Food chains, multiplexes plan expansion as consumer confidence picks up

In the past week, café chain Starbucks and multiplex operator Inox have launched three properties in one go across cities. They plan to launch more properties in the coming months and so will their rivals such as McDonald's, Burger King, Yum! Brands, and PVR.

As India kicks off its vaccination programme, the out-of-home retail and entertainment space is beginning to tick, with players working on expansion plans. 

Organised players have been the biggest beneficiaries after the lockdowns were lifted. Now, they want to capitalise on the market opportunity quickly, retail experts said.

"Consumer confidence is slowly picking up," said Arvind Singhal, chairman, Technopak. "The demand for organised brands is higher. Given real estate is not as expensive now, players want to take advantage of the trend."

Last month, PVR's board approved a plan to raise Rs 800 crore that, experts said, would be utilised to set up new properties. PVR had also raised Rs 300 crore in August through a rights issue.

"Cinemas remains an outing and socialising trend in countries such as India. So, the long-term outlook for out-of-home entertainment remains intact despite some near-term challenges," Karan Taurani, vice-president, research, Elara Capital, said.

PVR, the country's largest multiplex operator, said on Friday it had narrowed its losses in the December quarter and that the film exhibition market was showing signs of improvement. PVR has 845 screens across 176 properties in India and Sri Lanka.

The regional film market in India has been picking up with producers lining up big titles. The Hindi film market is expected to gain steam from March-April with the release of Sooryavanshi.

Alok Tandon, chief executive officer (CEO), Inox Leisure, the country's second-largest multiplex operator, said 2021 would be a year of buoyancy. "The induction of three properties with 11 screens shows our commitment to growth," he said.

Inox now has 637 screens across 150 properties, experts tracking the market said.

High-frequency indicators across several sectors have already pointed to a recovery in the business. Navin Gurnaney, CEO, Tata Starbucks, said 2021 held promise for the retail market. Starbucks has over 200 stores in 15 cities and plans to ramp up this number significantly this year.

"While 2020 was unprecedented, we managed to stay on course with growth plans. We are happy to start this year on a positive note," he said.

Fast-food chains such as Burger King are flush with funds and optimism after a strong debut on the bourses last month. "People will seek more hygienic environments when consuming food thanks to the pandemic. Organised players such as us will gain," Rajeev Varman, CEO, Burger King India, said.

Burger King plans to open 700 restaurants by December 2026 in India. It has 268 restaurants now.

McDonald's, under master franchisee Westlife Development, plans to add 185 stores to its current count of 315 outlets by 2022 in the west and south of India. Amit Jatia, vice-chairman, Westlife Development, said western quick-service restaurants would be the first to bounce back owing to the high level of trust that prevailed among consumers. "Preference for convenience channels is growing," said Jatia. "But these channels have to be firmly anchored within stores. We do not want to go slow on expansion.”