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Starbucks, Dunkin Donuts flock to India for fast-food success

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McDonald’s made its name serving up hamburgers fast, but it took the world’s biggest hamburger chain four years to enter India — without its signature dish.

A number of fast-food and cafe chains — Starbucks and Dunkin Donuts to name just two — that are flocking to India would do well to take away lessons learned by established rivals such as McDonald’s in navigating a market beset with obstacles.

Industry experts say patience and flexibility in a country where dietary traditions rule may well define successful global restaurant brands in India.

The stakes are high, with India’s quick-service restaurant market worth $13 billion and growing roughly 25-30 percent a year, according to Euromonitor and market research firm RNCOS. India’s entire food-service market is estimated at $64 billion.

Adapting menus to cater to local dietary needs may be a winning strategy, analysts say. This is not as easy as it seems – Burger King had looked to enter India in 2007-2008, but hit roadblocks when trying to tweak its menu to suit local tastes, according to analysts and several local media reports.

“If you’re a global food retailer, you need to have an offering for the Indian consumer … you cannot push global products,” says Pinakiranjan Mishra, partner and national leader for consumer products and retail at Ernst & Young in Mumbai.

“For a select group of consumers you can, but not if you are looking at building a mass presence.”

India is the first country where McDonald’s decided not to offer beef or pork items. Instead it sells chicken and vegetarian variants to cater to a significant portion of the population that is vegetarian.

Some of its newer competitors such as Denny’s Corp , which plans to enter India by mid-2012, are following suit.

“We have had to strip beef and pork out of our menu. We have had to customise it completely,” said William Edwards, chief executive of EGS, which is handling the international expansion of Denny’s, well known for its all-day menu featuring eggs, sausages and pancakes.


Analysts estimate that China’s fast-food market is nearly six times as big as India’s and foreign chains are targeting both markets to take advantage of rapidly growing economies.

Driving the growth in India’s fast-food sector is a generation of young and increasingly wealthy consumers with an appetite for western tastes.

More than 60 percent of India’s population, or 700 million people, are under the age of 30 — a prime target for fast-food.

“It’s a lot easier to grab a burger at McDonald’s than order a vada sambar (savoury doughnut in lentil soup) at an Udipi which is time consuming,” said Bidisha Mukerjea, a 24-year-old content writer from Mumbai, referring to Indian local fast-food restaurants. “Udipi food is cheaper but it’s about foreign brand attraction, it’s just fancy to eat at these new places.”

It’s no surprise that a host of foreign chains have their sights on India. Starbucks is expected to open its first India store in July or August. Others wanting a foothold include Applebee’s, Pollo Tropical, a unit of Carrols Restaurant Group (TAST.O), and hamburger chain Johnny Rockets.

Source : Economic Times

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