Retail Industry- Fast Foods

Section- B
Group- 1

Members

2021PGP110 DHRITI SRIVASTAVA 9540296653

2021PGP175 KEVIN AKHIL SUBHASH 9176429571

2021PGP177 KHEMENDRA SINGH MEENA 9399698038

2017IPM072 MOHAMMED AJDER PALASSERI P 9072512335

2021PGP481 MUHAMMED AJMAL 9645067222

EXECUTIVE SUMMARY

India is a country of diversity. Here food is not just a part of nutrition, and it is deeply connected
with our traditions and customs. Every region of our vast country has its own tastes and flavours
to offer. But due to extensive urbanisation, there has been a considerable change in the food choice
trends of Indians.

The concept of fast food has been prevalent for quite a few years now. Due to the high growth in
the industry, it isn’t easy for a family to catch up with the daily expenses with a job of a single
member. These conditions also make the people shift from one place to another for better jobs and
lifestyles. These factors contribute to the high growth in the fast-food industry these years. And
currently it is one of the fastest growing industries in India.

As per recent studies, fast-food industry is growing at a rate of 4.6% globally. And it is estimated
to reach 931.7 billion US dollars at the end of 2027. At the same time industry is at a rapid growth
stage in India, with an estimated CAGR of 18%.

The major players in the fast-food industry or the quick service restaurants (QSR) include
McDonald’s, Domino’s Pizza, Subway, Starbucks, Burger King, Pizza hut, KFC etc. In India, the
majority of the market share is dominated by Domino’s (22%), McDonald’s (12%) and KFC (11%)
by revenue.

The covid lockdown, though initially dealt a good blow to the industry, in combination with new
digital strategies has proven to be a stepping stone for the growth of this industry. Foreign
investment and skill transfer will undoubtedly help in expanding the market further in our country.

In collaboration with Invest India, the Ministry of Food Processing Industries has established a
dedicated Investment Facilitation Cell to handle all investment interests received in the food
processing sector.

Technology in Food Industry includes Alternative protein, Restaurant digitization, 3D food

processing, food waste reduction, etc. which helps consumers enjoy better-tasting, healthier food,
while companies will be able to invest in high-quality, long-lasting ingredients.

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CONTENTS

1. Executive summary 1
2. Industry Profile 3
a. Indian Market 3
b. International Market 6
3. Players Profile 7
a. McDonald’s 9
b. Burger King 10
c. KFC, Pizza Hut, Taco Bell (Yum! Brands Inc.) 10
d. Domino’s Pizza and Dunkin’ Donut (Jubilant FoodWorks) 11
4. Macroeconomic Profile 12
a. Government Regulations and Policies 12
b. Technology in Food Industry 13
5. List of figures 15
6. References 15

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INDUSTRY PROFILE

Indian Market

The fast-food industry is one of the rapidly growing industries in the world. According to a recent
survey, the fast-food industry is more than 700 billion USD and is expected to grow to 931.7 billion
USD by the next five years. According to Marketwatch, the industry is growing at a rate of 4.7%
and is expected to follow this trend till 2027. The fast-food market in India is at the forefront of
this growth. The Quick Service Restaurants (QSR) segment is projected to grow at a rate of 18%
till the fiscal year 2025. This is visible to us in the form of a massive increase in the number of
outlets for Mcdonalds, burger king, Domino’s, etc. Many brands have entered Tier 2 and 3 cities
as well to increase their penetration.

While the sudden lockdown restrictions imposed landed an initial blow on every business, the
easing of such regulations that followed has resulted in a considerable uptick in the number of
people ordering food to their residence or work area. While this trend has put the unorganized on
the verge of a shutdown, QSRs (and most of their franchises) saw good growth.

Growth over the last few years

The fast-food industry in India has seen rapid growth in recent years. The current annual growth
rate of the industry is 18%, while the foodservice industry is growing at a rate of 10% every year.
The lockdown restrictions and its spillover effects, such as shutting down of many restaurants, lack
of options due to delivery limitations etc., contributed to the growth of the QSR industry during
the pandemic. In fact, many fast-food brands leveraged the rise in demand to open up new stores
and expand their presence. This lucrative industry has attracted new but smaller players to set up
shop as well.

The fast-food industry in India stands at 10th position in terms of per capita spending, which sums
up to about 2.1% of their total annual expenditure. Rapid urbanization and the rise of the youth
population is expected to accelerate the growth of this industry. Major players are posing
themselves to ride this wave of change as effectively as possible.

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For instance, the number of Domino’s outlets in 2008 stood at 277. Currently, they operate more
than 1300 outlets spread across the country. Similar growth trends can be observed among other
significant players such as McDonald’s and Pizza Hut.

Present and future trends

As was the case of almost every business, the fast-food industry also got hit by the Covid-19
pandemic. While they were in an excellent position during the pre-covid time, the sudden travel
ban and an increase in the rate of unemployment put them in a tough spot. But the sector that
struggled most is the non-organized sector.

Pandemic bought an immense change in their supply chain strategies and imposed new hazard
controls. Before, the industry was more reliant on the eating out culture. But currently, these
players are relying on their digital capabilities.

Even though some players introduced digital technologies in their operations, many are still
struggling financially. There is also a big hit in demand due to the lockdown norms. The successful
implementation of these digitally-oriented strategies plays a significant role in bringing this
industry to its earlier pride.

Consumer confidence is another important aspect. The questions aroused in terms of safety and
well-being have been raised and are a significant factor in the reduced demand after the first wave.

Edelweiss estimates that during covid-19 entire food market in India compressed by 82%. Big
players like Mcdonald’s, Domino’s, etc., already recovered 85% of their business as in the pre-
covid scenario.

Importance to the economy (employment, contribution to GDP)

The entry of MNCs into the fast-food industry bought some hopes with itself. The people
welcomed it as an opportunity for employment and thereby contributing to the GDP of the country.
But in reality, there aren’t many changes in our GDP or GNP even with this high growth rate. Most
of the firms repatriated their revenue back to their home countries. It also doesn’t provide many
job opportunities. However, the growth of some Indian brands like Café Coffee Day, Barbeque
nation, etc., plays a significant role in contributing to our economy.

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Technological trends and major innovations

The food industry is a little slow in adapting to the changing technology and innovative digital
solutions. A trend to improve operating efficiency to reduce the service time can be observed in
these restaurants. But when it comes to technology, it was evident that even the big players lag a
little bit. But due to the new circumstances, restaurants are forced to change their operations
strategies and started investing a considerable amount in digital innovations. Few of them began
to build in-house delivery services, and at the same time, few colluded with other food delivery
services.

Analysts’ views of companies/industry

As the new regulations and lockdown norms came in to picture, Restaurants started taking
necessary measures like training their employees and remapping their outlets. They have
introduced strict protocols to regular use of hand sanitizers and to maintain social distance at all
times. QSR has ramped up their takeaway operations and started delivering foods to reach
customers who are actively not searching.

With the ease of restrictions, there will be a high demand for the number of services required.
Many consumers are reluctant to go to dine-ins due to serious health concerns. And since these
consumers are expecting broad menu options. Few players are already started modifying their
kitchens for the practical introduction of more dishes without making the kitchen structure more
complex.

Another important aspect is to stabilize their supply chain. The main motto of QSR stands on
providing cooked food in a short time. Consumers have expected the same even though the
delivery options. A wide range of inventory should be maintained from fresh products to frozen
substitutes, bike parts to maintain the delivery channels, etc. There is a notable reduction in the
supply of food and related products. They are collaborating with multiple stakeholders and
manufacturers to create a contingency plan.

Lockdown showed a shift in QSR spending to grocery spending, which will stay even in the post
covid world. So, it is high time for these restaurants to be prepared to find additional revenue

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sources. Many QSR has already started creating grocery product lines, and few have started
exploring a B2B channel through industry catering.

International Market

As per the "Fast Food Market by Type and End User: Global Opportunity Analysis and Industry
Forecast, 2020-2027" report (Allied Analytics LLP, 2020), the worldwide fast-food market is
relied upon to reach $931.7 billion by 2027, ascending at a CAGR of 4.6% from 2020 to 2027.

The worldwide fast-food market is relied upon to observe a critical development and ascend during
the period, attributable to an increment in the quantity of drive-through joints, ascend in the
quantity of working ladies, educated requesting choices, ascend sought after for global cooking
styles, and change in purchaser taste and inclination. Be that as it may, factors, for example, high
arrangement cost of cafés and ascend in wellbeing worries among the fast-food shoppers are relied
upon to hamper the development of this market. Besides, the ascent of quick relaxed food is gauged
to contrarily influence the fast-food market development.

Fast-food is one such helpful food item that can be overcome with ease anyplace, whenever.
Consequently, the way that the bustling way of life being taken on by most of clients clears way
for fast food items to fill as far as volume deals. Expansion in fame of drive-thru eateries, otherwise
called the speedy help cafés (QSRs), supports the development of the worldwide fast-food market.
Among the arising economies, China, India, and Brazil overwhelm as far as fast-food utilization,
inferable from their huge populace base and development in number of QSRs like McDonalds,
Burger King, Wendy's, Subway, and Dunkin' Donuts.

Key Findings

● The cheap food market size was estimated at $647.7 billion in 2019 and is assessed to reach
$931.7 billion by 2027, developing at a CAGR of 4.6% during the gauged time frame.

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 ● By type, the Asian/Latin American food fragment is assessed to observe the quickest
development, enrolling a CAGR of 3.4% during the gauged time frame.
● In 2019, by end-client, the speedy help eateries fragment held the most elevated offer,
representing 42.59% of the worldwide fast-food piece of the pie.
● In 2019, the U.S. was the most noticeable market in the North America area and is relied
upon to develop at a critical CAGR all through the estimated period.

PLAYERS’ PROFILE

Some of the major players in the fast-food retail industry in India are McDonald’s (Hardcastle
Restaurants Pvt. Ltd.), Dominos and Dunkin’ (Jubilant FoodWorks), Pizza Hut, KFC and Taco
Bell (Yum! Restaurants India), Burger King India Ltd., Subway (Subway Systems India Pvt. Ltd.),
Tata Starbucks Ltd. and Café Coffee Day (Coffee Day Enterprises Ltd.). (Rieff, 2021)

Fig 1: Global fast-food market share

*Adapted from Fast Food Market Share, 2021

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 Fig 2: Indian fast food market share

*Adapted from Indian Food Services Industry – Market Analysis, 2020

Table 1: Performance indicators of the major players

Companies Exchange Revenue Net Market EBITDA EPS Net Profit

Income Cap Margin
(annual)

Westlife NSE 986 Cr. -99Cr. 8325.58 -44 Cr. -6.38 -10.08%
Development Cr.
Mar’21
Ltd.
(McDonald’s)

Restaurant NSE 522.3 Cr. -173.91 6587 Cr. -91 Cr. -3.59 -35.17%
Brands Cr.
Mar’21
International
Inc. (Burger
King)

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Yum! Brands, NYSE 41,525 Cr. 19,970 2,86,197 12,120 Cr 4.35 21.21%
Inc. (KFC, Pizza Cr Cr
Mar’21
Hut, Taco Bell)

Jubilant NSE 3,384 Cr 230 Cr 50,311 Cr 770 Cr 28.42 7.00%

FoodWorks
Mar’21
(Domino’s,
Dunkin’)

Sources: Moneycontrol, 2021. Yum! Company, 2021. Jubilant Foodworks Limited

McDonald’s

McDonald’s is the biggest name in the fast food industry and has a history of innovation and
offering inexpensive and quick meals. They are present in more than 39,000 locations in over 100
countries. They reported revenue of $19.2 billion, market capitalization of $144.6 billion and Profit
margin of 50.8%. (McDonald's Corporation, 2021)

In India, McDonald’s currently has over 300 restaurants in 42 cities, with almost 10000 employees.
McDonald’s operates through various formats including standalone restaurants, drive-thru’s, mall
food courts, McDelivery and dessert kiosks. It also has three thriving brand extensions –
McDelivery, McCafe and McBreakfast. The menu features burgers, finger foods, wraps, salads,
beverages and desserts. Hardcastle Restaurants Pvt. Ltd. (HRPL), owned by Westlife, operates
McDonald’s in West and South India. They provide capital for all business operations and handle
real estate (long term lease etc.), while McDonald’s Corporation provides technical, operation and
business support. HRPL is also involved in managing the marketing, product and pricing, menu,
special offers, customer satisfaction monitoring and maintaining operational standards. (Westlife,
2020)

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They are expanding with 25-30 stores in 2021-22 in India and return to pre covid levels. (PTI,
2021). From 2013-18, McD was involved in a legal battle with its main franchisee in North India,
Connaught Plaza Restaurants. The termination of the franchise agreement happened in 2018, and
McD made profits for the first time in India that year. (Bureau, 2018). They face competition from
other quick service restaurants (QSR) such as Burger King, Wendy’s, Taco Bell, KFC, Subway
etc. (Downie, 2021).

Burger King

Famously known as the Home of the Whopper, is a direct competitor to McDonald’s. They have
more than 18000 restaurants in over 100 countries and roughly 11 million visitors on a daily basis
around the world. It is owned by Restaurant Brands International Inc., which also owns Tim
Hortons and Popeyes. Restaurant Brands International has an annual revenue of $32 billion with
over 27000 restaurants over 100 countries. (Burger King India Ltd., 2021).

The company's master franchisee arrangement allows it to tailor its menu to Indian tastes and
preferences, including a wide range of vegetarian meal options, which has resulted in increased
footfall and same-store sales, making it one of the fastest-growing QSR brands in India, with 200
restaurants opened in the first five years.

In December 2020, Burger King India went in for an initial public offering (IPO) on the BSE and
NSE in India. The IPO was subscribed over 150 times. They currently operate 268 stores in India
of which eight are franchises located at airports, and the rest are owned by the company itself.
(Burger King India IPO Subscribed Over 150 Times, 2020). In recent news, Burger King India is
in talks with F&B Asia, for acquiring the controlling stake in Burger King Indonesia. (Burger King
India in Talks to Acquire Controlling Stake in BK Indonesia, 2021).

KFC, Pizza Hut, Taco Bell (Yum! Brands Inc.)

Yum! Brands Inc. has more than 50,000 restaurants in over 150 countries and 1.5 million
employees. The company spun off from PepsiCo. in 1997 and spun off their China business to
operate as an independent, public traded company. The company is primarily focused on growing
their business through more franchises, more efficiency and sustainability. The company earned a

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total revenue of $50,359 Mn in 2020, of which, $26,289 Mn revenue by KFC, $11,745 Mn by
Taco Bell and $11,955 Mn by Pizza Hut. (Yum! Company, 2021)

KFC has over 23000 restaurants across 145 countries and 395 stores in India. KFC specializes in
fried chicken and is the world’s second largest chain by sales after McDonald’s. They customize
their menus according to the regions such as grilled chicken in US and UK, halal certified chicken
in Islamic countries and extra spicy variants for India. (KFC, 2021). Pizza Hut is the largest pizza
chain in the world after Domino’s with more than 18,000 restaurants in over 100 countries and has
recently opened its 500th store in India (in Punjab). Taco Bell has around 35 stores in India as of
2019, and is planning to open 600 more over the next ten years.

Yum! operates in India through three franchise partners: Devyani International, which is owned
by RJ Corp, Sapphire Foods, and Burman Hospitality, which was recently chosen as the master
franchise for the Taco Bell brand in India. They own and run approximately 800 restaurants
between them. In India, KFC is the company's most popular brand, followed by Pizza Hut and
Taco Bell. (Yum! Brands Reports System Sales Growth in India in June Quarter, 2019)

Domino’s Pizza and Dunkin’ Donut (Jubilant FoodWorks)

With over 17,000 locations in 90 countries, Domino's Pizza is the world's largest pizza company.
Domino's provides a variety of pizza options, including conventional hand-tossed pizza, Brooklyn-
style pizza, and crispy, thick-crust pizza. Domino's Pizza has 1380 restaurants across 298 cities in
India and India is the largest market for Domino’s after the US. They are well known for their 30
minute delivery time. It is also the first food service company to launch online and mobile ordering
all over India successfully. (Domino's Pizza India, 2021)

Dunkin' Brands was formed in 1950 and is one of the world's top franchisors of Quick Service
Restaurants (QSRs) that serve hot and cold coffee and baked products. Dunkin' Donuts India has
a broad variety of donuts, hot and iced drinks, and baked products. There are 27 restaurants across
8 cities in India. Dunkin’ Brands dropped the word “donuts” from its branding in 2018. Dunkin
has around 12,800 restaurants across 42 countries and a revenue of $1.3 Bn. (Dunkin' Donuts,
2021)

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MACROECONOMIC PROFILE

Government Regulations and Policies

Laws governing the food industry

The Indian food processing industry is governed by a number of laws that control issues such as
sanitation, licencing, and other licences required to start and operate a firm. The Prevention of
Food Adulteration Act, 1954, was the legislation that dealt with food safety in India. The PFA had
been in place for more than five decades, and it was time for a change owing to a variety of factors,
including the changing needs of our food sector.
The Food Safety and Standards Act, 2006 (hereafter referred to as "FSSA"), which took effect in
place of the PFA, supersedes all existing food-related laws. It explicitly abolished eight laws that
were in effect previous to FSSA's implementation:

Key Regulations of FSSA:

● Packaging and Labeling
● Signage and Customer Notices
● Licensing Registration and Health and Sanitary Permits

Foreign Direct Investment

In the food industry, 100% FDI is approved via an automated system. The government's reforms
and policy measures had a positive impact on FDI inflows into the country. Even during the Covid
epidemic, overall FDI inflows of USD 58.37 billion were received between April and November
2020. Inflows of foreign direct investment (FDI) into the food processing sector increased from
USD 628.24 million in 2018-19 to USD 904.7 million in 2019-20.

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Technology in Food Industry
Alternative Proteins
Alternative protein sources are becoming more popular among consumers because of health and
environmental concerns, making it one of the most important food technology developments. At
the moment, the major alternative protein sources include cultured meat, plants, edible insects, and
mycoprotein-based meals. Not only are they nutrient-dense, but unlike cattle protein, they also
require fewer resources from farm to fork. The lower overall expenses since alternative protein
sources need only minor dietary changes and health monitoring.

Restaurant Digitization
Restaurant digitalization improves the client experience while also allowing for more efficient
operations management. It also assists restaurants in gathering data points at each stage of the
process, allowing for data-driven decision-making throughout the operation. Furthermore, the
COVID-19 is driving a change in restaurants adopting digital management systems across the
supply chain as a result of the disruption to the food and beverage sector. Restaurants use
computerised menus, self-service kiosks, and cashless payment systems to decrease direct human-
to-human contact. Furthermore, chatbots and speech bots are emerging tools for aiding consumers
with meal orders and other restaurant-related questions in real time.

3D Food Printing
3D food printers utilize various types of powdered or liquid food materials to add nutritious value
to our meals while also providing more revenue to businesses. 3D food printers enable tailored,
precise, and repeatable nutrition with the proper amount of nutrients for a certain gender, lifestyle,
or medical condition.

Food Robotics
The food business has been impacted by robotics. Food robotics, which is already being used in
the food and liquid processing industries, enhance quality, boost productivity, and save costs.

Despite the fact that food robots and other automation are separated by safety restrictions, more
businesses are turning to robotics to improve product uniformity and efficiency. Consumers will

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be able to enjoy better-tasting, healthier food, while companies will be able to invest in high-
quality, long-lasting ingredients.

Food Waste Reduction

The concept of selling spoiled food at a reduced price or just donating it to those in need is not
new, but it is gaining traction at the moment. While every participant, from farmers to vendors to
consumers, contributes to the food system's long-term viability, social impact firms and startups
create viable business models to address the issue. Other than these technologies we have
Nutraceuticals, Food safety & Transparency, Ecommerce, Digital food management, and
Personalized Nutrition in technological advancements in the food industry.

Fig 3: Tree map illustrating the top 10 innovation trends and their impact on food tech

*Adapted from Top 10 Food Technology Trends & Innovations in 2021

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 List of Figures and Tables

1. Fig 1: Global fast-food market share 7

2. Fig 2: Indian fast food market share 8
3. Table 1: Performance indicators of the major players 8
4. Fig 3: Tree map illustrating the top 10 innovation trends and 14
their impact on food tech

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