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Fast food brands in an expansion mode in India

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The Indian fast food culture is here to stay, and it’s getting bigger each year, says Shubhranshu Pani, Managing Director – Retail, Jones Lang LaSalle India.

The American fast food brands such as McDonalds, Pizza Hut and various others have latched on to the heightened lifestyle aspiration of a young, cash-rich and not necessarily fastidious younger generation. The demand from this retail segment for prime space in Indian malls and high streets continues with little signs of slowing down.

What the statistics say
According to a study by the McKinsey Global Institute, India’s 300-million-strong middle class will grow to a whopping 583 million by the year 2025. India’s youth, which have emerged as the major economic drivers on the heels of the IT/ITeS and BPO culture, are spending enormous amounts of time and money on ex-home lifestyle activities.

Nor is the action confined to the metros alone – though, with thirty-five cities housing over a million people as compared to America’s nine, these are still the primary catchments.

Nonetheless, Tier II/III towns are catching up. International software companies, which are not necessarily CBD oriented, are setting up shop in India’s smaller cities, bringing along the legendary Indian Retail Mania. And fast food is an inalienable component of this trend that is sweeping every corner of the nation. In fact, in a period where the economic slowdown had put a damper on most retail space-related transactions, many fast food chains continued to snap of prime space for their expansion plans.

The psycho-sociological aspect
Foreign and domestic fast food franchises are targeting the Indian yuppie’s yen for everything American – everything that spells life in the fast lane and reflects a break from the traditional partisan mindset of the previous generations.

Thanks to a decisive break from traditional family formats and the birth of the Indian Dual-Income Family, India’s middle class is rapidly turning into a ‘eating out’ lot. In fact, the money that this component is spending on eating out is growing at an annual rate of 20 percent. There has also been an exponential rise in urban working women juggling home and job situations – found fodder for fast food chains capitalizing on the ‘available time’ crunch. Satellite TV, print glossies, the radio and focused advertising in glitzy malls and shopping complexes pitch in to

feed the craze for glamorous and convenient foreign and domestic fast food products.

Hardcore marketing
There is scientific marketing psychology at work here. The Indian versions of foreign fast food brands cannot survive without adapting to the highly individualistic Indian palate. The ‘Indianized’ versions of Italian and American fast food product lines reflect a scientific process of adaptation. To illustrate, witness the McAloo Tikki and the tandoori pizza. Witness how a major fast food chain knuckles under when certain segments of Indian society protest against a foreign food-production process or ingredient.

The message is on the wall in broad paint-strokes of mustard and Tabasco sauce: global fast food brands are taking India seriously. Very seriously indeed. And why not? In the final analysis, India Shining is all about increased spending power and an increasingly globalized scenario. The increased demand for foreign fast food brands is driven by higher disposable incomes, higher aspirations and a fundamental shift in overall mentality. Moreover, iconic fast food chains like McDonalds earn the largest part of their overall revenue outside.

Indian Malls – the ideal platform
Indian mall developers have zeroed in on the fast food juggernaut and refined their marketing strategies for food courts. In the early days, malls developers established and managed their own food courts. At that phase, food courts were just a low-profile component of the overall mall experience. Today, since these have become specialty areas, mall developers ask professional restauranteurs and established fast food brands to take the allotted space over.

These, in turn, have turned food court visits into stand-alone experiences in their own right. The result is increased competitiveness among fast food brands – resulting in saturation advertising campaigns that further whet the Indian appetite.

In fact, the collective food and beverages industry in India has evolved from being retail’s poor cousin to being the sector with the dominating edge. As the Indian population’s taste for fast food evolves along with its spending power, the industry can only thrive.

However, India may still have some way to go in understanding all the parameters involved. Indian consumers tend to lack the level of awareness prevalent in these fast food chains’ countries of origin. While American consumers require quite a bit of accountability for adherence to nutritional and food safety norms, fast food chains sometimes capitalize on the fact that Asian parameters are not nearly as exacting.

There is a lot more involved than glamour, after all. Indian consumers need to learn to look beyond the seductive power of multinational food chains. In fact, this is already happening. The latest trend in fast food chains is towards nutritional food that excludes potentially harmful ingredients such as sodium glutamate, refined sugar/artificial sweeteners, preservatives and trans fats, as well as deleterious processes such as deep frying. For example, Subway – though technically another American fast food franchise – distinguishes itself from the rest by placing complete emphasis on wholesome ingredients. The response from Indian consumers is heartening, proving that we are no longer given to predictable knee-jerk responses to foreign goods and concepts.

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