DOMINANT PLAYERS IN THE

FAST FOOD MARKET – A

COMPARATIVE STUDY

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 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.

“Fast-food chains initially catered to automobile owners in suburbia.

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.

sushi is normally cold sticky rice served with raw fish.Pizza is a common fast food category

in the United States, with chains such as Domino's Pizza, Sbarro and Pizza Hut. Menus are

more limited and standardized than in traditional pizzerias, and pizza delivery, often with a

time commitment, is offered.

Fish and chip shops are a form of fast food popular in the United Kingdom, Australia and

New Zealand. Fish is battered and then deep fried.The Dutch have their own types of fast

food. A Dutch fast food meal often consists of a portion of French fries .

Business

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 2006, a 5%

increase over 2005. 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

In 2006, 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

With rapidly growing middle class population and changing lifestyle, India is blessed with

one of the fastest growing fast food markets of the world. Almost all big fast food brands of

the world have succeeded in making their presence felt in the country and most of them are

posting appreciable growth.

On the basis of the rising disposable income, changing consumer behaviour and favourable

demographics, India is witnessing a tremendous growth in its fast food and restaurant

industries. Additional reasons include exposure to western cuisine, the rising number of

nuclear families and growth in the number of employed women, which are also having a

significant impact on the eating out trends and growth of the fast food industry in the country.

Consequently, all the popular fast food chains have chalked out massive plans for expanding

their business and presence throughout the country. Moreover, foreign fast food chains are

aggressively increasing their presence in the country. For instance, Domino’s has planned to

open 60-65 outlets every year for the next three years (2010-2012) while Yum Brands Inc is

also preparing for massive expansion across the country with plans to open 1000 fast food

outlets by 2015.

FACTS AND FIGURES

India’s fast food industry is growing at 40% per annum and generates over Rs. 4800 crores in

sales. The multinational segment of the industry generates over Rs. 7000 crores.

Fast food has, in a way, impacted the Indian economy by creating jobs. Outlets require a

large number of unskilled workers who are willing to work for low wages. On the one hand,

this generates widespread employment. On the other hand, some analysts feel that it weakens

the economy by forcing people to take up jobs in which there is little room for advancement.

Fast food industry has been very successful in India, both in financial terms as well as in

popularizing its quick service culture among the population.

INDIAN FAST FOOD MARKET ANALYSIS:

“Indian Fast Food Market Analysis” is a comprehensive market report that provides

qualitative research and rational analysis of the fast food market in India. The report

identifies the key players operating in the India fast food industry and has made a separate

section that talks about their business expansion plans and also gives an overview of strength

and weakness of each player. Government regulation and consumer behaviour are separately

discussed in detail in the report. Most importantly, the report also features the forecast on fast

food sales important economic parameters. The forecast is based on the correlation between

past market growth and growth in base drivers such as growth in middle class, urbanization,

cultural shift and lifestyle changes. 

Major players in fast food are:

MCDONALDS

KFC

PIZZA HUT

DOMINOS PIZZA.

COFFEE DAY

BARISTA.

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. They are building their confidence more on ‘ready to eat and easy to serve’ kind

of foods

Paucity of Time: people have no time for cooking. Because of emergence of working

women and also number of other entertainment items. Most of the time either people

work or want to enjoy with their family.

Double Income Group: emergence of double income group leads to increase in

disposable income. Now people have more disposable income so they can spend easily in

fast food and other activities.

Working Women: working women have no time for cooking, and if they have then also

they don’t want to cook. Because they want to come out of the traditionally defined

gender roles. They do not want to confine themselves to household work and upbringing

of children’s.

Large population: India being a second largest country in terms of population possesses

large potential market for all the products/services. This results into entry of large number

of fast food players in the country.

Relaxation in rules and regulations: with the economic liberalization of 1991, most of

the tariff and non tariff barriers from the Indian boundaries are either removed or

minimized. This helped significantly the MNC’s to enter in the country.

Menu diversification: increase in consumption of pizzas, burgers and other type of fast

foods.

CHALLENGES FOR THE INDUSTRY

Social and cultural implications of Indians switching to western breakfast food:

Generally, Hindus avoid all foods that are believed to inhibit physical and spiritual

development. Eating meat is not explicitly prohibited, but many Hindus are vegetarian

because they adhere to the concept of ahimsa. Those seeking spiritual unity may avoid

garlic and onions. The concept of purity influences Hindu food practices. Products from

cows (e.g., milk, yogurt, ghee-clarified butter) are considered pure. Pure foods can

improve the purity of impure foods when they are prepared together. Some foods, such as

beef or alcohol, are innately polluted and can never be made pure. But now, Indians are

switching to fast food that contain all those things that are considered impure or against

there beliefs. Some traditional and fundamentalist are against this transformation of food

habit and number of times they provoke their counterparts to revolt against such foods.

And that is what happened when McDonald’s decided to enter the complexity of Indian

business landscape, counting only on its “fast food global formula”, without any apparent

previous cultural training.

Emphasis on the usage of bio-degradable products: Glasses, silverware, plates and

cloth napkins are never provided with fast food. Instead, paper plates and napkins,

polyurethane containers, plastic cups and tableware, drinking cartons or PET

(polyethylene terephthalate) bottles are used, and these are all disposable. Many of these

items are tossed in the garbage instead of being recycled, or even worse, merely thrown

on the ground. This burdens nature unnecessarily and squanders raw materials. In order to

reduce soil and water pollution, government now emphasis more on the usage of bio-

degradable products.

Retrenchment of employees: Most of new industries will be capital intensive and may

drive local competitors, which have more workers, out of business.

Profit repatriation: Repatriation of profits is another area of concern for Indian

economy. As when multinational enters the any countries, people and government hope

that it will increase the employment rate and result in economic growth. However, with

the multinational operation, host country experiences these benefits for a short time

period. In long run neither employment increases (because of capital intensive nature of

MNC’s) nor it increases the GDP or GNP because whatever MNC’s earn they repatriate

that profit back to their home country.

PROBLEMS OF INDUSTRY

Environmental friendly products cost high: government is legislating laws in order to

keep check on the fast food industry and it is emphasizing more on the usage of bio-

degradable and environment friendly products. But associated with this issue is the

problem that fast food player faces - the cost associated with the environment friendly

product. They cost much higher than the normal products that companies uses for

packaging or wrapping their products.

Balance between societal expectation and companies economic objectives: To balance

a society’s expectation regarding environment with the economic burden of protecting the

environment. Thus, one can see that one side pushes for higher standards and other side

tries to beat the standard back, thereby making it a arm wrestling and mind boggling

exercise.

Health related issues: obesity:

a) Studies have shown that a typical fast food has very high density and food with

high density causes people to eat more then they usually need. \

b) Low calories food: Emphasis is now more on low calorie food. In this line

McDonald has a plan to introduce all white meat chicken Mcnuugget with less fat

and fewer calories.

TRENDS IN INDIAN MARKET

Marketing to children's: fast food outlets in India target children’s as their major

customers. They introduce varieties of things that will attract the children’s attention

and by targeting children’s they automatically target their parents because Children’s

are always accompanied by their parents.

Low level customer commitment: Because of the large number of food retail outlets

and also because of the tendency of customer to switch from one product to other, this

industry faces low level customer commitment.

Value added technology services: There is continuous improvement in the

technology as far as fast food market in India is considered. The reason behind that is

food is a perishable item and in order to ensure that it remain fresh for a longer period

of time. Earlier, Indian people prefer eating at home but now with the change in trend

there is also need for improvement and up gradation of technology in food sector.

Attracting different segments of the market: Fast food outlets are introducing

varieties of products in order to cater the demands of each and every segment of the

market. They are introducing all categories of product so that people of all age, sex,

class, income group etc can come and become a customer of their food line.

The success of fast foods arose from the changes in our living conditions:

1. Many women or both parents now work

2. There are increased numbers of single-parent households

3. Long distances to school and work are common

4. Usually, lunch times are short

5. There's often not enough time or opportunity to shop carefully for groceries, or to

cook and eat with one's family. Especially on weekdays, fast food outside the home is

the only solution.

Kentucky Fried Chicken

About the Company

KFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken, is a

chain of fast food restaurants based in Louisville, Kentucky. KFC is a brand and operating

segment, called a "concept" of Yum! Brands since 1997 when that company was spun off

from PepsiCo as Tricon Global Restaurants Inc. The restaurants are known as Poulet Frit

Kentucky or PFK in the province of Quebec in Canada. In France, however, the chain is

known as KFC.

KFC primarily sells chicken in form of pieces, wraps, salads and sandwiches. While its

primary focus is fried chicken, KFC also offers a line of roasted chicken products, side dishes

and desserts. Outside North America, KFC offers beef based products such as hamburgers or

kebabs, pork based products such as ribs and other regional fare.

The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in

1952, though the idea of KFC's fried chicken actually goes back to 1930. The company

adopted the abbreviated form of its name in 1991. Starting in April 2007, the company began

using its original name, Kentucky Fried Chicken, for its signage, packaging and

advertisements in the United States as part of a new corporate re-branding program newer

and remodeled restaurants will have the new logo and name while older stores will continue

to use the 1980s signage. Additionally, Yum! Continues to use the abbreviated name freely in

its advertising.

Products

The famous paper bucket that KFC uses for its larger sized orders of chicken and has come to signify

the company was originally created by Wendy's restaurants founder Dave Thomas. Thomas was

originally a franchisee of the original Kentucky Fried Chicken and operated several outlets in the

Columbus, Ohio area. His reasoning behind using the paper packaging was that it helped keep the

chicken crispy by wicking away excess moisture. Thomas was also responsible for the creation of the

famous rotating bucket sign that came to be used at most KFC locations in the US.

Menu items

KFC's specialty is fried chicken served in various forms. KFC's primary product is pressure-fried

pieces of chicken made with original recipe. The other chicken offering, extra crispy, is made using a

garlic marinade and double dipping the chicken in flour before deep frying in a standard industrial

kitchen type machine.

Kentucky Grilled Chicken - This marinated grilled chicken is targeted towards health-conscious

customers. It features marinated breasts, thighs, drumsticks, and wings that are coated with the

Original Recipe seasonings before being grilled. It has less fat, calories, and sodium than the Original

Recipe fried chicken. Introduced in April 2009.

Discontinued products

The Colonel's Rotisserie Gold – This product was introduced in the 1990s as a response to the Boston

Market chain's roasted chicken products, and a healthier mindset of the general public avoiding fried

food. Purportedly made from a "lost" Col. Sanders recipe, it was sold as a whole roaster or a half bird.[28]

Tender Roast Chicken – This product was an off-shoot of 'The Colonel's Rotisserie Gold'. Instead of

whole and half birds, customers were given quarter roasted chicken pieces. For a time, customers

could request chicken "original", "Extra Tasty Crispy", or "Tender Roast".

Smokey Chipotle – Introduced in April 2008. The chicken was dipped in chipotle sauce then doubled

breaded and fried. It has been discontinued since August 2008.

Advertising

One of KFC's latest advertisements is a commercial advertising its "wicked crunch box

meal". The commercial features a fictional black metal band called "Hellvetica" performing

live, the lead singer then swallows fire. The commercial then shows the lead singer at a KFC

eating the "wicked crunch box meal" and saying "Oh man that is hot".

In 2007, the original, non-acronymic Kentucky Fried Chicken name was resurrected and

began to reappear on company marketing literature and food packaging, as well as some

restaurant signage.

KFC Business Strategy

KFC fast-food chains are currently under the restaurant division of PepsiCo Incorporated.

Some major threats include the changing attitudes of society toward healthier eating habits,

KFC has more than 9,800 outlets located in 77 countries. In marketing, KFC restaurants are

not restricted from locating within close proximity of other KFC restaurants. There are two

alternative strategies for KFC. The first strategy involves keeping PepsiCo beverage division

and snack foods division together, and a divestiture of PepsiCo restaurant division; selling

Taco Bell, Pizza Hut, and KFC.

Present Situation

The organization is currently structured with two divisions under PepsiCo. David Novak is

president of KFC. John Hill is Chief Financial Officer and Colin Moore is the head of

Marketing. Peter Waller is head of franchising while Olden Lee is head of Human Resources.

KFC is part of the two PepsiCo divisions, which are PepsiCo Worldwide Restaurants and

PepsiCo Restaurants International. Both of these divisions of PepsiCo are based in Dallas.

Strengths

Strengths can be found internally in a company and can be used to the company’s advantage.

The strengths identified are as follows:

1. KFC's secret recipe.

The secret recipe has long been a source of advertising, and allowed KFC to set itself apart.

Also, KFC was the first chain to enter the fast-food industry, just before McDonald's, which

opened its first store a year later, and the "secret recipe" was the initial home replacement

strategy.

2. Name recognition and reputation.

KFC's early entrance into the fast-food industry in 1954 allowed KFC to develop strong

brand name recognition and a strong foothold in the industry. The Colonel is KFC's original

owner and a very recognizable figure, both in the U.S. and internationally, in their new logo.

In fact, in the fourth annual LogoValue Survey, done by The Schecter Group, the KFC logo

was the only one which significantly enhance the brand's image .

3. PepsiCo's success with the management of fast food chains. PepsiCo acquired Pizza

Hut in 1977, and Taco Bell in 1978. PepsiCo used many of the same promotional strategies

that it has used to market soft drinks and snack food. By the time PepsiCo bought KFC in

1986, the company already dominated two of the four largest and fastest-growing segments

of the fast food industry.

4. Traditional employee loyalty.

"KFC's culture was built largely on Colonel Sanders' laid back approach to management"

(Wright, p.433). Before the acquisition of KFC by PepsiCo, employees at KFC enjoyed good

benefits, a pension, and could receive help with other non-income needs. This kind of

"personal" human resources management makes for a loyal workforce.

5. Improving operating efficiencies by reducing overhead and other operating costs can

directly affect operating profit.

Due to the strong competition in the US, the fast-food chains are reluctant to raise prices to

increase profit. Many of the chains are turning to operating efficiencies to increase profit. For

many companies, operating efficiencies are achieved through improvements in customer

service, cleaner restaurants, faster and friendlier service, and continued high-quality products.

Weaknesses

Weaknesses are also found internally like strengths. Weaknesses, however, can limit a

company’s potential. The weaknesses for KFC are identified as follows:

1. The many sales of KFC lead to a confusing corporate direction.

Between 1971 and 1986, KFC was sold three times. The first two sales, to Heublein, Inc and

to R.J. Reynolds, left the company largely autonomous. It wasn't until the sale to PepsiCo in

1986 that changes in top management started to take place. These changes happened almost

immediately after the sale.

2. KFC has a long time to market with new products.

Because of the nature of the chicken segment of the fast food industry, innovation was never

a primary strategy for KFC. However, during the late 1980's, other fast food chains, such as

McDonald's, began to offer chicken as a

Menu option. During this time, McDonald's had already introduced the McChicken while

KFC was still testing its own chicken sandwich. This delay significantly increased the cost of

developing consumer awareness for the KFC sandwich.

3. Conflicting cultures of KFC and Pepsi Co.

While KFC's culture was largely based on the Colonel's laid back approach to management,

while PepsiCo's culture is more of a "fast track" attitude. Employees do not have the same

level of job security that they enjoyed before the PepsiCo acquisition

Problems

Through an analysis of the strengths, weaknesses, opportunities, and threats of KFC, the

following potential problem areas were identified:

1. No defined target market.

The advertising campaign of KFC does not specifically appeal to any segment. It does not

appear to have a consistent long-term approach. The U.S. has enormous changes in its

demographics. Single-person households have increased from 12% in 1970 to 25% in 1995.

With this kind of dramatic change, KFC does not have a proper approach to its target market.

2. Health Conscious Consumers.

There has been a trend toward an increasingly healthy diet in America. This put KFC at an

extreme disadvantage due to its fried product offering.

3. Increased Start Up Costs.

Prime locations have increased in cost due to limited room for expansion. New technology

has increased efficiencies, but resulted in greater increased start up costs. Restaurant and

equipment packages range from $500,000 to $1,000,000.

Achievements:

KFC is one of the most renowned world gastronomic brand names. Kentucky Fried Chicken

products are currently offered in 80 countries worldwide and in more than 11,000 restaurants

which are visited on a daily basis by almost 8 million customers. Globally, KFC employs

approximately 290,000 people, Worldwide, a new KFC restaurant is opened almost every

day.

In 2004 the “KFC Excellent” range - three types of salad (Caesar, Garden and Mandarin)

obtained the prize for “Worldwide Best Practice Award 2004” in the category of best product

and best marketing campaign and its implementation in the restaurants. This prize is

distributed each year by YUM Restaurants International.According to the ratings for “Most

expensive world brands 2004” conducted by the American weekly ‘Business Week’, KFC

was positioned 54th place; currently valued at 5.1 billion USD.

DOMINO’S

SIZE OF THE MARKET

Domino's Pizza is one of the biggest and fastest growing international food joints in South

Asia. The very first Domino's Pizza outlet in India opened in Jan, 1996 at New Delhi. Today,

Domino's Pizza India has become a wide network of Pizza delivery and food chain. There are

close to 220 outlets in 42 cities of India and the brand is the top most among the food

delivery business. Domino’s Pizza outlets can be seen at major locations of Delhi and NCR.

Their home delivery is free with a guarantee of “Thirty Minutes Nahi to Free”.  Although

they are expert in delivering Pizzas on time, their eating joints and outlets are also good. We

plan to have a total of 500 stores in 75-80 cities by 2010 to 2011. It would entail an

investment of Rs 200 million during the period

MARKET GROWTH

During last four months, dominoes have opened outlets in Jammu, Panipat, Surat, Baroda,

Nashik, Trivandum, Meerut and Patiala. While earlier, 70 percent of our business used to be

in metros and mini-metros, now the ratio is 50:50 between big cities and smaller Tier II and

III cities. Domino’s Pizza is expanding its base in India by opening 500 outlets to add to its

current tally of 156 outlets, across 50 cities in India by 2011 with an investment of Rs.1, 000

crore.

MARKET STRATEGIES

Promotional and Advertisement Campaigns(Coupons and discounts)

The '30 Minutes' Promise

Use of Technology(Digital interactive Television, Internet on the PC, Mobile

telephony)

Premium Pricing Strategy

Indian fast food industry and entry of multinational players

Distribution strategies of fast food chains in India

MARKET SHARE

The organized pizza market in India is worth Rs.500 crore and Domino’s has a substantial

45% market share, and registered a healthy growth of 60% over last year. The main target for

new outlets shall be metro cities though Tier II cities would also receive a fair amount of

attention. Currently Domino’s sells around 35,000 pizza every day, of which around 1% are

given free on account of its “30 minutes or free” model. 65 percent of its revenue comes from

home delivery service; around 35 percent is from sales in premise.

COMPETITORS

Fast food is one of the world's fastest growing food types. It now accounts for roughly half of

all restaurant revenues in the developed countries and continues to expand there and in many

other industrial countries in the coming years. But some of the most rapid growth is occurring

in the developing world; where it's radically changing the way people eat. People buy fast

food because it's cheap, easy to prepare, and heavily promoted. This paper aims at providing

information about fast food industry, its trend, reason for its emergence and several other

factors that are responsible for its growth. India is a developing country with 2 percent of organized

and 98 percent of unorganized sector. So most of the fast foods came into Indian market as

India has a high growth in every sector. Some of the competitors of domino’s are

McDonald's

Pizza Hut

Barista

Coffee Day

INTRODUCTION

Pizza Hut is one of the flagship brands of Yum! Restaurant Int. which also has KFC, Taco Bell, A&W and Long John Silver’s under its umbrella. It is the world’s largest pizza chain with over 12,500 restaurants across 91 countries.

Pizza Hut was started in 1958, by two brothers Frank and Dan Carney in Wichita, Kansas. They had the idea to open a pizza parlor. They borrowed $600 from their mother, and opened the very first Pizza Hut. In 1959, the first franchise unit opened in Topeka, Kansas. Almost ten years later, Pizza Hut was serving one million customers a week in their 310 locations. In 1970, Pizza Hut was put on the New York Stock Exchange under the ticker symbol PIZ.

In 1986, Pizza Hut introduced delivery service, something no other restaurant was doing. By the 1990's Pizza Hut sales had reached $4 billion worldwide. In 1998, Pizza Hut celebrated their 40th anniversary, and launched their famous campaign "The Best Pizzas Under One Roof." In 1996, Pizza Hut sales in the United States were over $5 million.

The first Indian outlet was opened in June 1996 in Bangalore. In India, Pizza Hut has 139 restaurants across 36 cities. Pizza Hut has been voted the “best family restaurant” for the second year running at the 2007 Tommy’s Parent Friendly Awards. "Pizza Hut is known for quality, innovation and category leadership.

PIZZA HUT INDIA

Background

Pizza Hut entered India in 1996, and opened its first restaurant in Bangalore. Since then it has captured a dominant and significant share of the pizza market and has maintained an impressive growth rate of over 40 per cent per annum. Pizza Hut now has 95 outlets across 24 cities in India; and employed nearly 4,000 people by end of 2004. Yum! has invested about US$ 25 million in India so far; this is over and above investments made by franchisees.

Yum! Brands Inc is the owner of the Pizza Hut chain worldwide. A Fortune 300 company, Yum! Brands owns Kentucky Fried Chicken, Pizza Hut, Taco Bell, A&W and Long John Silver’s restaurants worldwide. Yum! generated more than US$ 25.9 billion in worldwide sales in the year 2003, and has more than 33,000 restaurants in over 100 countries.

Pizza Hut is believed to have close to 50 per cent market share of the organized pizza-retailing segment in India.According to an article in Financial Express, the market size of the pizza segment is around US$ 87 million and currently growing at the rate of 15 per cent to 17 per cent per annum. According to Pizza Hut sources, most of their outlets are financially successful, encouraging further expansion. In India, the average investment for each outlet is US$ 275,000-335,000 and is borne by the franchisee.

RETAIL ENVIRONMENT

Out of all the existing pizza chains such as Domino's, Smokin Joe’s, Papa John’s, Pizza Corner, U.S Pizza, Pizza Hut has a dominating market share of 48% of the total market share. However, this forced competitors to look for new methods of increasing their customer bases. They all try to come up with some newer, bigger, better pizza for a low price. But Pizza Hut has always had the first mover advantage. Their marketing strategy in the past has always been to be the first. One of their main strategies, that they still follow today is the diversification of the products they offer.

The market has become greatly competitive and the customer has become more discerning and adventurous. This however has not affected Pizza Hut's comfortable reign over the Indian pizza industry and the ever increasing number of loyal customers who have made it possible for Pizza Hut to aggressively extend its presence.

Pizza Hut is always adding something new to their menu, trying to reach new markets. For example, in 1992 the famous buffet was launched in Pizza Hut restaurants worldwide. They were trying to offer many different food items for customers who didn't necessarily want pizza. Another strategy they used in the past and are still using is the diversification of their pizzas. Pizza Hut is always trying to make a pizza into something slightly different so that customers will think it’s a whole new product. E.g., in 1983, Pizza Hut introduced Pan Pizza, which had a guarantee of being ready to eat in 5 minutes when dining at Pizza Hut restaurants. In 1993, they introduced the "BigFoot," which was two square feet of pizza cut into 21 slices. In 1995, they introduced "Stuffed Crust Pizza," where the crust would be filled with cheese. Currently, they are marketing "The Big New Yorker," trying to bring the famous New York style pizza to the whole country.

POSITIONING

Pizza Hut was among the first multinational brands to enter the food retail sector in India. When the first Pizza Hut restaurant opened in Bangalore the quick service industry was at a nascent stage and the pizza category was dominated by a sole regional player who had a marginal presence. Pizza Hut went on to play a significant role in pioneering and developing this category in India.

Worldwide and in India, Pizza Hut has come to become synonymous with the 'best pizzas under one roof'. This is because at Pizza Hut the belief is that every pizza has its own magic, thus making it a destination product – which everyone seeks. It is this belief that has ignited the passion to create, innovate and serve the finest product the industry has to offer, while setting standards for others to strive to replicate. Pizza Hut is committed to providing uncompromising product quality, offering customers the highest value for money and giving service that is warm, friendly and personal.

A critical factor in Pizza Hut's success has been its unique dining experience. Crewmembers at Pizza Hut strive each day to provide 'customer mania' - the kind of service that ensures that every visit of the customer is a memorable one.

Pizza Hut's constant endeavor to provide extra value – whether it is pizzas which are available to suit every price range, new promotions or the introduction of innovative product ranges - that puts a 'Yum' on every customer's face - has allowed it to increase its presence in India to the current 139 restaurants across 36 cities.

MARKETING STRATEGY

Pizza Hut’s marketing strategy is very simple: “we want to satisfy our customer by offering them the best.” Pizza Hut has always valued customer service and satisfaction. In 1995, Pizza Hut began two customer satisfaction programs: a 1-800 number customer hotline, and a customer call-back program. These were implemented to make sure their customers were happy, and always wanted to return.

Another big strength and even a competitive advantage is the fact that they have a full service restaurant as well as delivery services. Most of Pizza Hut's competitors do not have restaurants. Because of the restaurant, Pizza Hut can market to different segments that other pizza chains cannot. For example, Pizza Hut can market to families much easier than Domino's or Little Caesar's. Pizza Hut offers a sit-down, conversational type restaurant where families can take their children for birthday parties for example. Pizza Hut's broad selection of products also makes it easier for them to market to different market segments.

The other two strategies followed by Pizza Hut is C.H.A.M.P.S (Cleanliness, Hospitality, Accuracy, Maintenance, Product quality and Speed) and 3F’s (Fun, Friendly and Familiar). These two strategies have really helped Pizza hut to evolve out as a market leader with a competitive advantage.

CONSUMER PULL FACTORS

A critical factor in Pizza Hut's success has been a menu that has constantly evolved and expanded to cater to the changing needs and specific preferences of customers in different parts of the world. In having understood the pulse of the customers in India, Pizza Hut has clearly established itself as a brand with an Indian heart.

Besides offering an extensive range of vegetarian pizzas, it was the first pizza chain to open a 100% vegetarian restaurant in India in Surat and later in Ahmedabad and Chowpatty, where it offers a Jain menu sans all root-based ingredients.

Over the years Pizza Hut has also developed and successfully introduced a range of products especially suited to the Indian palate. These products like Chicken Tikka, Spicy Korma, Spicy Paneer and the Masala and Tandoori pizzas have been a tremendous success. What has also given Pizza Hut a competitive edge is that in addition to an extensive range of internationally renowned pizzas like The Italian, the proprietary Pan Pizza and Stuffed Crust, in India the menu offers the option of a complete meal. It includes appetizers, a Salad Bar - where the customers can make their own fresh salads, a range of soups, pastas and desserts.

Pizza Hut has a unique tradition. A bell hangs at each Pizza Hut restaurant, which is rung by customers who as they leave wish to thank the servers for yet another memorable visit.

LONG TERM PROGNOSIS

With competition being so strong in this industry the threat of imitation products will surely be a problem to be dealt with. Pizza Hut will however have the first mover advantage with this product. With the entry of imitation products into the market, Pizza Hut will have to adjust its mixes to accommodate change. The promotions may have to be bigger and better than the competition, or the product may need to be altered to give it that little bit of an edge over the competition. For example stuffing the crust with cheese or giving a free topping with the purchase would help give Pizza Hut an edge over the competition.

Pizza Hut is moving beyond big cities. While consolidating its presence in the metropolitans, this aggressive expansion will involve Pizza Hut entering smaller cities like Cochi, Nasik, Bhubaneswar, Lucknow and Madurai . It is strengthening its roots in the Indian market by tying up with local and popular brands such as Reliance Communication. Apart from this it is also developing local supply chain.

Basically, Pizza Hut will need to remain flexible in the maturity stages of the product life cycle in an attempt to continue to be the market leader. Overall, this is a product that is not much unlike any of the other new pizza's that Pizza Hut has introduced. What makes this new product so exciting is the marketing plan that is directing the product at a new segment. We are taking a large pizza with a lot of toppings and marketing it as an "Extreme Pizza" to a generation of younger adults that are consumed by this marketing tool. This is what will make this a success. The mix of promotion and advertising we will be using will target a very profitable

Factors for Success

Offering value food

Employing economies of scale, Pizza Hut has made its offerings more affordable. Its delivery offer of US$ 4.4 for four personal pan pizzas has been very successful, helping it grow the business by 25 per cent. They have recently introduced a range of vegetarian personal pan pizzas for US$ 1.1. Most Pizza Hut restaurants are located in the metros and smaller metros. In taking long strides across the country, Pizza Hut is consolidating its position by opening more restaurants in the metros where it already has a presence as well as opening outlets in new markets.

Aggressive marketing and tie-ups with local and popular brands

Pizza Hut has increased its visibility by launching a well-received TV campaign aimed at the young crowd. It has formed partnerships with recognised brands such as Nestle and Pepsi. It also holds regular promotional campaigns targeted at children and uses these alliances to offer packages during these campaigns.

Developing the local supply chain

The local supply chain for Pizza Hut was developed by Yum! and currently 95 per cent of the ingredients they use are locally produced. They now import very few specialty items like pepperoni.

Leveraging the India Advantage : International brand with an Indian heart

Pizza Hut is one of the first international pizza chains with purely vegetarian dine-ins at Chowpatty (Mumbai), Ahmedabad and Surat, which also serve Jain menus. Pizza Hut has even opened two all-vegetarian restaurants in the western state of Gujarat to cater to the Jain religious community, whose members prefer not to eat at places where meat is served.

Offering more than the international menu

International food chains typically offer only a few localized products in other parts of the world. However, Pizza Hut’s local menu is as large as the international one. According to Pizza Hut, the Indian food heritage is very rich, and hence Indians like local flavors. The Tandoori range of pizzas, which was developed locally, has a menu mix of over 20 per cent.

Indigenous sourcing of raw materials

Pizza Hut has reduced costs through indigenous sourcing of raw material. It has tied up with a local company Dynamix Dairy Industries Ltd (DDIL) for sourcing mozzarella cheese. The landed cost of imported mozzarella comes to US$ 3.3 - 3.5 per kilogram. The domestic price, however, works out to US$ 2.99 - 3.1 per kilogram. Pizza Hut is adding to the bottom line by localizing equipment as well as by paying attention to inventory replenishment, which has been reduced from 60 to 30 days.

MC Donald’s

McDonald's is the leading global foodservice retailer with more than 31,000 local restaurants

serving more than 58 million people in 118 countries each day. More than 75% of

McDonald's restaurants worldwide are owned and operated by independent local men and

women.

The strong foundation that he built continues today with McDonald's vision and the

commitment of our talented executives to keep the shine on McDonald's Arches for years to

come. To read more about McDonald's history, vision and executives, click on their links in

the left menu.

We drive our business momentum by focusing on what matters most to customers.  Our

owner/operators, suppliers and employees work together to meet customer needs in uniquely

McDonald's ways.  The powerful combination of entrepreneurial spirit and System wide

alignment around our Plan to Win enables us to execute the best ideas with both large-scale

efficiency and local flair.

Business Model Franchise Model – Only 15% of the total number of restaurants are owned by the

Company. The remaining 85% is operated by franchises. The company follows a

comprehensive framework of training and monitoring of its franchises to ensure that

they adhere to the Quality, Service, Cleanliness and Value propositions offered by

the company to its customers.

Product Consistency – By developing a sophisticated supplier networked operation

and distribution system, the company has been able to achieve consistent product taste

and quality across geographies.

Act like a retailer and think like a brand – McDonald’s focuses not only on

delivering sales for the immediate present, but also protecting its long term brand

reputation.

Challenges in Entering Indian Markets

Re-engineering the menu - McDonald’s has continually adapted to the customer’s

tastes, value systems, lifestyle, language and perception. Globally McDonald’s was

known for its hamburgers, beef and pork burgers. Most Indians are barred by religion

not to consume beef or pork. To survive, the company had to be responsive to the

Indian sensitivities. So McDonald’s came up with chicken, lamb and fish burgers to

suite the Indian palate.

The vegetarian customer – India has a huge population of vegetarians. To cater to

this customer segment, the company came up with a completely new line of

vegetarian items like McVeggie burger and McAlooTikki. The separation of

vegetarian and non-vegetarian sections is maintained throughout the various stages.

McDonalds Marketing Mix (5 P’s)After segmenting the market, finding the target segment and positioning itself, each company

needs to come up with an offer. The 5 P’s used by McDonalds are:

1. Product

2. Place

3. Price

4. Promotion

5. People

Product: How should the company design, manufacture the product so that it enhances

the customer experience?

Product is the physical product or service offered to the consumer. Product includes certain

aspects such as packaging, guarantee, looks etc. This includes both the tangible and the non-

tangible aspects of the product and service.

McDonalds has intentionally kept its product depth and product width limited. McDonalds

studied the behaviour of the Indian customer and provided a totally different menu as

compared to its International offering. It dropped ham, beef and mutton burgers from the

menu. India is the only country where McDonalds serve vegetarian menu. Even the sauces

and cheese used in India are 100% vegetarian. McDonalds continuously innovates its

products according to the changing preferences and tastes of its customers. The recent

example is the introduction of the Chicken Maharaja Mac.

McDonalds bring with it a globally reputed brand, world class food quality and excellent

customer specific product features.

Place: Where should be the product be available and the role of distribution channels?

The place mainly consists of the distribution channels. It is important so that the product is

available to the customer at the right place, at the right time and in the right quantity.

Nearly 50% of U.S.A is within a 3 minute drive from a McDonald’s outlet.

There is a certain degree of fun and happiness that a customer feels each time he dines at

McDonalds. There are certain value propositions that McDonalds offer to its customers

based on their needs. McDonalds offers hygienic environment, good ambience and great

service. Now McDonalds have also started giving internet facility at their centres and they

have been playing music through radio instead of the normal music. There are certain

dedicated areas for children where they can play while their parents can have some quality

time together.

Price: What should be the pricing strategy?

Pricing includes the list price, the discount functions available, the financing options

available etc. It should also take into the consideration the probable reaction from the

competitor to the pricing strategy. This is the most important part of the marketing mix as this

is the only part which generates revenue. All the other three are expenses incurred. The price

must take into consideration the appropriate demand-supply equation.

McDonald’s came up with a very catchy punch line “Aap ke zamane mein ,baap ke

zamane ke daam”. This was to attract the middle and lower class consumers and the effect

can clearly be seen in the consumer base McDonalds has now.

McDonalds has certain value pricing and bundling strategies such as happy meal, combo

meal, family meal etc to increase overall sales volumes.

Promotion: What is the suitable strategy and channels for promotion of the product?

The various promotion channels being used by McDonald’s to effectively communicate the

product information are given above. A clear understanding of the customer value helps

decide whether the cost of promotion is worth spending.

There are three main objectives of advertising for McDonald’s are to make people aware of

an item, feel positive about it and remember it. The right message has to be

communicated to the right audience through the right media. McDonald’s does its

promotion through television, hoardings and bus shelters. They use print ads and the

television programmes are also an important marketing medium for promotion.

Some of the most famous marketing campaigns of McDonald’s are:

“You Deserve a break today, so get up and get away- To McDonald’s”

“Aap ke zamane mein ,baap ke zamane ke daam”.

“Food, Folks, and Fun”

“I’m loving it”.

People: How to converge the benefits of internal and external marketing?

McDonald’s understands the value of both its employees and its customers. It understands the

fact that a happy employee can serve well and result in a happy customer.

McDonald continuously does Internal Marketing. This is important as it must precede

external marketing. This includes hiring, training and motivating able employees. This way

they serve customers well and the final result is a happy customer.

The level of importance has changed to be in the following order (the more important people

are at the top):

1. Customers

2. Front line employees

3. Middle level managers

4. Front line managers

The punch line “I’m loving it” is an attempt to show that the employees are loving their work

at McDonalds and will love to serve the customers.

Products

McDonald's predominantly sells hamburgers, various types of chicken sandwiches and

products, French fries, soft drinks, breakfast items, and desserts. In most markets,

McDonald's offers salads and vegetarian items, wraps and other localized fare. Portugal is

the only country with McDonald's restaurants serving soup. This local deviation from the

standard menu is a characteristic for which the chain is particularly known, and one which is

employed either to abide by regional food taboos (such as the religious prohibition of beef

consumption in India) or to make available foods with which the regional market is more

familiar (such as the sale of McRice in Indonesia).

Advertising

McDonald's has for decades maintained an extensive advertising campaign. In addition to the

usual media (television, radio, and newspaper), the company makes significant use of

billboards and signage, sponsors sporting events ranging from Little League to the Olympic

Games, and makes coolers of orange drink with their logo available for local events of all

kinds. Nonetheless, television has always played a central role in the company's advertising

strategy.

To date, McDonald's has used 23 different slogans in United States advertising, as well as a

few other slogans for select countries and regions. At times, it has run into trouble with its

campaigns.

BARISTA

WORLDWIDE

Established in February 2000, Barista Lavazza is noted as a pioneer of Indian café

culture. The Barista Lavazza chain of espresso bars delivers a truly Italian coffee

experience in warm, friendly and relaxed environment. It aims to provide a

comfortable place for people to unwind over interesting conversations and a cup of

coffee. Barista Lavazza consist of young adults, who are exposed to global lifestyles

and appreciate the authentic flavours and tastes of coffee. At last count, the Barista

Coffee Company Limited has over 200 Barista Lavazza Espresso Bars and Barista

Lavazza Crèmes in over 30 cities across India.

Besides the Indian sub-continent, Barista Lavazza also has cafes in locations across

Sri Lanka, Oman and the UAE. Barista is owned by Lavazza, Italy's largest coffee

company. Lavazza, the sixth largest coffee roaster in the world, has a 46.5% share

in the Italian retail market (value, source: Nielsen) and operates in over 80 countries

in the Home and Away-from-Home sectors (Foodservice, Vending and Cafes).

HISTORY

C850 : First known discovery of coffee berries

1600 : Coffee enters to Europe through the port of Venice

1654 : The first coffee house opens in Italy

1750 : One of Europe’s first Coffee house

1822 : Prototype of 1st espresso machine is created in France

1908 : Invention of the world’s 1st drip coffee maker

Feb, 2000: First Barista Lavazza at Basant Lok, New Delhi

At Barista Lavazza our objective is to provide an authentic Italian coffee drinking

experience in a warm, friendly, no pressure environment. We began operations in

the year 2000 as we felt the time was right for the Indian consumer to experience a

café that provided a third space, away from work and home, where the guest could

relax and unwind.

Lavazza traces its origins back to 1895, when Luigi Lavazza purchased a little

grocery store, Paissa Olivero, in the old commercial section of Turin for 26,000

Italian Lire, about US$ 20. In the early 1900's, he invented the concept of the blend

- a complex art of mixing together coffee of different origins to obtain a distinctive

taste and harmonious flavour in the cup. Before the turn of the century, the name

Lavazza evolved into an international powerhouse and the unofficial ambassador of

Italy, being synonymous with all things Italian - creativity, art, passion and of

course, espresso.

OUR PHILOSOPHY

At Barista Lavazza, we do all we can to make every guest feel comfortable and

welcome. We serve nothing but the finest Arabica coffees and cuisine at great value

prices. We have friendly and efficient brew masters who believe in service with a

smile. And provide a cheerful, interactive ambience that makes guests wish their

coffee breaks lasted just a little bit longer.

To share our cup of joy, we have always stuck to our Italian roots, guarding them

zealously to ensure that our espresso bars reflect the warmth and character of

traditional Italian coffee houses. And in the process, make Barista Lavazza the place

‘where the world meets’.

Our aim is to passionately deliver the highest levels of experiential services.

Maintain consistency in serving the highest quality products and become a globally

competitive organization – one that is driven by an insatiable thirst for excellence.

AWARDS

Barista Lavazza’s pioneering efforts at providing a truly Italian coffee house

experience has received a number of accolades and recognitions.

Times Food Guide 2008 - Best Coffee Bar Award 

The Times Food Guide is a guide for food lovers across the country. It

comprehensively covers food joints in the various metros rating them according to

popularity, ambience, food etc. The award is in recognition of Barista Lavazza’s

popularity among its customers.

IMAGES Retail Award 2007 - 'Most admired retailer of the year: Catering

Outlets’ 

The Images Retail Awards (IRA) judges companies in the business of retail in

concepts, innovations, designs and consumer recall. Barista Lavazza has been

encouraged by the record number of consumer votes received in its favor during the

selection process.

Super Brand 2006-2007  

Super Brands India is a part of the globally recognized Super Brands UK, which

promotes the discipline of brand management and pays tribute to exceptional

brands. Barista Lavazza has been awarded Super bands for the second consecutive

year. And we’re even more chuffed about it this time because the new survey also

included the opinion of our consumers, along with the panel of judges. And it’s

always great to know our patrons appreciate our efforts to delight them.

INNOVATION

Research

Our research is the backbone of our quarterly menu refreshment process. We leverage Consumer Trends to launch products with higher acceptance and thus launch Guest Centric Product Development. Our R&D and Product teams spend 4 hours each month at stores / behind the Counter & Product ideation is thus based on observation and guest feedback. We track F&B studies across the world & understanding Indian trends and fitment. Our research helps us to identify key global trends & refresh our product line accordingly.

 

Innovation

Barista Lavazza is a 3 dimensional brand experience. Our focus has always been to provide a differentiated offering. We do this by using a guest touch point model that focus on the product innovation, refreshing ambience and warm service.

At Barista Lavazza, we launch a new line of food and beverage - every quarter. The launches are based on international trends, guest feedback and internal research. We will continue to innovate along these lines and launch products that delight our guests.

Our target audience has a global lifestyle and a truly international outlook. Our guests appreciate the truly international line of beverages served at Barista Lavazza and our warm environment. Our focus will be on innovation and continuously providing guest relevant experiences within the Barista Lavazza store.

Barista –Marketing Mix

Barista continued to maintain its focus on quality by sourcing only Arabica beans and using

the best international espresso machines, supplied by the Italy-based LaCimbali.

Barista was, working towards becoming the number one in terms of parameters likes brand-

imagery, brand-dominance, customer-loyalty and turnover. The strategy for fulfilling its

mission over the next decade would be by leveraging its strong position in the Indian market

to grow further in an Asian context.

I) Product

Barista cafes also have a good number of product mixes. The menu ranges from variety of

coffees and pastries. Barista also sells other items like mugs, Coffee beans, T-Shirts, Coffee

Kettles.

Core Product :BEVERAGES

Hot beverages

a) Hot coffee

b) Hot chocholates

c) Steamers

d) Tea

Cold beverages

a) Coffee on Ice

b) Ice cream blended coffee

c) Fruit smoothies

d) Ice tea

Indulgence

a) Indulgencce cold coffee and shakes like Barista cookie crunch and Barista blast.

Lavazza’s like Cappuccino aroma and Marocchino

OTHER FOOD ITEMS OFFERED:

Sandwiches

Snacks like Veg .Puff

Desserts like Choco chip Muffin, Blueberry Muffin

SUPORTING PRODUCTS:

Coffee Mugs

T-Shirts

Coffee makers

Visting cards holders

Steel key chains

Coffee and Coffee beans are also considered as the core product for Barista. The company

has also tested marketed coffee beans through its outlets in Mumbai and Delhi. Barista claims

that they sell a best coffee bean.

Barista has started with a new concept by the name Barista Merchandise. Barista

Merchandise is available at selected Barista espresso bars in Delhi, Mumbai, Kolkata,

Chennai, Hyderabad and Bangalore. The Barista merchandise are the different types of beans

that customer can take home and have the coffee of his own taste. Some of the Barista

Merchandise includes

The French Press

Barista House Blend

Barista is also diversifying its hot beverages menu and introducing several specialty teas. The

reasoning undoubtedly is based on the fact that apart from South India, all other parts of the

country are mainly tea-consuming areas, and this step is expected to help the company

expand its client base in the smaller towns of these regions.

II) Price

Barista holds the perception of being an expensive cafe. However, Barista was the first

organization to start the concept of the organized cafes in India. Initially Barista started with

Skimmed pricing policy. Barista segmented the market according to the income and age.

Due to the entrance of new players, Barista was finding difficult to maintain the market share.

First and foremost, Barista re-defined the target market customer. They even planned to

change their tagline. "Where the world meets” And so when company looked at this

positioning and they looked at the pricing - the strategy being that if we lower the pricing.

Apart from this, Barista has also introduced new low-priced beverages. The officials say

these price cuts have resulted in 15-per cent walk-ins at Barista's outlets during the last few

months. Barista decided to alter their strategy in order to retain their market. After studying

the market, Barista found that competitors were fighting against them against the pricing.

They decided to reduce their pricing. It was not done from a perspective of acquisition. With

reduction in the prices, there had been a 47 per cent increase in footfalls over the

subsequent three months. December 2003 had, seen Barista experiencing a 21 per cent per-

store increase in footfalls over the previous December, with the number of footfalls for the

year totalling 14 million.

III)

Place

Barista started its first outlet at Bangalore and from there it has started spreading its wings

especially after price reduction. Now they are even planning to focus on raising the bar of

coffee experience. Barista already has presence in all the metros and has a presence in all the

highly populated regions like Mumbai, Delhi, Bangalore and many more places.

Barista is seeking to expand through the franchisee route model and plans to enter B-class

towns in the country and middle-class localities in the metros such as North and East Delhi.

By 2005-06, Barista plans to have over 300 outlets across the country up from 153.

IV) Promotion

Barista did not initially believed in any kind of promotion but in order to keep their customers

interested they started building the brand by communication both within the store as well as

outside the store through mass media. It under takes various promotion activities during the

festival or during occasions like Valentines Day. Barista has done advertising in almost all

national newspapers. Barista has launched summer campaign through summer chillers, and

was advertised through different channels.

SWOT Analysis

Strength:

Claim to sell the best coffee

Large Number of outlet

In house sourcing of coffee beans

Espresso-Highest selling coffee

Weakness:

Expensive coffee

Self service for the customers

Quality of food- Stale breads

Opportunity:

Large Untapped Market

Tie-ups with other companies for promotion

Threat:

Entry of Foreign players like Georgia, Starbucks etc

Large unorganized market

CAFÉ COFFEE DAY

Café Coffee Day is a chain of coffee shops in India having its headquarters in

Chikkamagaluru, Karnataka. A division of Amalgamated Bean Coffee Trading Company

Ltd. (ABCTCL), it is commonly known as Coffee Day or CCD. It opened its first cafe in

1996 on Brigade Road in Bangalore, and today has the largest cafe retail chain in India – with

over 800 cafes in 112 cities.

Large number of coffee day cafes are located in Bangalore. The cafe chain has had much

success riding, and to some extent creating, the cafe culture wave that swept across

metropolitan India following strong economic growth resulting in an increase in youth

spending power. It has even tied up with World Space and Micro sense to enable its cafes

with satellite radio and Wi-Fi, respectively. Its first Wi-Fi cafe was opened on Lavelle Road,

Bangalore.

Café Coffee Day sources coffee from 5000 acres of coffee estates, the second largest in Asia,

that is owned by a sister concern and from 11,000 small growers. It is one of India’s leading

coffee exporters, with clients across the USA, Middle East, Europe and Japan.

With its roots in Chikmagalur, the home to some of the best Indian coffees, Coffee Day has

its business spanning the entire value chain of coffee consumption in India. Its different

divisions include: Coffee Day Fresh 'n' Ground (which owns 450 coffee bean and powder

retail outlets), Coffee Day Xpress (which owns 730 Coffee Day kiosks), Coffee Day

Takeaway (which owns 9000 vending machines), Coffee Day Exports and Coffee Day

Perfect (FMCG Packaged Coffee) division. It is entering the European market by opening

two Cafés in Austria as well, making forays into Pakistan and Germany to set up cafes

abroad. The strategy CCD has adapted is to place a cafe in every possible location where

some business can be generated. So in Bangalore, in the main shopping district, there are six

outlets in a 2 km radius and overall 120 cafes in Bangalore alone.

INDIA:

Café Coffee Day currently owns and operates 169 cafes in all major cities in India. It is a part

of India's largest coffee company named Coffee Day, ISO 9002 certified company. Coffee

Day's most unique aspect is that it grows the coffee it serves in its cafes. Cafe Coffee Day's

vending machines have a special niche in the market compared to competitors because Cafe

Coffee Day machines offer filter coffee unlike the instant coffee offered by competitors'

brands. Growing from a coffee exporter to a coffee parlour, café coffee day has certainly

come a long way in this segment.

Key Features:

Pioneers of the Café Concept in India with its first Café at Brigade Road, Bangalore in

1996. This Café was opened as a Cyber Café (first of its kind) but later, with the burst

of cyber cafes it reverted to its core competency….Coffee

Essentially a youth oriented brand with majority of its customers falling in the 15-29

year age bracket

Each café, depending upon its size attracts between 400 and 800 customers daily

At present it operates 169 cafes across 43 cities

Plans to operate 200 cafes by December 2004

It is a place where customers come to rejuvenate themselves and be themselves

D) Marketing Mix

Every company goes through different phases in the business. The phase is very similar to

that of the product lifecycle. In order to sustain in the market and to maintain its market share

it is essential for the company to have a right marketing mix. The company has to have a mix

of proper product that is relevant to the target audience, proper price, proper reach i.e. the

place and relevant promotion that keeps the target audience interested in the company.

I) Product

Café Coffee Day’s menu ranges from hot and cold coffees to several other items. However,

the core product is the coffee. The management believes that trend is changing towards

coffee. So taking this opportunity, the company also sells coffee powder. Café Coffee Day

also believes in selling other merchandised products.

CORE PRODUCT – BEVERAGES

Hot Cofee

Cold coffee

Hot Tea

Frost Teas

Fruiteasers

OTHER FOOD PRODUCTS OFFERED:

Small eats like hotdogs,brownies,cookies

Big eats like Burgers and sandwiches

Sweet eats

Sundaes

SUPPORTIVE PRODUCTS:

Mugs

Caps

T-shirts

Bags

New Introductions:

Reglon Sleeves T-Shirts

Marquis pens

Shoulder Bags

Coffee Mints

II) Price

Cafe Coffee Day has positioned as “Value for Money”. The major target customers are the

youngsters. Pricing is a very sensitive issue for the Indian consumers.

Café Coffee Day believes in mass marketing.

However there are some outlets where the students are given special discounts. CCD even

set up their outlets in the college campus.

CCD is looking for expansion to more interior places. Here prices become more complex as

the consumer are very conservative in spending. The decor, ambience and the experience

will play a major role in pulling the crowds in small cities.

The price of the product has to be kept uniform in order to maintain the uniformity in all the

outlets.

CCD target audience is youngsters. Majority of them are dependent on their family for their

expense. This is one of the most important reasons for low pricing compared to other cafes.

They believe it in making their product at an affordable price. Pricing is one of the important

weapons for them to fight against their competitor.

III) Place

Café Coffee Day outlets are spread across India. However, there are more number of outlets

in the metros and towns. For e.g. In Mumbai CCD have 37 outlets. In the past 12 months,

Café Coffee Day has also been on an aggressive drive to expand the number of cafés in the

smaller towns across the country based on research and invitations received from these places

to open more such cafes there. There will be an increased focus in cities having populations

from as low as Five Lakh upwards. However, the focus has not been on just opening more

cafés wherever there has been an opportunity. Café Coffee Day is already the largest and

most wide spread retail chain of cafes in India with a current count of 169 cafés in 43 cites.

IV) Promotion

In order to stay with the competition and to keep the audience interested, they undertake lot

of promotion activities. CCD jointly organizes large number of promotions with the other

companies serving the similar target audience. These cafes have emerged as a new media

vehicle for reaching the right type of the customer. CCD gets in physical touch with

audiences, target loyalty club members, or advertises in their newsletters

Cafe Coffee Day competitors include but are not limited to

Barista

Cafe Mocha

Costa Coffee

SWOT Analysis

Strength:

Large Number of outlet.

In house sourcing of coffee beans.

Tie Ups with good companies.

Weakness:

Limited Target Audience.

Follow the competitor strategy.

Quality of food- Stale breads.

Loud and Hard Music.

Improper sitting arrangement.

Opportunity:

Large Untapped Market

Tie-ups with other companies for promotion.

Threat:

Entry of Foreign players like Georgia, Starbucks etc.

Large unorganized market.