Inflation is a cause of concern for many businesses, especially those that rely on serving consumers. However, quick-service restaurants (QSR) are a segment that is relatively shielded from the impact of inflation due to their pricing strategies.
Amit Jatia, the Vice-Chairman of Westlife Foodworld, which operates the McDonald’s chain of restaurants in western and southern India, acknowledges the challenges that inflation presents to the economy. Nonetheless, he also recognizes that the affordable pricing offered by QSRs can help mitigate the effects of inflation on this particular sector.
“When the informal eating space comes under pressure, the frequency of consumer purchases does come down sometimes but what we feel is that the fine dining category bears the bulk of the impact. The share of QSR goes up. We are the most ‘value for money’ option in the informal eating out space,” Jatia said.
Although there have been price increases of 3-5% in recent months, the manufacturer of fries and McAloo Tikki burgers has still managed to persuade customers to spend more money.
“That has been possible because of portfolio expansion strategy and offering of a wider choice of menu to customers. We now get incremental customer visits to the store for our coffee selection. And when they come for a cup of coffee, they also end up buying, say fries,” said Jatia.
Besides, consumers are seeking indulgence; “that’s a big shift,” said Jatia, adding that they are willing to spend even on slightly expensive items if they think them to be a value for money proposition. “Consumers are gorging on both Aloo Tikki burgers that can be available for as low as INR 50 and gourmet burgers that cost upwards of INR 200,” said Jatia.
Westlife Foodworld, the company behind the McDonald’s chain of restaurants in western and southern India, has announced plans to open 250-300 additional outlets over the next five years.