over the years Pizza Hut has also developed and successfully introduced a range of
products especially suited to the Indian palate. These products like Chicken Tikka,
Spicy Korma, spicy Paneer and the Masala and Tandoori pizzas have been a
tremendous success. What has also given Pizza Hut competitive edge is that in
addition to an extensive range of internationally renowned pizzas like The Italian,
the proprietary Pan Pizza and Stuffed Crust, in India the menu offers the option of a
complete meal. It includes appetizers, a Salad Bar - where the customers can make
their own fresh salads, a range of soups, pastas and desserts etc. Pizza Hut also has
a community called as ‘VIP- Members’ joining this club is at no extra cost one can
avail greater offers.
Workforce of Pizza Hut is chosen with the motto “Together we grow” with primary
concern being quality of service, be it in terms of delivery or quality of pizzas. A
critical factor in Pizza Hut’s success has been a menu that has constantly evolved
and expanded to cater to the changing needs and specific preferences of customers
in different parts of the world. In having understood the pulse of the customers in
India, Pizza Hut has clearly established itself as a brand with an Indian heart.
Besides offering an extensive range of vegetarian pizzas, it was the first pizza chain
to open a 100% vegetarian restaurant in India in Surat and later in Ahmedabad and
Chowpatty, where it offers a Jain menu sans all root73 based ingredients. Moreover
Pizza Hut is not just a hangout zone for youngsters. It organizes birthday bashes,

kitty parties and corporate lunches. They also have a variety of combinations of
menu items which a customer can choose so that both the customer and the
company can have a win-win situation. The company can have the maximum of the
consumer surplus at the same time the consumer might feel that this was the best
offer.
From the menu card one can see the family size variants and the different pizza
combinations in the same one pizza are all the different ways of pricing. The
company attains the maximum profit in the meat items, so they give the selection
of pizzas slices of different varieties and they are clubbed together to form a single
pizza. Once the customer dines / orders @ home, normally discount coupons are
given to the customer so that there is an incentive for the customer to order from
pizza hut. Thus customers are forced to maintain loyalty towards Pizzahut.

PESTEL
POLITICAL FACTORS: The political environment is composed of laws, government
policies, and pressure groups that can affect your business that can affect your
business. Government can affect trade negotiation and protection, antitrust action,
deregulation of industry, and the level of privatization. Government legislation has
been institute to define and prevent unfair competition to protect consumers from
disreputable business practices such as deceptive offers and bait pricing, and to
protect the interests of society. The political factor would affect Pizza Hut business is
the legalization to establish more franchisee in India. Besides that, if the policies do
not protect the legal rights then it will have lesser franchisee. This will then limit the
amount of franchises that can be established by Pizza Hut and will affect their
business. In addition to that, political factors of India with foreign countries will also
play a role in affecting tourism in India, with more tourists coming to India; Pizza Hut
will
receive
more
exposure
and
recognition.
Economic Factors: Economic forces are the forces that will affect business. Factors
in the economy consist of the unemployment and the inflation rates. Economic is
one of the forces that we couldn’t control because this will be based on the country
inflations. When it comes to economic problem, the consumer will change their
buying power and their spending patterns because they have to buy what they
need first then they only can look for their wants. Besides that, some consumers
debt level are rising and their income are still the same, therefore this kind of
consumer have to look for their needs first and their spending patterns will change
base on their incomes and debts. Not only that, for some of the riches like
businessman, when comes to economic problem there are lesser rich people to buy
Pizza Hut franchisee because they will surely loss a large amount of money instead
of profits. Furthermore, there are many competitors in the market such as Dominos

Pizza, Papa John’s, and any other restaurant sell Pizza with the lower cost. For
examples, in India now have many others competitors such as Dominos Pizza
because Dominos are more on delivery but still Dominos Pizza franchisee are
strong. Therefore, Pizza Hut has to come up more special promotion or beneficial
thing
to
attract
more
customers.
SOCIAL FACTORS: social environment is also another factor that influences Pizza
Hut’s company. Cultural environment refers to institutions and also other forces
based on society’s basic values, perception, preference and behavior. All these
things will indeed affect Pizza Hut as the factors in cultural environment influences
potential customers of Pizza Hut. The diversity that exists in India will play a major
role because people of different races have different culture and their culture will
influence the choice of the food they consume. For instance, if pizza hut were to
serve pork in their dishes, then Malay people will not choose to dine in pizza hut as
it is against their culture to consume pork. Besides that, influence of one person to
another person also influences their decision on whether to eat in pizza hut or not. If
a major part of a particular city is not of interested in having pizza then it will
decrease the number of potential customers of pizza hut.
TECHNOLOGICAL FACTORS: The technology environment would be a factor that
affects business because in this new era technology are mushrooming day by day.
Organization has to keep track of new technology if the organizations want their
business to survive. Nowadays people are looking for more fast, easy, and
convenient way to do something. It is designed to serve people better. Today,
everyone around the world are talking about online shopping, purchase thing and
order thing through online because it is very convenient and the customer don’t
need to go out. In the past elderly will say that online shopping doesn’t make sense
but technology is a thing that no one can control. In addition to that, it will make
everything simple and easy and have the opportunities to get more profits in an
organization. Besides that, technology doesn’t mean only on internet but phone
calls or other electronics thing. For example, Pizza Hut has provided order via using
online or by the phone call and the delivery service. Besides that, any new flavors
and promotions will be found on the internet. Other than that, Pizza Hut in India
always comes out with more variety of pizza to attract customer whereas other
competitors are doing promotions only. They can use the social media for
advertising their new products.

ENVIRONMENTAL FACTORS: Natural environment also a external factors that
affect business. As the word natural means something comes suddenly and it
couldn’t control. Natural environment such as natural pollution, cost of raw
materials and any other natural forces. For example, Pizza Hut has the high
overhead cost because they are not just serving deliveries but also walk in
customer. In this point, they have to loads many raw materials. As the natural forces

have made the cost of raw material growth, therefore the cost for the raw materials
for Pizza Hut is high. Besides that, pollution nowadays is increased. This may affect
those producers to produce raw material for them. In addition, when pollution
comes, may people will not eat outside.

How KFC & McDonald's plan to target each other in India

Jalandhar is chicken country, as one would expect every nook and cranny in Punjab
to be. It also happens to be a harbinger of India's fast-food future, thanks to a headto-head fight between two iconic American companies in this bustling city.
KFC and McDonald's, whose famous signages — the Golden Arches and Colonel
Sanders — dot the highways and high streets of the world, are now squaring off in
Butter Chicken Country. KFC has opened an outlet half a kilometre from McDonald's
second restaurant in the town. In restaurateur talk, that is sniffing distance.
The people of Jalandhar now have two choices to "pull open the glass door, feel the
rush of cool air, walk in, get on line, study the backlit colour photographs above the
counter, place your order, hand over a few dollars (rupees), watch teenagers in
uniforms pushing various buttons, and moments later take hold of a plastic tray full
of food wrapped in coloured paper and cardboard", as Eric Schlosser wrote in Fast
Food Nation.
The fight between KFC and McDonald's, bitter rivals for market sweepstakes in
many parts of the globe, is cast in the same mould as some of the greatest brand
battles in corporate history — Coke vs Pepsi and Nike vs Adidas. But for nearly 15

years since they entered India, the competition
between the two resembled a boxing bout that
promised a knockout, only to be called off before
start. Jalandhar changed that.
Battle Royale
In the past few months, the fast-food restaurant
chains have taken jabs at each other, offering
similar dishes, matching prices and opening
restaurants in close proximity. KFC, which primarily
serves chicken, has taken aim at its burger rival
with some of its own burgers called Zingers.
For customers who prefer chicken inside buns, there is a snack called, well,
Snackers. McDonald's has responded with nuggets for those who like to chomp on
chicken.

A hamburger company in the eyes of the world, McDonald's was quick to adapt to
India's vegetarian ways with a fare packed with McAloo Tikki Burger, McVeggie and
Veg Pizza McPuff. KFC has retaliated with the Veg Zinger burger, Veg Strips and
Veggie Snacker.
Big Mac has targeted KFC's signature dish, the Hot and Crispy Chicken, with the
recently launched the McSpicy Chicken Burger. Pat came the Hot Zinger from KFC.
Not long ago, the beverages menu at McDonald's was limited to a coffee, cold
coffee and Coke. In contrast, KFC's Krushers label of beverages includes variants of
yoghurt, sparklers and dairy products.
McDonald's has now bumped up its beverage range to include mocha, hot
chocolate, tea, iced tea and cappuccino. KFC, meanwhile, has introduced a
Kafeccino variant.
The fight has also spilled over to pricing. KFC recently began offering its Streetwise
range targeted at college students for less than Rs 50, nearly seven years after
McDonald's has kept its
Happy Price Menu untouched at Rs 20. The companies have also started operating
outlets within a stone's throw away from the other. At Andheri in Mumbai, for
instance, KFC opened a third restaurant recently, matching its rival's tally. They also
co-exist in Delhi's crowded Lajpat Nagar market, among other places.

The gloves are finally off in the KFC-McDonald's fight. Their battle royale promises to
define not just their fortunes in India, but also that of a raft of smaller rivals, some
foreign, many Indian — and the limits to which the Indian restaurant industry can be
stretched to accommodate all.

What's Cooking?

Both companies have begun an ambitious expansion strategy in India, powered by
breakneck investments. KFC will add 50 restaurants to its existing 120 by the year
end.
The company's ambition is to operate 500 restaurants in India by 2015. It has
invested $100 million to date. Plans are afoot to invest another $120 million.
McDonald's is no less ambitious. The company is targeting 1,000 restaurants by
2020. It opened 33 new restaurants last year. Hardcastle Restaurants, which runs
McDonald's in the south and west and recently bought out the joint-venture stake of
the parent company to become a licencee, plans to open up to 70 stores next year,
says vice-chairman Amit Jatia. It will be the franchisee's biggest expansion in the
past 15 years. McDonald's also plans to invest Rs 1,000 crore to boost growth.

Given the scale of investments and the pace of expansion, the two rivals look
certain to step on the other's toes frequently.

But Vikram Bakshi, managing director of Connaught
Plaza Restaurants that has a joint venture with
McDonald's in the north and east, says he is not
worried. "Even if they [KFC] come right next to us —
they do that often — they realise they gain nothing."
The Jalandhar outlet, he says, continues to be one of
McDonald's' highest selling restaurants. Still, Bakshi
admits to gaps in the pool of products.

"To their Zinger, we've had our Spicy Burger. [But] I
don't have to tell you how worried they were...they
had to call their Zinger Hot Zinger," he chuckles.
Jatia, however, sought to play down the contest
between the companies. "We compete with
everybody in the market."
Niren Chaudhary, managing director of Yum! Restaurants India, which operates KFC,
Pizza Hut and Taco Bell in the country, shared a similar sentiment. He pointed to the
"gigantic" potential of the Indian restaurant
industry. "The branded restaurant business is
estimated to be less than 2% of the total industry,"
he says. That is piecemeal for an industry
estimated at Rs 43,000 crore and growing at 5-6%
a year. The organised segment is estimated at Rs
8,500 crore and growing at 20% a year.
Even Bakshi says "the size of the market is so huge
that everyone can co-exist".
Thought For Food
The National Restaurants Association of India views
the market with the same rose-tinted glasses.
India's 1.2 billion people are getting richer and
eating out more, it said in a report last year. "With
the increase in disposable incomes of the average Indian consumer, the market size
and potential of restaurants are expected to further grow."
Shushmul Maheshwari, CEO of research firm RNCOS, says the food consumption
pattern of urban Indian families have changed dramatically with the growing
influence of western culture. "Indians have started dining out and have moved on to
accept different varieties of delicious food from the world." As if on cue, plenty of

restaurant chains, including Starbucks, Hooters, Burger King and Grand Canyon
Coffee, are betting on India.
Given the impending entry of rivals, KFC and McDonald's seem to have combined
the luck and skill needed to be in the right place at the right time. The development
in many cities of the infrastructure needed for fast food to flourish, including malls
with food courts and highways with drive-through locations, has been a big help.
Today, after 15 years in India, both chains say with confidence that they have put
fast food on the Indian menu. From modest beginnings — KFC was forced to shut
shop a year after it entered India in 1995 while McDonald's 100th restaurant took 10
years since its entry in 1996 — they are expanding fast, selling a broad range of
foods wherever paying customers may be found.
That includes rural areas and small towns, the unlikeliest of places for burgers and
crispy chicken to flourish. Colonel Sanders and Ronald McDonald have made their
way to airports, railway stations, BPOs and even SEZs. They have also taken root
along the highways.
"There is a significant spring in their step now," says Arvind Singhal, managing
director, Technopak Advisors. Piping Hot
They are also making money. KFC's Chaudhary says the company has grown nearly
two times in the past four years. McDonald's says its south and west offshoot has
turned profitable. The offshoot's revenues grew at a compounded 35% in six years.
The north and east division is doubling turnover every three years. Both their
investments will be funded through internal accruals.
Bakshi says McDonald's has finally reached a "takeoff point". Chaudhary says the
market is ready only now and KFC has the advantage of just starting out in India.
Never mind that it took 16 years. Their optimism stems from a burgeoning
population short of time and flush with money who frequent hotels, restaurants and
malls. Likewise, half the population is 25 years or younger. They are the target
consumers for both KFC and McDonald's.
RNCOS' Maheshwari says the varied demographics in India present a big
opportunity for fast-food business. "Every age group represents a separate market
— Indians below 14 years of age are more than the total population of most of the
emerging markets."
The new markets look just as promising. McDonald's is considered the poor man's
meal in the West, but in India's small towns, the company's executives are pleased
that it holds a halo of aspiration around it. "In B-towns, people come to McDonald's
as if on an outing — in large numbers and in their best attire," says Bakshi.

Still, some analysts have chafed at the snail-paced growth of the fast-food giants in
India. "Hundred-odd outlets in 15 years is minuscule," says Singhal. "They have
underestimated India's potential and over-hyped the challenges." He says the
opportunity was there 15 years ago. "I would have gone to eat a burger 15 years
ago."
The growth of the two chains in India is the polar opposite of that in the US.
According to financial services company UBS, three-quarters of Americans already
live within three miles of a McDonald's outlet. Two-thirds live within three miles of a
KFC.
"They have not been able to expand yet as the majority of the population in India
still prefer home-prepared food to fast food," says Maheshwari.
Local rivals, meanwhile, are chomping at their tail. Restaurants such as Bikanerwala
and Haldiram's have learned to sell traditional road-side cuisine and dishes in a
clean and hygienic environment through modern-format setups. A clutch of ethnic
fast-food chains such as Jumbo King and Goli Wada Pav of Mumbai, Kaati Zone of
Bangalore, Ashrafilal Kulfi and Honest Pav Bhaji of Ahmedabad too is bracing for a
fight.
There is also the threat of Domino's Pizza, which has emerged stronger after initial
hiccups, and other MNC rivals such as Subway, Papa John's, Texas Chicken, Chilli's
Grill & Bar and Cinnabon. Domino's runs 392 stores across India as of June 2011.
Ajay Kaul, chief executive officer of Domino's, says the company will continue to
expand the store footprint. "Even in existing cities, there are opportunities for
opening more stores."

For their part, McDonald's and KFC say the slow-paced progress was intentional.
"What we have done in these 15 years is getting our model right, from the menu to
pricing to the viability of the business," says Bakshi. KFC's Chaudhary says one has
to be careful against getting misled by the "1.2 billion number". "The macroeconomic environment in India is far better now than it ever was," he says.
Restaurants, they say in unison, are unlike other retail businesses. For one, the
infrastructure is boggling. And the chains are willing to wait out to open a restaurant

at a prime location. McDonald's' first shop in Delhi did not come up at the central
Connaught Place but at Basant Lok.
Pinakiranjan Mishra of Ernst & Young, a consultancy, gives the companies credit for
the caution. "They have spent years looking at the price points and the fare in India.
They have understood the market."
That's not to suggest the future is bright. Besides competition, the restaurant
business in India is also fraught with troubles. Supply remains iffy in small towns
and rural areas while the cold chain continues to be patchy. KFC and McDonald's are
known for fattening products. India is no different and the scrutiny will only increase
in future. Rentals and real estate prices continue to escalate and could take a take a
toll on liquidity. There has been no letup in commodity prices in recent months.
Loyalty is not one of the virtues of the teenager, the target consumer of these
companies. The rest are finicky, to put it mildly. During the initial years, McDonald's'
service time averaged 75 seconds. Today, it has improved it to 58 seconds. But the
customer thinks "we've become slow", says Bakshi. And both restaurant chains
sorely miss skilled people.
In this setting, industry watchers predict an interesting fight between the two rivals.
Besides their newfound affinity for breakneck expansion, they share a similar
growth strategy. They plan to fill gaps in metros and flock to emerging towns. KFC is
present in Kochi and McDonald's is studying the market there. McDonald's will
launch a dessert called McFlurry in September. Its dessert menu appears thin while
KFC serves three varieties, including sundaes.
Bakshi says McDonald's holds huge advantages over KFC. "Our entire logistics and
backend allow us to keep prices at a certain level." Truth is KFC has managed to
keep prices on a par with its rival on most of its fare. For now, the verdict among
experts is overwhelmingly in favour of McDonald's. Future Brands MD and CEO
Santosh Desai says McDonald's has got it right from the beginning. "They have been
careful to portray itself as a family restaurant."
Maheshwari says McDonald's has been faster in understanding the Indian market.
"KFC is still perceived as a non-vegetarian restaurant."
Still, KFC has hit the ground running in India after its re-entry in 2003. Its 100th
store came up in Chennai's T Nagar in 2010 while McDonald's took 10 years to
reach the milestone.
"India is a land of infinite opportunities. They [McDonald's] are chasing their own
destiny and we ours," says KFC's Chaudhary.
Regardless of how they fare, experts say the upshot of the competition will be fast
food becoming commonplace in India, a fact of modern life, though Singhal says it

will take a great deal of doing to dislodge the samosa in India. A McSamosa then?
Yes, if it is on a tray off the counter and wrapped in paper.

Fast food growth rate set to be a whopper in India

While the indian economy slows, its consumers taste for burgers and pizza is
growing fast, with one research agency suggesting the fast food market there will
double over the next three years.
According to a report published by Crisil, the Indian unit of Standard & Poor’s rating
agency, the QSR market will be worth around Rs70bn (US$1.13bn) by the end of
2016, from its current value of Rs34bn (US$549m). It says the growth will driven
largely by new store additions, although during this period, same-store-sales are
expected to decline considerably thanks to intensifying competition in tier I cities
coupled with the economic slowdown.

Growth spreading to the heartlands
Crisil expects the new stores will grow by 16-18% each year, especially as
multinationals blaze a trail into tier II and III cities—which at the moment only
account for around one-quarter of total stores.
“In tier I cities, we expect the [average] annual QSR spend per middle-class
household to surge by over 1.5 times to around Rs6,000 [US$96.88] by 2015-16,”
said Crisil’s Prasad Koparkar.
“This quantum jump in QSR spend in urban areas will be propelled by the increase
in nuclear families and working women, steady growth in incomes, changing
lifestyle and eating patterns and, importantly, greater accessibility of QSR outlets.”
Global brands currently account for 63% of the domestic QSR market and will
continue to grow on the back of expansion into smaller cities.
Question of Indian tastes
While the likes of McDonald’s have been successful in adapting their menu and
products to local tastes, they have found it difficult to incorporate Indian food into
their assembly line production.
“On the other hand, foreign cuisine can be served quickly, and is more amenable to
the cold
storage format and a centralised kitchen,” said Ajay D’souza, Crisil’s research
director.

“McDonalds and Domino’s Pizza have shown over the years that the Indian
consumer is
comfortable with Western fast food.”

Growth prospects of Fast Food industry in India
The Indian fast food market has been witnessing rapid growth on the back of
positive developments and presence of massive investments. Currently, market
growth is largely fuelled by the rising young population, working women, hectic
schedules, and increasing disposable income of the middle-class households. Some
of the unique properties of fast food like quick served, cost advantage, etc are
making it highly popular among the masses. Thus, India offers enormous
opportunities for both domestic as well as international players. According to this
new research report, “Indian Fast Food Market Analysis”, the Indian Fast Food
Industry is anticipated to grow at a CAGR of around 34% during 2012-2017.
Anticipating the future growth, many big
International players are entering into the market by making deals with the
domestic players. And those already present in the Indian market are expanding
their presence in different provinces of the country. This trend will emerge more
strongly during BMI’s forecast period, providing opportunities to local players to
widen their product portfolios.
BMI research further revealed that there is a large scope of growth in the untapped
tier-II and tier-III cities, owing to which, major fast food retailers have already started
applying various marketing strategies in popularizing their brands in these cities.
Furthermore, they are aiming to provide affordable and customized products to suit
the needs of people that would ultimately provide necessary boost to the Indian fast
food industry.