Wendy's cuts prices to shore up India sales

Fast food lovers will now be able to bite into a Wendy's burger for only Rs 49, as the world's third largest burger chain drops prices to shore up sales. The vegetarian variant will be available for Rs 39.

Till now, foodies had to shell out at least Rs 100 to get a bite of the burger. For vegetarians, the pocket pinch was slightly less at Rs 59. For bigger and better burgers, one had to pay Rs 150-200.

Rivals McDonald's, the largest burger chain in the world, and Burger King, second-largest, also have value meals in India, a key market for them. One can get a McDonald's burger for as low as Rs 25 and a Burger King one for Rs 35.

Kentucky Fried Chicken, which specialises in — as its name suggests — fried chicken, sells burgers for a minimum of Rs 29.

Wendy's management feels low-priced burgers will get them more customers. Jasper Reid, director, Sierra Nevada Restaurants, the master franchisee of Wendy's in India, said the brand's entry into low-price range will give it access to a new set of customers. "It is not just about price, but about the quality you offer. What we are giving is table service, crockery, food that is made to order," he said.

Sanjay Chhabra, a director at Sierra Nevada Restaurants, said the new price points will effectively increase the offerings from Wendy's below Rs 100.

"Earlier, we had three vegetarian (burger) offerings below Rs 100 (at Rs 59, Rs 79 and Rs 89).  We now have five. One can get a burger for Rs 39, Rs 59, Rs 79, Rs 89 and Rs 99. In non-vegetarian, on the other hand, we will have three offerings below Rs 100 now (Rs 49, Rs 79 and Rs 99), which is, in my view, a good way to navigate consumers," he said.

The layered pricing below the Rs 100-mark, claim experts, is intended to arrest lower same-store sales growth that has hit the financial performance of most food-service players in recent quarters.

Wendy's opened its fourth outlet in the Delhi-NCR region this week. Plans include stepping into Mumbai later this year. Bengaluru and Punjab will come later.

Listed players such as Jubilant FoodWorks, master franchisee of Domino’s Pizza and Dunkin’ Donuts, and Westlife Development, the operator of McDonald’s in west and south India, have had their same-store sales growth for the December 2015 quarter at two per cent and 3.2 per cent, respectively — much lower than the double-digit growth they saw a few years ago. 

 

Yum! Brands, which operates KFC, Pizza Hut and Taco Bell in India, has seen it same-store sales growth decline to 13 per cent in the December 2015 quarter, its ninth straight quarter of decline.

The March 2016 quarter, according to analysts, is expected to be no different as consumers cutback on discretionary spends. 

Abneesh Roy, associate director, research, institutional equities, Edelweiss, in a recent report, said, “In our view, delayed recovery in same-store sales growth over medium term seems not just cyclical but structural. Revival remains challenging for the entire quick-service restaurant space though our long-term view remains positive.”