Quick take on QSR biz

In the last few years the food and beverages (F&B) industry of India has grown rapidly and it is anticipated to grow at compound annual growth rate (CAGR) of around 30-34 per cent every year. Acknowledging the potential in the last 15 years many international brands like Dominos, KFC, McDonalds entered Indian market with their concept of Quick Service Restaurants (QSR’s).

India is known for its diversity in food with many Indian brands serving scrumptious QSR food, however the market is largely captured by unorganised players. Inspired from international QSR format and examining the gap for organised traditional QSR in the market some of the Indian brands opted for the same format to make their name. Indian fast food as their main course undeniably helped them to hold their foot in the market. Inspired from international QSR chains, Dheeraj Gupta, MD, Jumboking says: “Western QSR models like, Dominos etc which are known worldwide for its services were my inspiration. I observed the Indian market and realised the need for a branded Indian burger chain and I started a Vada pav restaurant, Jumboking.”

Stimulating factors

In recent times Indian consumers along with their lifestyle have changed their eating habits. Nowadays, people do not mind spending money eating out with family and friends, churning up huge appetite for the QSRs. Young to old everyone can be seen devouring money on fast food at malls, multiplexes, shopping streets etc. Thanks to the increase in disposable income and the variety of eating joints available in every nook and cranny. The huge demand for the QSR’s in Tier I and Tier II cities are witnessing gigantic expansion.

Serving Indian street food in an organised way attract people from all segments to spend a few extra bucks for an air conditioned, comfortable ambiance with dine in option. Gupta says: “The concept of Jumboking was started 10 years back. At that time it was quite unimaginable to make vada pav as popular brand. Today Jumboking has become an air conditioned outlet, crowded with youngsters proudly biting into the Indian burger i.e., vada pav. During the last 10 years we have worked hard and it has surely led to our success.”

Franchise players
Some of the prominent Indian QSR brands franchising in India include:

Bangs: Bangs serve products in Indian flavour with varieties which include fried chicken, burgers, wraps, pasta, french fries and beverages. Minimum investment for a kiosk is Rs13 lakh for this model which is only for metro cities. Express outlet model will cost about Rs 20-25 lakh and restaurant model will cost about Rs 35 lakh and more which includes franchisee fee, equipment and interiors. The brand will be adding 50 more outlets in 2012.

Jumboking: Jumboking is a well defined brand of vada pav having a decade of experience. The brand has set a target of 100 stores by August 2013. The franchise fees and cost of interiors for an air conditioned JumboKing store will be approximately Rs 15 lakh. Area required for the franchise is 300 sq. ft with minimum frontage of 15 ft.

Kaati Zone: Kaati Zone offers very convenient take away food. The smallest format is a kiosk which is less than 100 sq. ft requiring an investment of Rs 8 lakh (excluding any rent deposit payable to local property owner). It presently has 19 franchise stores in six cities.

Goli Vada Pav: Goli Vada Pav was incorporated with the idea of creating an ethnic snack chain offering the staple Mumbai street food vada pav in standardised manner. Established in 2004, presently, the company operates more than125 outlets across 30 cities in four states out of which 30 are in Karnataka, 20 are in Bengaluru and three in Hyderabad.

Quick success via franchise route

Indian QSR brands are planning aggressive expansion mostly via franchise route. Asvin Simon, CEO, Bangs India shares: “Franchising is the best model to expand. These days’ people want to invest money in different concepts and especially in food and beverages. Our business model is accepted in almost every city. So it has become very easy to achieve the targets. We have opened 20 outlets in the first two months”.

Kiran Nadkarni, CEO, Kaati Zone, shares his franchise story: “Franchising has helped us in two major ways; we have been able to generate momentum in expansion quickly. Secondly, the local entrepreneurial talent has helped manage the store operations and brand experience better. Since we are planning to set up a large number of stores, franchising is the best strategy for growth.”

Success mantra

Nadkarni bestows success mantra for QSR business: “The business of building a QSR brand is a long-haul one. Initially, a company has to establish a strong back-end and processes and systems to handle multi-city and multi-location expansion in a subsequent phase. Profitability is achieved once a certain scale is reached in terms of number of stores. The key factors for success are: superior customer experience across entire network of stores, an efficient supply chain, and processes and systems that enable massive scale-up.”

Take up a QSR franchise

To acquire a franchise of Indian QSR brands investment and area varies from brand to brand. These brands mainly offer two formats kiosk and outlet. Explaining the benefits of kiosk format Nadkarni says: “Investment in a kiosk format is less and it is popular and number of franchisees is willing to sign up. The investment is low and only two people are required to operate it and your break even sale is low and returns are also very attractive for the franchisee.”

With increasing disposable incomes and mass appeal, Indian F&B industry offers tremendous growth opportunity for the QSR business. Along with international brands national QSRs are realising this and are rolling out aggressive expansion plans.