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Indian Fast Food Industry on a Quick and Smart Growth Drive

The foray of multinational fast food retailers into India has impacted the taste buds of Indian consumers significantly. Instant food is scoring over traditional food due to influence of Western countries, and rise in income & subsequent standard of living, convenience, etc. As a result, fast food menus are gaining wider acceptance from the Indian consumers.

The Indian fast Food Industry Dryer has witnessed high growth strides in the past years, with increasing disposable income; exposure to a number of cuisines; and consumers’ willingness to experiment a mix of both Western and local menu. It has not only provided convenience to people who shuttle between home and work for a bigger part of the day but also eliminated the requirement of conventional cutlery. This industry at the moment thrives on international appeal endorsed by niche chains. The development of nutritious and healthier replacements for the traditional servings at fast food restaurants has transformed into mass promotion of portable foods. As per a new research report titled ‘Indian Fast Food Market Analysis’, currently the Indian fast food industry stands at a massive size of ` 47 billion, driven by a growing number of working professionals and increasing westernization. Apart from this, busy life schedule, standardized food, and less timeconsuming processes are also fuelling the demand from domestic consumers in the industry. As demand for all types of fast food items are consistently on the rise, pizza, burger, and French fries have become the all time favorite among young Indians, more so with some of the well-known burger and pizza restaurants like McDonald’s, Domino’s, KFC, Pizza Hut, Nirula’s etc, operating in India. Consumers’ first choice As far as products are concerned, instant noodles and pasta are at a nascent stage but are fast evolving in the Indian fast food business. Demand for these food items are growing as consumers with hectic lifestyles do not want to spend much time in cooking. Besides, a variety of noodles and pasta is easily available in the international fast food makers’ menu at an attractive price range, pulling various

consumers to add these delicious foods into their palates. The instant noodles and pasta segment has thus turned out to be a big hit among fast food lovers, resulting in the entry of many leading players into this segment. As per an ongoing study on the Indian fast food industry, there has been a major shift in food habits in the metropolitan cities encouraging the manufacturers to introduce innovative flavors in noodles and pastas to suit Indian consumers. Further, the enhancement of fried instant noodles’ condiment, good performance of non-fried noodles, and the subsequent release of coarse cereal noodles are some of the main trends currently prevailing in the Indian market. About 86 per cent of households prefer to consume instant food over traditional food due to steep rise in dual income level & standard of living, convenience and influence of Western countries. As a result, fast food menus comprising pizza, burger, sandwiches, etc are gaining wider acceptance from the Indian consumers. Competitors’ zone On the competitive front, the fast food market in India is poised for rapid expansion and higher efficiency with the entry of international giants. It has also been observed that with the increasing popularity of dining out in India, restaurant operators want to safeguard their share of improved consumer spending by offering all types of cuisines. This provides a significant opportunity to players in the food and beverage industry. Major players in this sector are creating a competitive environment for future growth. And in order to cater to this augmented customer base, Nirula’s is increasing its existence in metro cities along with the Tier-2 and Tier-3 cities through different formats. The new outlets in cities, such as Amritsar, Patna, Bhopal, Pune and Ludhiana would mainly be Family Style Restaurants (FSR), ice cream kiosks and parlors. Likewise, KFC has plans to increase its existence from 21 cities at present to around 75 cities through its objective to operate 500 restaurants in India by 2015. The company is eager to spread wings to new cities such as Hubli, Madurai, Salem and Mysore in the south, and in the north in Kanpur, Allahabad. Similarly, McDonald’s is targeting 1,000 restaurants by 2020. Hard castle Restaurants, which runs McDonald’s in the south and west, plans to open up to 70 stores next year. It will be the franchisee’s biggest expansion in the past 15 years. McDonald’s also plans to invest ` 10 billion to boost growth. Most of the food chains are busy in innovating and customizing their products. For instance, in order to boost revenue and offer different varieties to the tastes of various cross-sections of people, Domino’s Pizza is planning to customize its range of products. The company is taking initiatives to come up with a new assortment of diet pizzas for Indians, who are health-conscious and intends to introduce different specialties in pizza for people residing in different parts, like North and South India. Further, the acceptance of fast food has grown faster as several players have well-understood the basic requirements of Indian food and served more vegetarians & selected no vegetarian meal options (excludes pork and beef from their menu). Franchise outlets

On the strategic front, it has been found that the franchising concept in India is continuously rising, with the increase in the number of international players opening more franchise outlets in India. The increasing revenue figures from franchise outlets encourage the players to opt for the concept. As a result, many international fast food giants are opening up their franchise outlets in India to grab the huge untapped potential in a fast emerging market. In a recent development, Nando, South Africa-based Afro-Portuguese, global restaurant chain is starting up around 35 outlets by 2013 in various parts of India through the franchise route. The company expects to expand enormously in the northern parts of India. Varying consumer behavior Talking about consumers, it has been a noticeable trend that food consumption pattern of urban Indian families has changed dramatically with times owing to the growing influence of Western culture. Indians have started dining out and moved on to accept different varieties of delicious food from the world. Further, studies indicate a radical change in the consumption patterns of Indian consumers, who have traditionally been known for their price sensitiveness. Middle-class families as well as the youth prefer to have a burger worth ` 25 rather than that worth ` 50-75. This reveals that despite looking for taste and brand, consumers in India are still inclined to low-price and health issues. As per a survey conducted in 2010, nearly 80 per cent of the fast food consumers expect the fast food owners to implement required measures for reducing the harmful impact of fast food. To tackle this issue, these owners have adopted innovative cooking styles, such as baking and grilling that retain the flavor of food and also require lesser quantity of oil. Besides, major retailers in this area are now providing all necessary information like ingredients, nutrition and fat contained on the product pack. These measures have helped Indian fast food consumers select healthy and nutritious meal as well as protect them from the dangerous effect of unhealthy fast food. Government inventiveness As far as the role of government is concerned, various initiatives in the recent past have resulted in the entry of many international Fast Food Retailers in the country. With the economic liberalization in 1991, nearly all tariff and non-tariff barriers have been removed or minimized from the Indian boundary that has helped many retailers to enter the growing Indian fast food industry. As per the Food Safety and Standards Authority of India, the new rules and standards will make it mandatory for street food vendors to register with state health departments that are into policing hygiene. It requires the food authority to issue licenses to food vendors only after ensuring that their products are safe and hygienic. Vendors with products that are found unhygienic or unsafe will face monetary penalties. Moreover, user friendly and IT-enabled licensing system will be created to improve governance and compliance. To try to ensure that India has the capacity to implement the new law, the government has increased the number of state laboratories for testing eatables and appointed more food safety officers to check food quality & hygiene instead of merely monitoring adulteration.

Besides, the Indian government has also directed state governments to prohibit sales of fast food and carbonated drinks on school premises & check out all such items that lead to unhealthy eating from cafeteria within a 1,500 feet radius of schools. In addition, the country’s regulators have ordered food chains to provide product nutritional labeling at the time of sale, so that customers can know about what they are eating and what effect it can have on their health. This step is a result of various studies that have shown that a typical fast food has very high density that causes people to eat more than they usually require, causing people to fall ill with many health-related problems like obesity, diabetes and heart diseases. Shortfalls and remedies India has witnessed a massive increase in the consumption of fast food over the past few years. Indeed, the country has come out as one of the rapidly growing fast food markets in the world. Although the country offers lucrative opportunities to new entrants due to rapid urbanization and changing lifestyles, there still exist some roadblocks, which may hinder the exponential growth route of this industry in future. Competition from local street vendors remains the biggest threat to the growth of the fast food industry in the country. There is an increase in raw materials cost and fuel charges, which is causing a lot of strain to the players in this segment. Lack of proper infrastructural facilities, with respect to roads and electricity, has also hampered the development of fast food market in India. Besides, the industry will have to tackle a number of roadblocks including the rising consumer concerns regarding obesity and healthconsciousness to maintain the ongoing trend. On a fast track If the challenges are met with serious considerations, the Indian fast food industry is anticipated to achieve glorious milestones in the coming years. Increasing inclination of people to eat outside (restaurants) will be the major driving force behind the projected growth. Besides, healthy food options and low-price menu will also contribute to its growth, to attain a CAGR of around 33 per cent during 20102014. Moreover, continuous economic growth and improving employment situation will lead to higher personal expenditures on outside food by 2014. Fast food joints will also need to maintain their stance on pricing because the environment will remain extremely competitive. Hence, it is believed that the fast food industry will experience modest improvement in the coming years. Source – Modern Food Processing (Infomedia18)