Availability of an infrastructure, supplier ecosystem, focus on quality and hygiene, and standardisation is spurring the growth of QSRs in India, concluded the panel at India Food Services Forum 2014 held at Mumbai. The panel comprised of representatives from leading QSR chains in India and moderated by Samir Kuckreja, President, National Restaurant Association of India (NRAI).
Gaurav Jain, CEO, Mastkalandar, said "Bite as much as one can chew" their strategy is to expand to cities which can be managed by overnight journey from Bangalore, but plans are there to expand to delhi and Mumbai, but the key lies in not expanding out of desperation
Sanjay Coutinho, CEO, Basking Robbins, mentioned that they have 530 stores in 120 cities, and on being questioned that does now growth is on brand rather than Industry? He said that 62 percent of their business is coming from top 18 cities and thus they plan to have future development concentrated in those cities. Location, he said, is important on deciding growth. Another challenge which he highlighted was of "Hygiene and Sanitation," with especially FSA coming into play, and also logistics in frozen food segment.
Vadapav which enjoys a huge fan-following in Mumbai and Thane, the challenge lay in standardising the product and creating a brand out of it, added Dheeraj Gupta, MD, Jumboking foods. He said the company is planning a disciplined growth over next few years reaching a 1000-store mark 5 years down the line. "Managing franchisees would be the top challenge. It becomes a problem when franchisees do not earn money. We have to focus on merchandising, product mix, and marketing," Gupta said.
According to Ajay Kaul, CEO, Jubilant Foods, the lack of an ecosystem for Quick Service Restaurants in India poses a big challenge for the growth of the industry. He recalled that when the global QSR players forayed the Indian market around 1995, the ecosystem of suppliers and service providers did not exist at all. The situation remains more or less similar even today. Ajay felt that the unavailability of suppliers who can supply raw or semi-processed materials on a large scale limits the new product development. The challenge is more on supply side rather than on demand side. Other challenges he quoted are infrastructure, trained human resources, sanitisation, and hygiene.
When asked about future growth trajectory for Barista Lavazza, Nilanjan Bhattacharya, COO, pointed at moderating level of investments in capital and optimising returns. Over the years, Barista has realised that the real business comes from public places with captive audience (such as colleges, hospitals, business parks, institutions, malls) as compared to traditional high streets. The challenge for the coffee shop industry, according to Bhattacharya, lies in matching quality of product with consumer-perceived prices and in coping against rising real estate prices.
The panels gave quite insightful responses when asked to define differentiators for their brands, outlining the strategic space these brands are operating in.
Bhattacharya attributed the differentiation to strengthening linkage between Italian-ness and coffee. Relating with Photography and literature has been well received by the patrons and continues to be their key differentiator, he opined.
Jain pointed out that the "Chalta Hai" attitude hurts any business for that matter. On consistency of execution he mentioned that currently they are into business of fresh food but scaling with create
challenges for them. Coutinho was of opinion that their challenge is churning out new flavours consistently, distribution, and logistics.
While 30-minute delivery remains the key promise of Domino’s, the strategy to avoid franchising model for expansion gives the competitive advantage for them, added Kaul. The strategy to control the entire supply chain, quality and people has led to internal differentiation that has led to building up a unique consumer perspective, he added assertively.
For Gupta, understanding the market and aligning the strategy with the requirements was the key to success. According to him, the company realised that convenience is the sole factor driving popularity of Vadapav and, hence, built their business model around it. The strategy translated into small-sized stores in crowded places, standard, hygienic product and quick service to consumers.
As part of Q&A round, the panel mentioned that best way to motivate their employees is to give a heart to each store, make employee being proud of their work and get the suggestions from them on new ideas and improvements. Second suggestion which came forward was think global and implement local and customise to local palette but consider customer feedback whether they like it or not. The last suggestion was that Indian customer relates Healthy to Hygiene, but relating it to low fat low cholesterol food might not be good idea some times as customer wants to indulge when eating out. Finally Kuckreja concluded the panel discussion by summarising the new trends in food industry.