Are you being served?

Quick service restaurants are adopting exciting new strategies to attract the hungry Indian.

It is "the recognised world leader in pizza delivery" "" or so it claims "" but in India there's more to Domino's Pizza than just delivery. Domino's stores in India are not just delivery centres; in around 50 outlets, especially in smaller cities, there are tables laid out where diners can sit down and eat.

It's a strategy driven, says Ajay Kaul, CEO, Domino's Pizza India, by a reading of the Indian consumer's psyche. "The mindset, in tier II cities, is to go out to eat. Besides, rents are cheaper."

Note: India is one of only a few markets where Domino's offers dine-in services.

Take another example. McDonald's India operations are exceptional in a number of ways, one of them being that India is one of few countries to offer McDelivery, McDonald's delivery services. The objective? Enhancing reach and offering greater convenience.

Although it isn't free, like Domino's, and wasn't a focus of the company's marketing initiatives until recently, delivery today contributes 5 per cent of overall sales and is today the "fastest growing platform", informs Vikram Bakshi, managing director, McDonald's India (north and east).

Two companies, two strategies to reach out to the Indian consumer. But in this larger scheme of things, Domino's and McDonald's seem to have got hold of two ends of the same stick. Or have they?

The interesting thing about the Rs 1,200 crore branded QSR (quick service restaurant) segment in India, the largest in the organised eating-out market, is that there are almost as many strategies to reach out to the consumer as there are players "" with funding available for everyone.

Surprisingly, all the strategies seem to be working (thanks, no doubt, to the fast clip at which the market is growing or because India is not one country but several rolled into one), although what may seem to work for one company, may not for another.

But even here, there are a few constants. The most important of these being that the eating-out phenomenon continues unabated, and has gathered steam, percolating down to the smaller cities on the one hand, and on the other increasing in frequency in the bigger ones. No wonder every major player is expanding, opening stores all over the place. Domino's opened six stores in one day, August 25, in Mumbai, Pune and Bangalore.

To Akshay Chaturvedi, senior consultant, KSA Technopak, it seems like there is almost a competition to get in before someone else does. "In value terms, spends on eating out have almost doubled in a year," he says. And the reasons for this: changing demographics, specifically the growing section of middle-income groups, lifestyle factors like nuclear families, late work hours, double-income families, so that there's very little time to come home and cook.

Equally important, you now have the right kind of real-estate settings coming up to house QSRs "" malls, IT parks, highrise apartment complexes. And lastly, the entry of serious players and, lately, private equity to fund innovative local players to take on the MNC biggies.

Under this broad phenomenon, of course, QSR chains, who've largely all done their TG surveys, have perceived several smaller peculiarities about the Indian consumer that they're making the most of.

For one, deliveries are the faster-growing category, for obvious reasons. But it remains a big-city phenomenon. "You just have to travel 200 km out of Delhi to see that eating out remains big," says Sudipta Sengupta, senior vice-president (sales and marketing), Nirulas Corner House.

For some, like Delhi-based Yo! China, deliveries constitute 40 per cent of sales, and Parag Dutta, AVP (operations), says he expects it to overtake in-store sales in two years' time. And the delivery market will grow, says Anjan Chatterjee of Mainland China and Oh! Calcutta fame, simply because labour being relatively cheap in India, a delivery-centred business model has an advantage.

One innovation is online orders, especially with an eye on the NRI gifting market, something Nirula's has tapped into with its revamped shopping cart, unveiled on August 1. The company now has a payment gateway and a dedicated customer executive to handle online sales.

Value for money

If there's one characteristic that distinguishes the Indian QSR-consumer, it's his price-sensitivity. And companies have taken the price war to the consumer. As with many others, it was McDonald's that showed the way here with its Rs 20 burgers and Rs 7 ice-creams.

The stock weapons here are the "happy meals" and "combos". Domino's says as much as 20 per cent of its sales come from the "fun meal for 4" scheme, where a pizza which it introduced last year comes for as little as Rs 45.

Unnat Varma, director (marketing), KFC, says one of the significant things that it did differently when it re-launched in 2004 was to get the price right (plus, of course, the right menu and the right location). KFC has an individual meal combo priced at a low Rs 99.

It's not easy keeping the prices low and yet be profitable and expand, given rising real-estate and interest costs. One way to do this is to keep "food costs" low, as QSRs all over strive to do.

While most MNC pizza-and burger joints pride themselves on the hot-off-the-stove quality of their food, most Indian QSRs go the commissary (central kitchen) route. It helps to maintain uniformity of taste, as also keep the costs low since more of the high-cost real-estate at the outlet can be used to lay out tables.

Yo! China's Dutta says the company has reduced its kitchen area to 30-35 per cent and is looking to further bring it down to 25-20 per cent. Another way the company, which is expanding its store count from the present 30 to 80-90, is look to cut CTC by outsourcing all labour-intensive tasks like cutting and chopping.

But just as there are ways to attract Indian consumers with attractive prices, there are also ways to get him to spend, and no better way to do this than to appeal to his susceptibility to a smart deal! Take KFC, which introduced a medium sundae, offering it at a discounted price of Rs 20 along with its combo meal.

Verma says that he's perceived a greater willingness to spend, evidence of which is the 10-15 per cent increase in average billing. However, you can go only so far with tweaking prices, says Neeraj Jain, CEO of Delhi-base Pulse Foods. "The Indian consumer is very smart. He can even walk out of the store if he feels he isn't getting his money's worth."

International's fine, so is desi

According to published data, Western fast food constitutes only 10 per cent of the total Indian fast-food market. Of this, organised pizza brands make up 50 per cent, with just two players "" Domino's and Pizza Hut "" accounting for 75 per cent market share.

But that's changing. Clearly, having liked pizzas and burgers, the Indian consumer's hungry for more and also, being better travelled and more clued into global trends today, his expectations have gone up and he's willing to experiment. No wonder QSR chains are gearing up to offer more variety, more often to enhance the dining experience.

Pizza Hut's World Food Fest, where it's offering Chinese, Mexican, a wider range of Italian than just pizzas, some Indian and Lebanese is a ploy to appeal to just such evolved tastes.

Besides, as Anup Jain, director (marketing) Pizza Hut, says, tastes within a single family often differ so that the father may want to eat Indian, while the wife may want Chinese and the child, Lebanese. So you have, Geneva-based Global Franchise Architects, which has the Pizza Corner and Coffee World chains, gearing up to launch The Donut Baker by the end of this month.

But given a choice, a significant chunk of consumers would rather eat the desi chana masala and dosa-sambhar. As a consumer survey commissioned by Navis Capital (which invested in Nirula's last year), concludes, "The desis make up a big chunk of the respondent base (41.8 per cent)."

Which explains the fast-growth of a chain like Pulse, which specialises in north Indian fast food. To be sure, Pulse has concentrated on high-traffic areas like food-courts in malls, office complexes, neighbourhood markets where its chances of attracting the impulse consumer "" and QSR falls in the "impulse" category "" are higher.

But you now have more Indian QSRs coming up. Chatterjee, who's known better for his fine-dining restaurants, is focusing on tweaking at least two of his brands "" Just Biriyani and Mostly Kebabs "" and rolling them out as QSR formats, with an emphasis on take-aways and deliveries.

He's been piloting the format at Mega Mall in Mumbai's upmarket Lokhandwala, having brought down the prices to the sub-Rs 40 level. Touching base in nine more malls in the city is the plan for this year.

Besides desi food, the Indian consumer's love affair with Chinese continues. You already have two Chinese-only QSRs and both are on quick-expansion mode "" Chatterjee's Haka and Yo! China, with possibly Mars Restaurant's China Joe to follow sometime soon.

On the go

Indians are holidaying more, and now QSR chains are increasingly looking to ensnare the hungry Indian as he drives along highways, or catches a flight or a train. McDonald's has drive-thru restaurants at Manesar, Karnal, Mathura "" all driving distance from Delhi. Cafe Coffee Day too is going the highway route, having already touched base on the Delhi-Jaipur, Mumbai-Pune expressways.

As Simran Sablok, GM (marketing) says, "Travel has gone up and while on the go our consumers would rather have food cooked in a hygienic way and in an ambience that is familiar."

And it's not just restaurants along highways. Smaller express formats, kiosks that sell a limited menu and ice-creams, even carts are gaining ground primarily because they need less investment and are fast-moving.

What's interesting is that products are also being tweaked to make them easier to have on the go. For example, Conniza, introduced last year by the south-based QSR chain, Pizza Corner, is a pizza shaped like a cone that already has a significant chunk of overall sales.

Yo! China has lately introduced "Yo! on the go", trendy boxes with some noodles topped up with manchurian or other sauce, and a fork inserted, priced at Rs 20 plus taxes. "It's doing very well," says Duttta, "since it meets the two criteria of speed and value." At Haka, Chatterjee has gone even further with product-innovation "" he's come up with a special fork and short noodles that you can pick up with greater ease.

Let's meet over coffee

Coffee culture has well and truly caught the imagination of Indians, especially the young yuppie crowd. They use cafes to chill out, to meet friends, to conduct business meetings. Interestingly, both Barista and Cafe Coffee Day claim that as much as 50 per cent of their clientele is repeat. Location is, of course, key here, as Rini Dutta, Barista's vice-president (marketing and product development), points out.

But more important, given that quick table turnover is not the business model here, is the need to enhance experience, so that once a consumer has stepped in, he keeps coming back for more.

Cafe Coffee Day is the pioneer here with its plethora of formats "" garden cafes, music cafes, book cafes, (wi-fi enabled) cyber cafes, tie-ups with other brands for promotions (not just a way to create excitement in the cafe but a source of revenue as well). But now, Barista too is going in for book reading sessions, live-band performances and the like to enhance in-store experience.

The more recent trend is the lounge where cafes are not just moving up the value chain, they're also emphasising food along with the beverages. Barista was the leader here with its Creme brand, but now Cafe Coffee Day is opening slightly bigger (3,000 sqft) stores where, along with coffee, you can have a wider choice of food, informs Sablok.

Catch them young

It's a truism that FMCG companies have explored and exploited them to their advantage for a long time. Now it's the turn of QSRs to cater to the kids with menus and combos designed specifically for them, gifts (McDonald's, of course, but also Nirula's) and other marketing initiatives to catch their fancy.

Almost all chains have a special menu for children and are looking at getting a toe-hold in the birthday parties market. In most family-style restaurants, Nirula's has an entire floor cordoned off for parties. Not just that, it has a loyalty programme for young patrons wherein on their birthdays they get a coupon for a free scoop of ice-cream and discount vouchers on cakes.

"For many from the poorer sections of society, this is their first contact with an organised QSR brand," says Sengupta. Nirula's also has a Scholars Award Programme for students who get 90 per cent and more. "We give away around 50,000 sundaes every year."

Kids are an important target group for Pizza Corner as well and Kaushik Roy, its CEO informs that, "As part of our constant endeavour to get kids exited, we publish an in-house comic book called Adventures of Zzapi Nercor about a super hero who spreads social messages."

Social messages and quick dining!