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Infinity Business School Business Strategy Group Project Report on Fast Food Industry in India

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Infinity Business School Business Strategy Group Project Report on Fast Food Industry in India INFINITY BUSINESS SCHOOL BUSINESS STRATEGY GROUP PROJECT REPORT ON FAST FOOD INDUSTRY IN INDIA Submitted To: Rear Admiral Dr Rakesh Chopra Submitted On: 19th March, 2010 Submitted By: Group No:6 Roll No. Name 806 Adnan Abbas 815 Dhruv Mittal 823 Jasveen Kaur 824 Kajoli Gupta 831 Misal Anand 839 Prerna Mehta 847 Rohan Saraswat 855 Shanu Kukreti 863 Tushar Kashyap 871 Kashish Hans 1 DECLARATION We declare that the work contained in this report is the result of our own efforts. We have not copied it from any other printed source. Submitted by: Group No: 6 Submitted to: Rear Admiral Dr Rakesh Chopra 2 AKNOWLEDGEMENT We must express our deep sense of gratitude to Rear Admiral Dr Rakesh Chopra for his kind, liberal support as well of his valuable advice and directions, without which it would have been impossible for us to prepare this report. We also express our indebtness to Mr. Umesh Kumar, Assistant Restaurant Manager, Pizza Hut and Mr. for giving their valuable time to answer our questions. Submitted by: Group No :6 3 TABLE OF CONTENTS Sl No. TOPIC PAGE 1 Declaration 3 2 Acknowledgemnt 4 3 Introduction to fast food industry at large 6 4 Company Introduction 8 5 Product Market And Target Market 13 6 Customer Behaviour 18 Firm’s 4P’s, Marketing Strategies, Listening 7 System 22 8 Competition Analysis 27 9 Firm’s Differentiation Strategy 33 10 Firm’s Positioning Strategy 36 11 SWOT Analysis 39 12 Conclusion 43 Appendix:Interesting Articles 13 Bibliography 48 4 FAST FOOD INDUSTRY Introduction Fast food is the term given to food that can be prepared and served very quickly. While any meal with low preparation time can be considered to be fast food, typically the term refers to food sold in a restaurant or store with low quality preparation and served to the customer in a packaged form for take-out/take-away. Outlets may be stands or kiosks, which may provide no shelter or seating, or fast food restaurants (also known as quick service restaurants). Franchise operations which are part of restaurant chains have standardized foodstuffs shipped to each restaurant from central locations. The capital requirements involved in opening up a fast food restaurant are relatively low. Restaurants with much higher sit-in ratios, where customers tend to sit and have their orders brought to them in a seemingly more upscale atmosphere may be known in some areas as fast casual restaurants. History The concept of ready-cooked food for sale is closely connected with urban development. In Ancient Rome cities had street stands that sold bread and wine. A fixture of East Asian cities is the noodle shop. Flatbread and falafel are today ubiquitous in the Middle East. Popular Indian fast food dishes include vada pav, panipuri and dahi vada. In the French-speaking nations of West Africa, roadside 5 stands in and around the larger cities continue to sell—as they have done for generations—a range of ready-to-eat, char-grilled meat sticks known locally as brochettes. The Start of Fast Food Culture The concept of fast food pops up during 1920s.The 1950s first witnessed their rapid proliferation. Several factors that contributed to this explosive growth in 50’s were: (1) America’s love affair with the automobiles. (2) The construction of a major new highway system. (3) The development of sub-urban communities. (4) The baby boom subsequent to world war second. On the go Fast food outlets are take-away or take-out providers, often with a "drive-through" service which allows customers to order and pick up food from their cars; but most also have a seating area in which customers can eat the food on the premises. People eat there more than five times a week and often, one or more of those five times is at a fast food restaurant. Nearly from its inception, fast food has been designed to be eaten "on the go", often does not require traditional cutlery, and is eaten as a finger food. Common menu items at fast food outlets include fish and chips, sandwiches, pitas, hamburgers, fried chicken, French fries, chicken nuggets, tacos, pizza, hot dogs, and ice cream, although many fast food restaurants offer "slower" foods like chili, mashed potatoes, and salads. Variants Although fast food often brings to mind traditional American fast food such as hamburgers and fries, there are many other forms of fast food that enjoy widespread popularity in the West. Chinese takeaways/takeout restaurants are particularly popular. They normally offer a wide variety of Asian food which has normally been fried. Most options are some form of noodles, rice, or meat. Sushi has seen rapidly rising popularity in recent times. A form of fast food created in Japan. Pizza is a common fast food category in the United States, with chains such as Domino's Pizza, Sbarro and Pizza Hut. Fish and chip shops are a form of fast food popular in the United Kingdom, Australia and New Zealand. A Dutch fast food meal often consists of a portion of French fries . Business 6 In the United States alone, consumers spent about US$110 billion on fast food in 2000 (which increased from US$6 billion in 1970). The National Restaurant Association forecasted that fast food restaurants in the U.S. would reach US$142 billion in sales. In comparison, the full-service restaurant segment of the food industry is expected to generate $173 billion in sales. Jobs and labor issues Today, more than 10 million workers are employed in the areas of food preparation and food servicing including fast food in the world. Employees are the backbone of the fast food industry. Proper training is crucial to the orderly and quick service customers expect. Yet, employee turnover can be as high as 200% per year. With such a turnover, owner-operators of franchise and non- franchise restaurants have the daunting task of constantly training an entirely new workforce. Policies and procedures need to be explained to each new employee. Globalization The global fast food market grew by 4.8% and reached a value of 102.4 billion and a volume of 80.3 billion transactions. In India alone the fast food industry is growing by 40% a year. McDonald's is located in 120 countries and on 6 continents and operates over 31,000 restaurants worldwide. KFC is located in 25 countries. Subway has 29,186 restaurants located in 86 countries, Pizza Hut is located in 26 countries, Taco Bell has 278 restaurants located in 12 countries besides the United States. Health issue Tran’s fats which are commonly found in fast food have been shown in many tests to have a negative health effect on the body. The fast food consumption has been shown to increase calorie intake, promote weight gain, and elevate risk for diabetes. The Centers for Disease Control and Prevention ranked obesity as the number one health threat for Americans in 2004. It is the second leading cause of preventable death in the United States and results in 400,000 deaths each year. FAST FOOD INDUSTRY IN INDIA INDIA – EMERGING MARKET FOR GLOBAL PLAYERS The percentage share held by foodservice of total consumer expenditure on food has increased from a very low base to stand at 2.6% in 2001. Eating at home remains very much ingrained in Indian culture and changes in eating habits are very slow moving with barriers to eating out entrenched in certain sectors of Indian society.. The growth in nuclear families, 7 particularly in urban India, exposure to global media and Western cuisine and an increasing number of women joining the workforce have had an impact on eating out trends. FACTS AND FIGURES Fast food is one of the world’s largest growing food type. India’s fast food industry is growing by 40% a year and is expected to generate a billion dollars in sales.The multinational segment of Indian fast food industry is up to Rs. 6 billion, a figure expected to zoom to Rs.70 billion. In last 6 years, foreign investment in this sector stood at Rs. 3600 million which is about one-fourth of total investment made in this sector. Because of the availability of raw material for fast food, Global chains are flooding into the country. MARKET SIZE & MAJOR PLAYERS a) Dominated by McDonalds having as many as 75 outlets. b) Domino’s pizza is present in around 100 locations. c) Pizza hut is also catching up and it has planned to establish 125 outlets at the end of 2005. d) Subways have established around 40 outlets. e) Nirulas is established at Delhi and Noida only. However, it claims to cater 50,000 guests every day. Major players in fast food are: • MCDONALDS • KFC • PIZZA HUT • DOMINOS PIZZA • SUBWAY The main reason behind the success of the multinational chains is their expertise in product development, sourcing practices, quality standards, service levels and standardized operating procedures in their restaurants, a strength that they have developed over years of experience around the world. The home grown chains have in the past few years of competition with the MNCs, learnt a few things but there is still a lot of scope for improvement. REASON FOR EMERGENCE Gender Roles: gender roles are now changing. Females have started working outside. So, they have no time for their home and cooking food. Fast food is an easy way out because these can be prepared easily. Customer Sophistication and Confidence: consumers are becoming more sophisticated now. They do not want to prepare food and spend their time and energy in house hold works.
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