 "Food packaging image via Shutterstock.")
The quick service restaurant (QSR) segment has, for two years, been facing a slowdown in consumer spending. It has managed growth in revenue by increasing penetration and store count but per-store sales are hit.
To recover sales and increase the footfall in their outlets, major QSR entities Devyani International and Lite Bite Foods are choosing new store locations with some care.
Lite Bite - it owns 12 restaurant brands, including Subway, Punjab Grill and Street Foods of India - is focusing on airports, railway and metro rail stations, apart from delivery on board. Devyani, franchise owner of KFC, Pizza Hut and Costa Coffee, is preferring office complexes and hospitals.
Such locations ensure a certain number of restaurant visitors across seasons. Ashish Chanana, chief operating officer, Costa Coffee, says half of its 100 outlets are now in office complexes, airports and hospitals.
The coffee chain is in a phase of consolidation - closing of unprofitable stores and opening new ones in locations which ensure a higher footfall.
"The process has helped us turn profitable this year," said Virag Joshi, president and chief executive of Devyani. The Rs 1,200 crore (in FY15) entity, he added, would be opening 100 stores, combining all its franchise chains, in 2016.
Lite Bite has 35 outlets at the Mumbai airport and earns 60 per cent of its revenue from the travel gateway.
Of its 100 outlets, 13 are at Delhi airport, six in various international airports (including Washington DC, Singapore, Bangkok and Abu Dhabi) and nine in Mumbai metro rail stations.
"This fiscal (year), we grew by eight to 10 per cent. However, same-store growth remains subdued in standalone stores," said Amit Burman, chairman. "Travel retail is always more attractive, since you get assured footfall."
Burman says the company is bidding for spaces to open outlets in all major airport modernisation projects.
"We are planning to open 16 new outlets in Mumbai airport, which will increase our sales by Rs 40-50 crore next year," he added. Lite Bite's sales in 2014-15 were Rs 160 crore.
On such a strategy, Pinaki Ranjan Mishra, partner at EY India, says: "It's a prudent move. But, in the long run, the companies will be required to find a way to turn the standalone stores profitable."
Compared to sectors like fast moving consumer goods, this one is dependent on discretionary buying.
Entities here do need to focus on operational efficiency and cost-effective offerings to remain afloat once the airports, railway stations and office locations run out of vacant space.
FINDING NEW GROUNDS
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Devyani, Lite Bite foods preferring airports, railway stations, hospitals, office complexes for new store locations
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QSR chains inclining towards such locations as they ensure huge footfall across seasons
