As competition grows fiercer and consumers dine out more frequently, the trend towards premiumizing food items is fueling the expansion of food chains.
An ICICI Securities research report suggests that various brands are now catering to diverse price points and target audiences.
Brands are embracing premiumization with innovative offerings like KFC‘s Chizza (a pizza-chicken hybrid); Domino’s Oven Baked Pasta and Burger Pizza (a distinctive fusion); and Popeyes‘ introduction of The Cajun flavor (a pioneering move).
Biggies Burger, BurgerMan, and several other brands compete fiercely with national brands in the chicken market. Fried chicken is emerging as a competitive advantage, with each player, organised or not, offering competitive pricing based on taste.
Oven Baked Pasta in PH and Burger Pizza in Domino’s make a unique combination. Indigenous brands, for instance Biggies Burger and BurgerMan, compete aggressively with national businesses in the chicken category.
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According to a report from ICICI Securities, “Organised players such as KFC, McDonald’s, Popeyes, and Burger King are aiming to increase their market share through network expansion, benefiting from the rising disposable income of GenZ and working millennials, as well as an improved start-up ecosystem.”
Brands are enticing consumers through pricing tactics and fresh product introductions. KFC’s launch of its Lunch Special Combo at INR 149 from 11 AM to 4 PM has bolstered foot traffic and increased customer engagement.
The Chizza, priced at INR 300, has been a significant success for KFC stores, accounting for 8-10% of its daily sales. KFC outlets experience increased footfall on Wednesdays, Saturdays, and Sundays.
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The brand generates 85% of its revenue from non-vegetarian items and 15% from vegetarian offerings. Pizza Hut introduced “Melts,” a distinctive thin-crust pizza starting at Rs. 169, which is receiving positive feedback in the market.
It’s “Don’t Cook Wednesday” promotion offers a 50% discount on any medium pizza. Quick Service Restaurant (QSR) brands are promoting mid-week dining out as an alternative to weekend dining, driving their growth.
Popeyes, during its early launch phase, encountered difficulties in establishing its product positioning vis-à-vis KFC and McDonald’s. The brand found itself competing in the fried chicken space, where KFC held a prominent market leadership position.
While KFC maintains its practice of locally sourcing chicken and marinating it in-store for two hours, Popeyes sets itself apart with a 12-hour marination process conducted at its commissary in Bengaluru.
Consumers are also intrigued by the Cajun flavor, distinguishing it from the Indian spices offered by competitors. McDonald’s success with its Peri Peri flavor as a French fry topping demonstrates growth driven by premiumization.
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The market is fiercely competitive, with local players vying for dominance on price points. Brands are closely competing by offering attractive combos and deals to entice customers.
The IPL serves as an additional growth catalyst aimed at further increasing the ticket size this quarter, particularly as consumers show a preference for ordering meals at home.
Overall, brands are benefiting from attractive combos, discounts like lunch combos, and new product launches with unique flavors, resulting in improved consumer confidence and rising growth.
