Amidst a third consecutive quarter of reduced business due to growing consumer inclination towards affordable products and regional brands, major quick service restaurant (QSR) chains in the nation are intensifying their efforts in menu localization, product creativity, and the introduction of additional budget-friendly items.
While Taco Bell introduces a fusion of Indian flavors into their menu with three novel offerings, KFC India and Burger King are placing greater emphasis on affordability, with prices beginning at just INR 99.
“We are very cognizant that consumer discretionary spending in India, like many other countries, is facing some headwinds… We are experiencing this as well,” said Gaurav Burman, director of Burman Hospitality and master franchise partner of Yum! Brands-owned Mexican cuisine restaurant chain Taco Bell.
“We hope to ride through this, and we will,” he said. “But, yes, we are feeling it (slowdown in discretionary spending), like peers in the industry.”
Taco Bell is localising extensively to increase its appeal. “We’re in an environment of high interest rates (and) high inflation,” Burman said. “People are tightening their belts… Branded QSR is not an everyday purchase.”
This development arises in the midst of heightened competition.
Within the realm of mass-produced Western-style fast foods, numerous boutique brands specializing in lower-priced options, such as Leo’s, Tossin, GoPizza, and MojoPizza, are progressively gaining market share over the larger chain counterparts.
Furthermore, at the premium spectrum of the burger market, specialized brands like AvoBeet and Feta Burger, Nino Burgers, Louis Burger, and Speak Burgers are capturing a portion of the market share.
Major chains are introducing fresh products in an effort to rejuvenate their customer traffic.
Moksh Chopra, general manager at KFC India, said in a statement that the chain has “unlocked a new price point of ’99 with two recent launches” besides rolling out consumer promotional offers.
In its financial statements, Restaurant Brands Asia (RBA) India, the operator of Burger King, highlighted that its main objectives for FY24 will revolve around enhancing its competitive stance in the value-for-money meal category, commencing at ’99, in order to establish a leadership position in terms of pricing.
Taco Bell’s Burman, though, said he is “not losing sleep over regional brands”.
“We just have to manage our business to ride out headwinds,” he said. “Would I be happier if all our markets were growing and growing double digits? Of course. But the reality is, when you take a long-term view of managing a business, you’ll have good times and hard times.”
Burman said Taco Bell has reached “critical mass” in India with 130 stores and is aiming at 170 stores by the year end despite macro headwinds.
Sapphire Foods, responsible for managing nearly half of Yum! Restaurants’ KFC and Pizza Hut operations in India, noted in a management commentary that the pizza category is experiencing heightened competition from both nationwide and local competitors, resulting in a notable slowdown.
During the June quarter, Pizza Hut outlets operated by Sapphire witnessed a 9% reduction in same-store sales, while its KFC franchise recorded steady same-store sales growth without significant change.
“Given the headwinds, we continue to do what is in our control – delivering value and product innovation, and investing behind strong advertising,” Sanjay Purohit, chief executive office of Sapphire Foods, said in an earnings call.
