Value on the menu

FOOD: Fast-food chains devise strategies for smaller cities.

With rising competition in large cities, casual dining chains and quick-service restaurants (QSR) like Pizza Hut, Domino’s, Nirula’s and KFC have now trained their guns on cities like Jammu, Varanasi, Vadodara, Nagpur, Jalandhar and Lucknow.

“The tier-III markets are still untapped and provide a great opportunity especially for our QSR format and we are constantly looking at ways to make in roads into these markets,” says Nirula’s CEO and Managing Director Samir Kukreja.

Industry watchers point out that the rising aspirations in these markets are prompting consumers to try out QSRs or upgrade from QSR to casual dining services, thus spelling opportunity for both the formats. On the other hand in wake of prevailing economic pressures, eating out trends in the bigger cities indicate that consumers are moving from fine dining to casual dining and QSR category.

These brands are best known for the same menu they offer all over the country. But the menus in the smaller markets may be skewed towards promoting the value offerings on the menu. And this has helped them grow in such markets.

Pizza Hut’s offering, Magic Times, for instance claims to provide a full meal starting at just Rs 99 per person. “The value proposition works well for the tier-II and tier-III markets and we are witnessing almost 40 per cent growth on the back of our value menu,” says Pizza Hut Marketing Director Anup Jain.

Further, the company plans to make these new markets a part of its brand transformation process, whereby it will roll out its new enhanced experience that includes a new upgraded décor, expanded menu and a new logo and tagline, in tandem with its strategy for the big cities.

KFC, while focusing on its key urban markets, has plans to keep a tab on growth opportunities in tier-II and tier-III markets. It has already opened stores in Jalandhar and Lucknow. “Factors like urbanisation, dual income family units, the growing trend of nuclear family and a fast-paced lifestyle continue to boost growth. We estimate this growth to be around 25-30 per cent on total market size every year. This presents an excellent opportunity for our brand to grow,” says KFC Marketing Director Unnat Varma.

While the affordability factor works as a growth strategy, McDonald’s India (northern and western region) Managing Director Vikram Bakshi feels that one must invest in understanding the depth and demand of these markets before expanding.

“We have learnt from our experience in the past that expanding too quickly in these markets is not the right approach. In a market like Meerut opening new stores did not give us any added benefits but in Jaipur for example we have been adding stores with a two year gap and it is working well for us,” Bakshi adds.