Changing trends in consumer behaviour and the onset of online foodservice/ food ordering concepts are driving a transformation of modern Indian foodservice. In an exclusive interaction with indiaretailing, Jagjit Kandhari Singh, COO, Kebab Xpress, talks about the opportunities and transformations in the industry.
It’s good to see Indian-origin QSRs growing in a market largely dominated by foreign brands. However, in your opinion, why does India not have a pan-India homegrown QSR chain? What could be the bottlenecks?
Broadly I feel India never had the vision to build a pan Indian home grown chain of QSRs. While there are many regional players who are fairly successful, most are fearful of not being able to match localised tastes and preferences in non-native markets.
Then there are major roadblocks on the infrastructure side in terms of building a cost effective supply chain, multiple regulatory/licensing issues and time taken to perfect back-end operations. It is impossible to build a quick service restaurant chain in a short period. Look at Jubilant Foodworks; they took 15 years as well. Such as long-haul business requires time and effort to perfect the basic unit model, thus patience and patience capital are paramount. Moreover, all successful MNC QSR chains are product oriented, none of them cover a large base of cuisines (they work on limited SKUs). Having said that, I do believe that ethnic QSR concepts are a lucrative opportunity.
What are the changes that you have witnessed in terms of consumer trends in the fast food business in India?
The Indian consumer is changing — more connected than ever, more savvy and better equipped to benefit from an ever-changing marketplace. The consumer fabric is evolving; today’s consumers are demanding the need for tastier food with additional benefits such as convenience, health, service delivery efficiency and cost economics.
What are your chain’s USPs?
Kebab Xpress addresses the growing need of consumers for convenience, and the insatiable hunger for North-Indian food in a contemporary format. On menu are mouth-watering vegetarian and non-vegetarian Kebabs, Kathis, Biryanis and Curries. The food portions have been designed to suit the appetite of an average individual and packaged in a very vibrant, young and convenient theme. The sheer convenience of Kebab Xpress’ eat on-the-go design has found takers in the corporate world as well.
How are you leveraging technology to connect with today’s consumers — in marketing and branding?
The economics of marketing is ever-changing with the advent of two-way, real-time communication with consumers. Today the touch points with consumers have changed both in numbers and nature, requiring a major adjustments to align strategy and budgets to where consumers are actually spending their time. The old marketing funnel metaphor fails to capture the shifting nature of consumer engagement.
At Kebab Xpress, apart from adopting various traditional touch points, we engage customers with our online ordering platform, and interact with consumers through Facebook, Twitter and blogs. We shall be shortly launching an app, which is a natural progression to the medium.
Kebab Xpress seemingly had slow growth in 2014 as compared to 2013. Are you planning to crack up the pace this year?
Well, first, please note that a QSR does not scale up overnight like technology. It has to be built up brick by brick and customer by customer. We had plans to open 10 outlets in 2014; however, owing to delays beyond our control, we could only open four. This year, we have envisaged to enhance the number of outlets to 25 outlets in Delhi NCR. All the current outlets are company owned.
We are currently operating nine outlets (mix of high streets, malls and food court kiosk locations) at: The Qutub Tiffin, Qutub Minar; N-5, Connaught Place; V3S Mall; Moments Mall; Club Road Punjabi Bagh Ext.; DLF Cyber Hub; The Great India Place; Pacific Mall, and HUDA City Sector 29, Gurgaon.
We shall be shortly opening outlets at: World Mark 1 Aerocity near IGI Airport; Garden Galleria Noida; Euro Park Ghaziabad; Indirapuram Habitat Centre Ghaziabad; Crown Interiorz mall Faridabad; Shipra Mall, and Reliance malls at Vikas puri and Dwarka.
Please share last fiscal turnover details and projected revenues for current fiscal. Also pls share YoY growth percentage over past two years.
Kebab Xpress reported Rs 8.78 crore in the last fiscal with nine operational outlets with staggered openings during the year in Delhi NCR. The projected revenues for the current fiscal year are Rs 19.3 crore. We’ve witnessed positive growth from FY 2012-13 to FY 2013-14 by 574% and from FY 2013-14 to FY 2014-15 by 104%. We are confident of meeting our targets during this fiscal.
There is a tremendous growth in the online foodservice concepts. What is your view about these models and their scalability/sustainability?
The online foodservice industry in India is getting energised with investors pouring in millions of dollars and larger players gobbling up smaller rivals. Foodservice is one of the most fragmented industries in India. Over 90 per cent of the restaurants and eateries in the country are in the unorganised sector (a large chunk of them are private or family-run businesses with less than 10 total employees). However, the scenario is changing, thanks to the advent of technology. Restaurants, mainly in the metro cities, are now going tech and partnering with various online food ordering ventures to generate additional revenues.
There are around 20 digital food ordering ventures in India, some of whom are just providing an online platform for ordering, while others have set up their own kitchens, in addition to providing a booking platform. Digital food ordering is emerging as one of the largest categories in India. I strongly feel food is really key to people’s happiness in India. The diversity in the food culture, combined with the increasing number of nuclear families and incredible uptake on mobile, present big opportunities for companies. We also see millions of people migrating to cities. So choices, ease of ordering and timely-delivery are key things to succeed here. The B2B segment also remains largely untapped, and employees working in large corporates — and even startups — in metros cities are still unable to access hygienic food. This provides huge opportunities,
Overall, the online foodservice concepts are catering to the changing taste of modern India through its innovative concepts. However, the real challenge lies in the right mix of innovation with strong business sense in order to attain long term sustainability and scalability. It’s not like technology where growth is massive.
What is the biggest challenge for your business today?
The major challenges are food inflation, product imitation, price competition, local competition, building a cost effective supply chain and multiple licensing issues.
The organised segment of QSR has survived the economic slowdown better than other sectors. Eating out has grown exponentially in India, thanks to our changing lifestyles, the rise in our disposable incomes, the rapid urbanisation, the increase in the number of working women, and the fact that the Indian consumer is rapidly becoming indulgent. With the changing market dynamics, the challenges facing the QSR segment are also changing with time. Today, these have more to do with trained manpower availability, real estate rates, compliance with the legal framework, offering localised menus and consumer engagement strategies, and, at the same time, ensuring that the consistency and standardisation of the product are maintained. The customers at these eateries are not keen on brand loyalty anymore. They may easily switch over to another brand. However, they are very particular about matters of hygiene and price.
It is important to follow the four Ps of the market (product, price, place and promotion) in order to stay relevant. And most importantly, Food is a Fun Business. Let’s not take the fun out of eating.