The catering services sector in India is rapidly expanding. The estimated value of this industry is Rs. 57,000 crore, but only Rs.3, 940 crore or 6.9 per cent accounts for organized segment. The unorganized segment chiefly consists of street side stalls/kiosks constituting the majority of consumer food-service units.
The competition will become fierce when domestic players, international players and the unorganized sector compete with each other on the same turf, which according to experts will begin as soon as 2010.
Questions like where the industry is heading, what will be the scenario, how will the advent of MNC’s affect the unorganized sector, what are the factors that are conducive for growth in this sector, need to be answered.
Indiaretailing.com asked a set of question to all the top industry players. We bring you a series of interviews on this issue. First in this series is the interview with Rajat Pandhi, MD, Dixy Chicken India Pvt Ltd.
Q. Why are so many foreign players interested in fast-food retailing in India?
Ans- A steep growth rate of over 30 per cent p.a. in fast-food retailing is a compelling reason for all major international food chains to want to set a footprint in India.
Q. How has the growth of malls helped in promoting catering services?
Ans- These days, malls have become synonymous with retailing in India. People from all walks of society are converging at the malls, if only because these provide a one-stop solution to all their buying needs, including food. This makes most of the malls very high footfall areas, so all major food chains vie to put up their stalls/outlets there.
Q. Where will this sector be by 2010 in India?
Ans- Organized food retailing has potential to touch the Rs 10,000-crore turnover mark by 2010.
Q. Where do you see yourself in the coming years? What are your plans for the future?
Ans- In the next three years, Dixy Chicken India will have 170 outlets and in the process will become one of the leading international fast-food chains in the country. Also, within the next five years Dixy Chicken India will establish its footprint in the major cities of Southeast Asia.
Q. Facts suggest that 70 per cent of the catering service in India is unorganized and the prices they offer are much lower. What will be your pricing strategy in the future?
Ans- Dixy Chicken India’s pricing strategy will be very simple but competitive, keeping the motive as “value for money”.
Q. To be able to capture a major share in this sector you will have to penetrate tier I and II cities, which is when the real competition starts between other major players, the unorganized sector, and you! How do you see the competition developing?
Ans- Dixy Chicken India always welcomes healthy competition. In fact, competition will help bring out the best of every player and eventually the consumer will be benefited. So, competition is actually an important instrument for GROWTH.
Q. The expansion spree has already started. Major players have started entering the airports. The railway ministry is also considering allowing multinationals in the railway stations. Where do you think this expansion spree will take the industry?
Ans- This expansion spree was a time bomb ticking, which is now blown and the debris are falling across tier 1/2/3 cities, airports, railway stations, bus stations, high street markets, malls, etc. This will spread like there is no tomorrow!!!
Q. What according to you are the most important things that a player entering this sector needs to do?
1. Gauge market opportunities and risks like the size of the targeted market, the competition (existing players/brands), the target clientele’s culture and traditions;
2. Study the financial implications and repercussions; and
3. Enter the fray only after a thorough homework (setting up standard operating procedures, efficient supply chain, and so on).
as told to Karan Mude, Senior Correspondent | indiaretailing.com