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Jaipuria Institute of Management, Lucknow 2013-15 Fast Food Analysis of Fast Food Industry Submitted to: Prof Amit Sharma Submitted by Pratyush Kumar Srivastava Saarah Kaazmi Kunal Singh Divya Agrawal Richa Pragya Ritu Raj Section- C

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Fast Food

Fast FoodAnalysis of Fast Food Industry Submitted to: Prof Amit SharmaSubmitted byPratyush Kumar SrivastavaSaarah KaazmiKunal SinghDivya AgrawalRicha PragyaRitu RajSection- C

Table of ContentsOrigin of the fast food market in INDIA2The Indian Fast Food Market - An Overview4Indian Fast Food Market Analysis8Key player in Indian fast food industry9KFC (Kentucky Fried Chicken)13Why Indian market is critical for KFC in long run?13Sales promotion campaign adopted by KFC:13MCDONALDS:15Dominos23BRAND BUILDING THROUGH ADVERTISING24Core Competencies of Dominos25Product & Service Design26Dominos Business Strategy29PIZZA HUT32Marketing Strategy32CORE COMPETENCE32Sustaining, building relationships and Exploiting Changing Conditions33PESTEL34How KFC & McDonald's plan to target each other in India35Fast food growth rate set to be a whopper in India42Growth spreading to the heartlands42Growth prospects of Fast Food industry in India43

Origin of the fast food market in INDIA

Traditionally over the ages, fast food for the average Indian customer meant having breads i.e., paranthas, rotis etc. with sabzi or achaar. These were the traditionally available snacks or in the form of samosas etc. All the items were available at the roadside dhabas or the local sweet shops. There were no established eating places or restaurants for the average Indian customer.

It was the Nirulas family way back in 1920s that started the trend of opening good eating places in the city. Nirulas initially when they entered the restaurant business, were more into catering and hotel business. It was only in the late 50s and early 60s that they decided to open up a restaurant serving snacks and fast food. By 70s they had a pastry shop, snack place and Hot Shoppe. This started the trend of eating joints in the city and over the country. Nirulas was considered to be the pioneer in fast food business. Seeing its success in the country other local fast food joints and restaurant started coming up in the 80s. With the coming up of these local joints Nirulas was not left behind. It had a well-established fast food chain over the next decade. However seeing the potential in the country in the 90s due to the changing life styles, the established chains world over made their entry into the Indian food market. However the tastes and the style of the kind of food which these MNCs we offering the Indian customer has been made familiar to him by Nirulas only.

Although the concept was introduced to the Indians way back, but in the true sense market for fast food has been developed only after the entry the various MNCs starting with Wimpys to McDonalds, Pizza Hut, KFC, Dominos etc., with many more to come over the next few years.

Upto the year 1995 Indian food market was predominantly dominated by the traditional dhabas, potential restaurants in the customers colony and some restaurants in a five star hotel. Having fast food i.e., burgers, pizzas etc., was considered to be an option for eating out. It was not at all synonymous with the American concept of fast food as a quick takeaway bite or a substitute for lunch.

Apart from fast food being available at the local colony restaurants and at some five star restaurants, Nirulas was the only fast food chain existing in the country with its restaurants expanding with every passing year since its inception. It has been almost 50 years now since its set up and there is hardly anyone who doesnt know that Nirulas exists. Nirulas was the first one to bring fast food to India back in the 50s since then it has evolved into an eating place with a tremendous brand equity and brand recognition. It proved to be a perfect eating place for an average middle class who wants to eat out at an affordable price who cant afford the five-star restaurants and would not want to go to the local dhabas.

Nirulas almost had a monopoly for decades due to the way it has been placed. It is a place where a person from an average middle class group to upper class group can go to eat out. Its popularity has increased over the decades. With the trends changing and the incomes rising almost anybody who can afford to eat out could go for a snack at Nirulas.

However the year 1995-96 witnessed a drastic change. 1996 is considered to be the year of Indias entry into the world food market. International giants such as McDonalds, KFC, TGIF, Dominos, Pizza Hut all bombarded the Indian food market.

Before these, UK-based joint called Wimpys had established its chain in the country in 1990. By year 1996 it had about three to four joints established in Delhi. However it did not pose much of a threat to Nirulas reason being lack of variety and that Wimpys was looked at more of a hangout place rather than eating out with the family.

Its been the American international giants i.e., McDonalds, Pizza Hut etc., who have targeted their restaurants to the families. Apart from the foreign and Indian fast food chains setting up shop, there are a range of specialty restaurants offering varied fare such as Chinese, Mexican, French, Italian etc. These places however offer range of items different from burgers, pizzas etc, but they definitely are competition to both foreign and Indian fast food chains.

However, restaurant business is such which is surrounded by threat from everywhere be it Indian joints or foreign joints.

It is only these international joints and specialty restaurants which are gradually coming up and some Indian restaurants which have made up the food market. Prior to this it was only the local restaurant that became visible while passing by or through local banners etc., and the five star restaurants were for the elite class out of reach by the average middle class customer. There was hardly any awareness or promotion to beat competition.

Each of the foreign food joints that have come into the country has their own strategy lined up to differ from the rest. Each of these studied the Indian tastes and style and thereby targeted the Indian customer. An average Indian restaurant goer is no convenience eater, unlike the Americans.

If he is paying, he is paying for food that tastes good (Spicy, soft, savory etc.), not for how pleasantly the stuff is served or how spotless the widows are. He wants food for that can make him come back to the restaurant. An Indian food joint owner would definitely understand this but an American company, which comes and places it directly without knowing the customer is definitely in for trouble. Customer loyalty in a restaurant business is essentially low. A customer when he comes to a restaurant usually looks at the quality of food, variety, ambience, speed of delivery and the location. The variety would influence the frequency of visits since taste is a dominating factor to the Indian customers.

Almost all the fast food chains both Indian i.e., Nirulas and foreign i.e., McDonalds etc., are targeting the families. This serves to be an advantage because the turnaround time is short and family has higher propensity to spend because different members order larger variety of dishes.

Each of these restaurants delivers quality, value and services in its own way through its line of strategies. The emphasis is on the value that the restaurant is delivering to the customers.

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

The Indian Fast Food Market - An Overview

Dryer has witnessed high growth strides in the past years, with increasing disposable income; exposure to a number of cuisines; and consumers willingness to experiment a mix of both Western and local menu. It has not only provided convenience to people who shuttle between home and work for a bigger part of the day but also eliminated the requirement of conventional cutlery. This industry at the moment thrives on international appeal endorsed by niche chains. The development of nutritious and healthier replacements for the traditional servings at fast food restaurants has transformed into mass promotion of portable foods.

As per a new research report titled Indian Fast Food Market Analysis, currently the Indian fast food industry stands at a massive size of ` 47 billion, driven by a growing number of working professionals and increasing westernization. Apart from this, busy life schedule, standardized food, and less time- consuming processes are also fuelling the demand from domestic consumers in the industry. As demand for all types of fast food items are consistently on the rise, pizza, burger, and French fries have become the all time favorite among young Indians, more so with some of the well-known burger and pizza restaurants like McDonalds, Dominos, KFC, Pizza Hut, Nirulas etc, operating in India.

a. Consumers first choice

As far as products are concerned, instant noodles and pasta are at a nascent stage but are fast evolving in the Indian fast food business. Demand for these food items are growing as consumers with hectic lifestyles do not want to spend much time in cooking. Besides, a variety of noodles and pasta is easily available in the international fast food makers menu at an attractive price range, pulling various consumers to add these delicious foods into their palates. The instant noodles and pasta segment has thus turned out to be a big hit among fast food lovers, resulting in the entry of many leading players into this segment.

As per an ongoing study on the Indian fast food industry, there has been a major shift in food habits in the metropolitan cities encouraging the manufacturers to introduce innovative flavors in noodles and pastas to suit Indian consumers. Further, the enhancement of fried instant noodles condiment, good performance of non-fried noodles, and the subsequent release of coarse cereal noodles are some of the main trends currently prevailing in the Indian market. About 86 per cent of households prefer to consume instant food over traditional food due to steep rise in dual income level & standard of living, convenience and influence of Western countries. As a result, fast food menus comprising pizza, burger, sandwiches, etc are gaining wider acceptance from the Indian consumers.

b. Competitors zone

On the competitive front, the fast food market in India is poised for rapid expansion and higher efficiency with the entry of international giants. It has also been observed that with the increasing popularity of dining out in India, restaurant operators want to safeguard their share of improved consumer spending by offering all types of cuisines. This provides a significant opportunity to players in the food and beverage industry.

Major players in this sector are creating a competitive environment for future growth. And in order to cater to this augmented customer base, Nirulas is increasing its existence in metro cities along with the Tier-2 and Tier-3 cities through different formats. The new outlets in cities, such as Amritsar, Patna, Bhopal, Pune and Ludhiana would mainly be Family Style Restaurants (FSR), ice cream kiosks and parlors. Likewise, KFC has plans to increase its existence from 21 cities at present to around 75 cities through its objective to operate 500 restaurants in India by 2015. The company is eager to spread wings to new cities such as Hubli, Madurai, Salem and Mysore in the south, and in the north in Kanpur, Allahabad.

Similarly, McDonalds is targeting 1,000 restaurants by 2020. Hard castle Restaurants, which runs

McDonalds in the south and west, plans to open up to 70 stores next year. It will be the franchisees biggest expansion in the past 15 years. McDonalds also plans to invest ` 10 billion to boost growth. Most of the food chains are busy in innovating and customizing their products. For instance, in order to boost revenue and offer different varieties to the tastes of various cross-sections of people, Dominos Pizza is planning to customize its range of products. The company is taking initiatives to come up with a new assortment of diet pizzas for Indians, who are health-conscious and intends to introduce different specialties in pizza for people residing in different parts, like North and South India. Further, the acceptance of fast food has grown faster as several players have well-understood the basic requirements of Indian food and served more vegetarians & selected no vegetarian meal options (excludes pork and beef from their menu).

c. Franchise outlets

On the strategic front, it has been found that the franchising concept in India is continuously rising, with the increase in the number of international players opening more franchise outlets in India. The increasing revenue figures from franchise outlets encourage the players to opt for the concept. As a result, many international fast food giants are opening up their franchise outlets in India to grab the huge untapped potential in a fast emerging market. In a recent development, Nando, South Africa-based Afro-Portuguese, global restaurant chain is starting up around 35 outlets by 2013 in various parts of India through the franchise route. The company expects to expand enormously in the northern parts of India.

d. Varying consumer behavior

Talking about consumers, it has been a noticeable trend that food consumption pattern of urban Indian families has changed dramatically with times owing to the growing influence of Western culture. Indians have started dining out and moved on to accept different varieties of delicious food from the world. Further, studies indicate a radical change in the consumption patterns of Indian consumers, who have traditionally been known for their price sensitiveness. Middle-class families as well as the youth prefer to have a burger worth ` 25 rather than that worth ` 50-75. This reveals that despite looking for taste and brand, consumers in India are still inclined to low-price and health issues. As per a survey conducted in

2010, nearly 80 per cent of the fast food consumers expect the fast food owners to implement required measures for reducing the harmful impact of fast food. To tackle this issue, these owners have adopted innovative cooking styles, such as baking and grilling that retain the flavor of food and also require lesser quantity of oil. Besides, major retailers in this area are now providing all necessary information like ingredients, nutrition and fat contained on the product pack. These measures have helped Indian fast food consumers select healthy and nutritious meal as well as protect them from the dangerous effect of unhealthy fast food.

e. Government inventiveness

As far as the role of government is concerned, various initiatives in the recent past have resulted in the entry of many international Fast Food Retailers in the country. With the economic liberalization in 1991, nearly all tariff and non-tariff barriers have been removed or minimized from the Indian boundary that has helped many retailers to enter the growing Indian fast food industry.

As per the Food Safety and Standards Authority of India, the new rules and standards will make it mandatory for street food vendors to register with state health departments that are into policing hygiene. It requires the food authority to issue licenses to food vendors only after ensuring that their products are safe and hygienic. Vendors with products that are found unhygienic or unsafe will face monetary penalties. Moreover, user friendly and IT-enabled licensing system will be created to improve governance and compliance.

To try to ensure that India has the capacity to implement the new law, the government has increased the number of state laboratories for testing eatables and appointed more food safety officers to check food quality & hygiene instead of merely monitoring adulteration.

Besides, the Indian government has also directed state governments to prohibit sales of fast food and carbonated drinks on school premises & check out all such items that lead to unhealthy eating from cafeteria within a 1,500 feet radius of schools. In addition, the countrys regulators have ordered food chains to provide product nutritional labeling at the time of sale, so that customers can know about what they are eating and what effect it can have on their health. This step is a result of various studies that have shown that a typical fast food has very high density that causes people to eat more than they usually require, causing people to fall ill with many health-related problems like obesity, diabetes and heart diseases.

f. Shortfalls and remedies

India has witnessed a massive increase in the consumption of fast food over the past few years. Indeed, the country has come out as one of the rapidly growing fast food markets in the world. Although the country offers lucrative opportunities to new entrants due to rapid urbanization and changing lifestyles, there still exist some roadblocks, which may hinder the exponential growth route of this industry in future.

Competition from local street vendors remains the biggest threat to the growth of the fast food industry in the country. There is an increase in raw materials cost and fuel charges, which is causing a lot of strain to the players in this segment. Lack of proper infrastructural facilities, with respect to roads and electricity, has also hampered the development of fast food market in India. Besides, the industry will have to tackle a number of roadblocks including the rising consumer concerns regarding obesity and health-consciousness to maintain the ongoing trend.

g. On a fast track

If the challenges are met with serious considerations, the Indian fast food industry is anticipated to achieve glorious milestones in the coming years. Increasing inclination of people to eat outside (restaurants) will be the major driving force behind the projected growth. Besides, healthy food options and low-price menu will also contribute to its growth, to attain a CAGR of around 33 per cent during 2010- 2014. Moreover, continuous economic growth and improving employment situation will lead to higher personal expenditures on outside food by 2014. Fast food joints will also need to maintain their stance on pricing because the environment will remain extremely competitive. Hence, it is believed that the fast food industry will experience modest improvement in the coming years.

Source Modern Food Processing (Infomedia18)

Indian Fast Food Market Analysis

The Indian fast food market has been witnessing rapid growth on the back of positive developments and presence of massive investments. Currently, market growth is largely fuelled by the rising young population, working women, hectic schedules, and increasing disposable income of the middle-class households. Some of the unique properties of fast food like quick served, cost advantage, etc are making it highly popular among the masses. Thus, India offers enormous opportunities for both domestic as well as international players.

According to our new research report, Indian Fast Food Market Analysis, the Indian Fast Food Industry is anticipated to grow at a CAGR of around 34% during 2011-2014. Anticipating the future growth, many big international players are entering into the market by making deals with the domestic players. And those already present in the Indian market are expanding their presence in different provinces of the country. This trend will emerge more strongly during our forecast period, providing opportunities to local players to widen their product portfolios.

Our research further revealed that there is a large scope of growth in the untapped tier-II and tier-III cities, owing to which, major fast food retailers have already started applying various marketing strategies in popularizing their brands in these cities. Furthermore, they are aiming to provide affordable and customized products to suit the needs of people that would ultimately provide necessary boost to the Indian fast food industry.

The report also provides extensive information on the countrys fast food market, besides discussing the growing segments like Noodle market, Pizza market, and others food market. Thus, it provides valuable information about the Fast food companies and provides necessary insight for investors looking to enter this market. Moreover, the report features forecast for fast food sales in the country. The forecast is based on the correlation between past market growth and growth in base drivers, such as middle class, urbanization, cultural shift, and lifestyle changes. Due consideration is given on competitive landscape to enable clients to understand market structure and growth prospects.

Key player in Indian fast food industry

The size of McDonalds, Dominos Pizza, Pizza Hut and KFC in following terms

Sales, Production

McDonalds Corporation had annual revenues of US$27.5 billion and profits of $5.5 billion in FY year 2012. McDonalds is present in 40 Indian cities with 217 restaurants and serves 650,000 customers daily

Dominos Pizza delivers an average of 1 million pizzas per day sales of $8.2 billion.

KFC had annual revenues of US$20 billion.

Pizza Hut had annual revenues of US$12 billion.

Employees

McDonalds India employs a sizable complement of staff numbering 9,000 people.

Pizza Hut India employs a sizable complement of staff numbering 8,000 people.

KFC has 180,000 employees across the world.

Market Share

Among McDonalds has 42% market share

Among Pizza Hut has 46.4% market share and Dominos has 21.67% market share.

KFC has 42.11% market share.

Segmentation

1. McDonalds segmentation in India has three different bases:

a. Demographic Segmentation: Kids, Family and Students

McDonalds offers different products like Happy Meal which includes a free toy for kids. For families it has made different outlets and meals which are suitable for takeaways and drive-thru. McDonalds has made its environment which is suitable for students of school to hang out with their friends and can get their lunch at McDonalds.

b. Psychographic segmentation: Convenience and lifestyle

McDonalds has adopted itself according to the convenience and lifestyle of the Indian consumers, as India has a huge vegetarian population so McDonalds came up with a different and new product line which includes items like Mc Veggie burger and Mc Aloo tikki Burger. They also made McDonalds as a place to relax and even for entertainment.

c. Behavioural segmentation: Occasions, for e.g. Birthday Parties of kids

McDonalds can get more customers by whom they can get most of the share of India Fast Food Industry but they should emphasis on their Targeting technique.

McDonalds has segmented their products according to bases of Demographic, Psychographic and Behavioral.

McDonalds target segments are children, youth and the young urban people.

Children are more interested in toys and delicious meals.

Youth prefer those places which are entertaining.

Urban family select McDonald for various occasions like birthday party, placement treat etc.

For teenagers and young youth , McDonald has priced several products.

2. KFCs segmentation in India

a. Demographic Factor

Age: Generally there is no age limit focus by the KFC. The target and focus is on each and every individual in a society. KFC finds its largest demographic in the young of any society.Gender: Both male and females are focused by KFC, gender does not play any role here.Household Size: This plays a vital role in the demographic factor of the KFC. Generally they target whole families rather than single persons. This being the reason for their Family Meals which are basically bundled items served at a nominally cheaper rate.

b. Economic Factors

Income: Income is an important key factor for KFC. This factor decides which class is to be targeted. In the early rise of KFC they focused on the upper class but slowly are introducing economy meals that attract the lower to middle class.

Consumption Behaviour: It estimates the behaviour of people, their liking and disliking towards the pricing of the products.

c. Behaviour Factors

In behavioural aspect they segmented the market on the basis of quality, taste and price. Following are the different possible segments in this regard: taste conscious, quality conscious, class conscious, and combination of price and quality.

d. Geographic Factors

On the basis of the geographical factor we have divided our market in two main segments, urban and semi urban.

e. Political Factor

The operations of KFC are affected by the government policies on the regulations of fast food operation. Currently government are controlling the marketing of fast food restaurant because of health concern such as cardiovascular and cholesterol issue and obesity among the young and children in the country. Governments also control the license given for open the fast food restaurant and other business regulation need to follow such as for a franchise business. Good relationship with government in giving mutual benefits such as employment and tax is a must for the company to succeed in any foreign market.

3. Pizza Huts segmentation in India

a. Geographic:

Region pizza hut outlets in different countries is a way of segmenting their market according to region and finding out potential markets.

City they also segment the cities as class i, class ii, metros, small towns.

b. Demographic

Age under 10years, 10 to 18 years, 18 to 25 years, 25 to 40 years, 40+ years.

Family income middle class, upper middle class, high class

Dual income earners yes/no

c. Psychographic

Socio-economic class urban (a1, a2, b1, b2, c, d)

d. Behavioural

Occasions birthdays, corporate lunches, marriages, parties, receptions

Loyalty status low, medium, high

User status first time, regular, non-user

Targeting

In geographic segment they targeted countries where there were no pizza hut outlets. Initially opened in class I cities and then have now moved to metros.

In demographic segment their main target is the young adults ranging from 25 years to 40 years and also dual income earners family. They aim basically at the uppermiddle class and the high class income families.

In psychographic segmentation they targeted a1, a2, b1 socio-economic classes.

In behavioral segmentation they targeted for occasions such as birthday bashes, corporate lunches. It was also found that they were targeting the first time users because they felt that their quality and taste would automatically make them a loyal customer.

Positioning

The ambience and decor of all pizza hut outlets are good and the outlets are spacious. When customers think of party and decide to have pizza, pizza hut only comes into their mind. Pizza hut also arranges kitty parties, birthday parties and business meetings in their outlets. Pizza hut has customized birthday party invites with different themes for the customers to choose and use it as invitations. Though pizza hut is costlier than dominos, they have their own customers, who do not bother about spending, but look for quality and personalized service. When we visit pizza hut, they have restaurant hostess who will assign us tables and introduce the steward who will be taking care of us. This is generally a procedure that is followed in five star category hotels and pizza hut is also following it to emphasize on service quality.

Pizza Hut has come to become synonymous with the best pizzas under one roof. They have positioned themselves for their unique dining experience

KFC (Kentucky Fried Chicken)

KFC has been a late entrant in the Indian market. Even they have unique offering with Crispy Chicken, it faces stiff competition in fast food segment from organized player like McDonald which competes with its range of value meals and Dominos which is symbolized by its 30-minutes delivery of Pizza. In fact, in all major market across the globe, KFC competes with these two companies. Both the brand has look at catering their product offerings suited to Indian tastes. KFC has also included item such as Rizo (Rice) which is served only in south East Asian countries. The company is owned by yum brands! And has several license in India including KFC Malaysia with Kolkata forming a major sourcing destination.

Why Indian market is critical for KFC in long run?

More than 50% of sales and profits are generated from the Chinese market. However, the recent food scandal in china has affected KFC adversely, thereby the emphasising the need to grow in other markets. India forms the perfect answer to this requirement with a young population and growing spending power.

Sales promotion campaign adopted by KFC:

KFC has a tie-up with Freecharge.in through which it offers food coupons currently. The various offers that it has are:

Get three piece hot wings with any meal

Get a Choco cake on purchase of Rs. 300

Value Snacker meal at INR 70 (veg) and INR 80 (non-veg).

In term of in-store sales promotion, KFC offers a special offer to promote breakfast sales. If a meal is ordered in the breakfast slot, the customer can avail another piece of crispy chicken for an additional INR 20 instead of INR 75 in normal case. This can been seen in direct response to McDonald which is promoting its breakfast menu quite heavily with its loyalty cards that offer free McMuffin during breakfast. Both the freecharge.in and in-store campaign is not valid for home delivery order. However, there is a slightly fallacy in this assumption on KFCs part as Indian are not likely to consume chicken in breakfast.

If we closely analyse the three offers above, the third coupon is redundant as the snacker meals are available at these prices even without the coupons. The second coupons ensures a minimum ticket size of INR 300 in order to avail the offer, which is possibly only in groups of 2 or more generally. The only value coupon appears to be three piece hot wings free which can be availed with meals starting from INR 70.

KFC recently started its home delivery service in India, for which it has similar offers. However the minimum order size for home delivery has to be INR 150. In addition to it, KFC was also offering 2 Litre Pepsi free with chicken buckets for home delivery. As a consumer, there is enormous value in the deals as KFC is often perceived as a premium product due to its unique offering.

In fact, the value deals can also be looked at as targeting the college student and the family market to change its perception from a fast food to family food. If we analyse the monetary value of the deals, KFC has a significant cushion as margins are quite high due to the price difference between the final product and the raw materials. The only problem for KFC though will be who redeems it and how it is being redeemed. For instance, the coupon for three piece hot wings free might pose serious challenge towards the profitability in case its redeemed with the low priced meals. However, there is little doubt that the strategy is bound to increase market share for KFC in the last food segment in short run.

KFC India has launched its first ever digital only campaign, promoting its Krushers at net-savvy teenagers in the country.

The fast food brand has launched the first ever User Generated Graphic Novel in India, that allows consumers to input their pictures, names, and a couple of favorite catchphrases into a storyline. The consumer can then read his/her own personalized graphic novel, and share it with their friends on Facebook. This engaging application has already seen 17,000 consumers creating their own Krushers Komics within 7 days of launching the application.

Each day, the best male and female entries will get a print version of their novels as memorabilia. Weekly winners with the best novels get the opportunity to win an Xbox 360.

On YouTube, KFC has created a digital interactive brand channel. Users logging on to the channel will see an endless video of two teenagers sitting in a library, looking infinitely bored.

They ask the user to liberate them from the boredom, the user has to do so by dragging them a Krusher from the bar above. The protagonist instantly comes to life, pulls out the video timeline, and uses it as a straw to drink the Krusher. He/she then goes into a Krushers world, where events unfold basis the Krusher selected.

Speaking on the first-of-its-kind online campaign, Tarun Lal, General Manager - KFC India and Area Countries said, With the launch of a dedicated social media campaign for Krushers, we are taking forward our journey of fan engagement on digital platforms to the next level. The youth of today, our core TG spends most of their time online and our initiatives in the past like Currycature, KFC Wow and Design Your Own Bucket have done very well for us. Going forward, we are hoping to achieve deeper engagement with more and more consumers, making KFC the Most Social QSR brand in the country.

KFC currently has around 3.8 million Facebook fans in India.

MCDONALDS:Introduction

1940: FIRST MCDONALDS

1953: BEGINS TO FRANCHISE

1960: RENAMED AS MCDONALDS CORPORATION

1965: WENT PUBLIC

1971: FIRST ASIAN MCDONALDS

1980: FIRST POULTRY ITEM

1984: SPONSOR OF OLYMPICS

1996-97:BABY PROMOTION

2005: CALL CENTERS

McDonalds IN INDIA

1996: FIRST INDIAN MCDONALDS OPENS

1997: FIRST DRIVE THROUGH

2000: FIRST HIGHWAY RESTAURANT

2003: FIRST DESERT KIOSK

2004: MCDELIVERY SERVICE

2006: MCDELIVERY ON BICYCLES

2007: FIRST 24 HOUR MCDONALDS RESTAURANT

2013: NATIONAL BREAKFAST DAY

4Ps of McDonald

PRODUCTS:

In India McDonalds has a diversified product range which focus more on vegetarian products because most customer in India is Vegetarian. The happy meal for children is more in demand among others. It has lots of item in their menu which increases its popularity. McDonalds studied the behavior, taste and preferences of Indian customer and then provided menu which is very different from other international market. It removed beef, pork and mutton from the menu.

It bring best quality product.

Various items are as follows:

Breakfast Menu

Regular Menu

Beverages

Desserts

Happy Meal

India is a first country were McDonalds serve non-beef and non-pork products.

It also serves special sauces that use local spices and chillies.

PRICES:

Pricing is very important as it decide the revenue of a particular company. The pricing strategy of McDonalds is to attract middle and lower class people. It uses value pricing and bundling pricing strategies such as combo meal, happy meal etc to increase the sales of a product.

PROMOTION:

McDonalds used extensive advertising campaign.

It uses various media to attract large number of customer at a time. i.e television, radio and newspapers. Television played a important role in advertising.

It also uses billboards , posters.

McDonald also uses co-branding strategy . In this coca cola have a tie up with McDonald from many years.

Some of the famous marketing campaigns of McDonald are-

You deserve a break today, so get up and get away- To McDonald

Aap ke zamane mein, baap ke zamane ke daam.

Food ,Folks and Fun

Im loving it.

It also use personal selling, advertising, sales promotion, public relation and direct marketing.

Sales Promotion- it consist of activities by organizing events, programmes, function, distribution of free coupons, contest, providing offers etc.

Public relation-the employees in the outlet interact with customer face to face.

PLACE:

It consist of distribution channel. It is very important so that product can be available to the customer at the right place at right time and the right quality.

McDonald's now in India has a network of over 250 restaurants across the country. McDonald's India is a leader in the food retail space, which has more than 250 restaurants serving more than 6.5 lakh customers daily in India

Strategies in India:

McDonald entered into India in 1996.

They had joint venture with Connaught plaza restaurant and hard castle restaurant.

Connaught plaza restaurants manages operations in North India whereas Hard castle restaurant in western.

McDonald in India is a joint-venture under the ownership and management of two Indians, Amit Jatia and Vikram Bakshi.

Four main pillars of McDonald are fresh food, affordable prices, fast service and limited menu.McDonald think about Indian customer taste, lifestyle, languages and perception.McDonald products in India neither contain beef nor pork in it.

It survived only due to keen understanding of the Indian economy.

They want to make McDonald as a favorite place for customer.

The strategy focuses on people, price, customer experience, promotion and place.

McDonalds success is the quality standards as they have been able to maintain all over the world.

They developed new menu items which always attracting new customer and giving more reasons to old customer to be attached.

They operate on franchisee basis.

India have large vegetarian customer so they came with completely new menu of vegetarian like McVeggie burger and McAloo Tikki which suit the Indian customer.

McDonald's Corporation as it enhances its trust in the local partner.

McDonald's India has an aggressive expansion plan - including market expansion, new customer outreach formats and menu expansion.

It also re-engineered its operations to address the special requirements of vegetarians. Special care is taken to ensure that all vegetable products are prepared separately, using dedicated equipment and utensils. This separation of vegetarian and non-vegetarian food products is maintained throughout the various stages of procurement, cooking and serving.

McDonald's have a philosophy of Quality, Service, and Cleanliness & Value for Money. They provide customers high quality products, served quickly with a smile, in a clean and pleasant environment at an affordable price. This effectively means that the McDonald's menu is priced at a value that the largestsegment of the Indian consumers can afford, while at the same time ensuring that quality is not sacrificed for value - rather, McDonald's leverages economies to minimize costs while maximizing value to customers.

It also promote family dining experiences.

Dominos

Dominos has positioned and established itself as the pioneer in the pizza delivery service. They are giving different offerings for different segments like local favorites, Global favorites, Premium pizzas, kids corner and designers pizza .A fair degree of flexibility is available where customers can customize their pizza and can choose to purchase combos thereby providing better value for money. Additional items such as soft drinks accompany these choices. Dominos has successfully implemented this concept of mass customization by catering to customers individual needs through unique combinations. Dominos standard product and services offering is universal across the world quality pizza delivery in approximately thirty minutes.

Corporate Vision

The Dominos Corporate Vision statement Passionate focuses on the following key areas:

Being better than the competition

Ensuring a quality product

Providing excellent service

Creating lasting relationships with its employees and the communities within which it operates.

A clear corporate vision ensures that the company and its franchises can work towards meeting common goals thereby increasing its business in a potentially virtuous cycle overall global vision translates into specifics at a country level in a seamless manner so that the overall strategic vision is kept in mind at all times.

Mission

Dominos pizza is the pizza specialist who consistently delights the customer with great taste and choice pizza with friendly, courteous team members providing prompt, safe delivery service

Dominos values

During our visit to Islamabad franchise following five values were seen written on white board where all the employees was working

Dominos vision

Exceptional people on a mission, to be the best pizza delivery company in the world.

Jubilant Food Works Ltd. (formerly Domino's Pizza India Ltd) was incorporated in March 1995 as the master franchisee for South Asia Pacific, of Domino's Pizza International Inc., of USA. Moreover, the company holds the master franchisee rights for Sri Lanka and Bangladesh through its wholly owned subsidiary. Mr. Shyam S.Bhartia and Mr. Hari S. Bhartia of the Jubilant Group are the promoters of the company. Since inception, Domino's Pizza India Ltd. has proceeded to become one of the largest and fastest growing international food chains in South Asia. The first Domino's Pizza store in India opened in January 1996, at New Delhi. Today, Domino's Pizza India has grown into a countrywide network around 411 outlets in 95 cities.

POSITIONING WAR

When Domino's entered the Indian market, the concept of home delivery was still in its nascent stages. It existed only in some major cities and was restricted to delivery by the friendly neighborhood fast food outlets. Eating out at 'branded' restaurants was more prevalent.

GOING PLACES

Dominos has selected their store locations wisely with focus on shopping malls, multiplex complexes, metro stations, highways, offices spaces not only in Tier-1 but has also extended their foot print in Tier-2 and Tier-3 cities reaching out to a larger consumer base.

LOCALIZING THE MENU

Since its entry into India, Domino's introduced new toppings for Pizzas to cater to the local tastes. Different flavours were introduced to cater to local population.

BRAND BUILDING THROUGH ADVERTISING

Domino's and Pizza Hut initially restricted their ad strategy to banners, hoardings and specific promotions. In August 2000, Domino's launched the

'Hungry Kya? (Are You Hungry)' sequence of advertisements on television. In

2009 Dominos rolled out a new campaign 'Khushiyon ki Home Delivery', to promote the home delivery service of its latest offering. The campaign has been created by Contract Advertising and positions the home delivery of pizza and pasta as a very convenient service.

PRICING AND PROMOTION WARS

Through its 'Fun Meal for 4 pack the Dominos Pizza India offers four pizzas at the rate starting at Rs 156. This has helped the specialty food franchise to enhance the strength of its customer base. Domino's has introduced price cuts, discounts to attract the customers. They offer comeback value to their customer.

Core Competencies of Dominos

Dominos core competencies have evolved over time. Their unique sets of strengths have helped the Company dominate the pizza food service industry, and a leader in the home delivery / take away.

Product & Service Design

Failed Product and Product Re-design:

Dominos openly acknowledge shortcomings and use customer feedback to revise their strategy and approach. In an effort to design their product again, the company reconfigured its recipe. They tested several combinations of cheeses, sauces and crust to finally arrive at a recipe that was welcomed by the public. It is useful to note that the end customer was heavily involved in the process of the product being re-designed and influenced the outcome largely. This approach of using customer feedback can be credited the company witnessing an increase in sales following the redesigning of their product.

Operations Challenge of the Product/Service Mix

Additionally the thirty minutes delivery guarantee that was initially introduced but later cancelled due to a relatively high incidence of accidents and snatching of pizza on roads. This is an example of a service delivery challenge the company faced. Recognizing that the thirty-minute delivery was an attractive option for the customer, Dominos reintroduced the concept, however allowing itself some leeway and positioning it as a gift to the customer.

Process Design

Transformation &conversion process in term of 4Vs:

Volume: high volume-trained staff following same standard procedures in massive quantity as it is efficient way to produce special equipment leading to continuous operations

Variety: the customers have a choice to select their own topping or can add more ingredients. Dominos moreover redesign operational strategies on the basis of customer feedback

Variation in demand: dominos has low demand in daytime but demand variation is high at lunch and dinner time

Degree of visibility: when the customer comes for dine in or for take away kitchen is highly visible, but in case of delivery at door step visibility of production process is low

Assembly line approach

Dominos were the pioneers to use the assembly line approach to prepare pizzas and other items at high degree of consistency .They has chosen to use the assembly line approach to produce its pizzas, while at the same time they have retained the flexibility of a batch flow process.

The production process at a Dominos kitchen utilizes the consistency and efficiencies that comes from using an assembly line approach while retaining the flexibility that comes from adopting a batch type manufacturing process. Dominos calls make line to its assembly line. This make line methodology also facilitates dominos to produce higher volume in rush and peak hours

The Production Process

The production process is very streamlined and structured - from the order placement to thefinal delivery to the end customer.

7 steps of production process

Step 1: The customer initiates the order. It could be through the phone, internet or a walk-in to the restaurant.

Step 2: The Dominos representative takes the order and enters it into the Dominos PULSE system (a proprietary system that streamlines the order taking process).

The PULSE system increases efficiencies at a store level. The key functions of this system are:

(a) Touch screen ordering: Improves order taking accuracy and efficiency especially during busy periods.

(b) Delivery driver routing system: Improves delivery efficiency.

Step 3: The order displayed on the screen on the assembly line along with the customer specifications.

Step 4: One of the team members in the assembly line picks up the work order, prepares the dough and applies the sauce and cheese accordingly.

Dominos: dough making

Dominos: assembly line

Step 5: In the next step of the make line another team member add the appropriate type /amount of toppings, and then places it into the oven.

Dominos: oven baking

Step 6:After the allotted baking time, a third member of staff removes the pizza from the oven, and places it in a box (which has the order type & number displayed to ensure accuracy of delivery). The pizza is then ready for delivery.

Dominos: packaging

Step 7: The pizza box is put into a hot-bag and is dispatched through a delivery driver or handed out for collection by the waiting customer.

Dominos Business Strategy

We intend to achieve further growth and strengthen our competitive position through the continued implementation of our business strategy, which includes the following key elements:

Continue to execute on our mission statement.Our mission statement is Exceptional people on a mission to be the best pizza delivery company in the world. We implement this mission statement by focusing on four strategic initiatives:

People First. Attract and retain high-quality Company employees, who we refer to as team members, with the goals of reducing turnover and maintaining continuity in the workforce. We continually strive to achieve this objective through a combination of performance-based compensation for our non-hourly team members, learning and development programs and team member ownership opportunities to promote our entrepreneurial spirit.

Build the Brand. Strengthen and build upon our strong brand name to further solidify our position as the brand of first choice in pizza delivery. We continually strive to achieve this objective through product and process innovation, advertising and promotional campaigns and a strong brand message.

Maintain High Standards. Elevate and maintain quality throughout the entire Dominos system, with the goals of making quality and consistency a competitive advantage, controlling costs and supporting our stores. We believe that our comprehensive store audits and vertically-integrated distribution system help us to consistently achieve high quality of operations across our system in a cost-efficient manner.

Flawless Execution. Perfect operations with the goals of making quality products, attaining consistency in execution, maintaining the best operating model, making our team members a competitive advantage, operating stores with smart hustle and aligning us with our franchisees.

Grow our leading position in an attractive industry.U.S. pizza delivery and carry-out are the largest components of the U.S. QSR pizza category. They are also highly fragmented. Pizza delivery, through which approximately 75% of our retail sales are generated, had sales of $11.9 billion in the twelve months ended November 2004 and grew by 1.6% during that period. As the leader in U.S. pizza delivery, we believe that our convenient store locations, simple operating model, widely-recognized brand and efficient distribution system are competitive advantages that position us to capitalize on future growth.

Carry-out, through which approximately 25% of our retail sales are generated, had $12.2 billion of sales in the twelve months ended November 2004. While our primary focus is on pizza delivery, we are also favorably positioned as a leader in carry-out given our strong brand, convenient store locations and quality, affordable menu offerings.

Leverage our strong brand awareness.We believe that the strength of our Dominos Pizzabrand makes us one of the first choices of consumers seeking a convenient, quality and affordable meal. We intend to continue to promote our brand name and enhance our reputation as the leader in pizza delivery. For example, we intend to continue to promote our successful advertising campaign, Get the Door. Its Dominos. through national, local and co-operative media. As part of our strategy to strengthen our brand, each of our domestic stores contributed 3% of their retail sales to our advertising fund for national advertising in addition to contributions for market-level advertising. Additionally, beginning in 2005, each of such domestic stores increased its contributions to our advertising fund for national advertising from 3% to 4% of retail sales.

We intend to leverage our strong brand by continuing to introduce innovative, consumer-tested and profitable new pizza varieties (such as Dominos Philly Cheese Steak Pizza and Dominos Doublemelt Pizza) and complementary side items (such as buffalo wings, cheesy bread, Dominos Buffalo Chicken Kickersand Cinna Stix) as well as through marketing affiliations with brands such as Coca-Colaand NASCAR. We believe these opportunities, when coupled with our scale and share leadership, will allow us to continue to grow our position in U.S. pizza delivery.

Expand and optimize our domestic store base.We plan to continue expanding our base of domestic stores to take advantage of the attractive growth opportunities in U.S. pizza delivery. We believe that our scale allows us to expand our store base with limited marketing, distribution and other incremental infrastructure costs. Additionally, our franchise-oriented business model allows us to expand our store base with limited capital expenditures and working capital requirements. While we plan to expand our traditional domestic store base primarily through opening new franchise stores, we will also continually evaluate our mix of Company-owned and franchise stores and strategically acquire franchise stores and refranchise Company-owned stores.

Continue to grow our international business.We believe that pizza has global appeal and that there is strong and growing international demand for delivered pizza. We have successfully built a broad international platform, almost exclusively through our master franchise model, as evidenced by our nearly 2,750 international stores in more than 50 countries. Our international stores have produced positive quarterly same store sales growth for 44 consecutive quarters. We believe that we continue to have significant long-term growth opportunities in international markets where we have established a leading presence. In our current top ten international markets, we believe that our store base is less than half of the total long-term potential store base in those markets. Generally, we believe we will achieve long-term growth internationally as a result of the store-level economics of our business model, the growing international demand for delivered pizza and the strong global recognition of the Dominos Pizzabrand

Directional Srategy: Stability

Stability strategy involves the maintenance of status quo or, achieves growth in a methodical, but, slow manner. The main reasons for an organization, to adopt this strategy are when it wants to take low risk, choose stability and anticipate the changes, to recover in the business. Domino's is an example for stability strategy. Its commitment on providing quality and quick service delivery has created respect and loyal customer base. The company's management has little or no interest to diversify into other areas.

Porters Generic Strategy: Differentiation

Differentiation is aimed at the broad market that involves the creation of a product or services that is perceived throughout its industry as unique. The company or business unit may then charge a premium for its product. It attempts to develop products that are unique in the industry. Uniqueness can be in the form of service Dominos strategy to differentiate has been by its 30 minutes or free delivery service which is a competitive specialty and advantage towards its competitors. It was the one who came up with this different strategy after aggressive research.

Competitive Position: Market Leader

The market leader is dominant in its industry and has substantial market share. If you want to lead the market, you must be the industry leader in establishing an innovation-friendly organization, developing new business models and new products or services. You must be on the cutting edge of new technologies and innovative business processes. Your customer value proposition must offer a superior solution to a customers' problem, and your product must be well differentiated. Dominos has clearly positioned and projected itself to be a market leader through its strategy to be fastest pizza delivery chain in industry, with 45% market share.

PIZZA HUT

Pizza Hut entered India in 1996, and opened its firstrestaurant in Bangalore. Since then it has captured adominant and significant share of the pizza marketand has maintained an impressive growth rate of over40 per cent per annum. Pizza Hut now has 95 outletsacross 24 cities in India; and employed nearly 4,000people by end of 2004. Yum! has invested aboutUS$ 25 million in India so far; this is over and aboveinvestments made by franchisees.

Marketing Strategy

Pizza Huts Pricing Strategy

Pizza Hut is committed for providing uncompromising product quality, offering customers the highest value for money and giving service that is warm, friendly and personal.

They stress heavily on the dining experience and the ambience

Thus at each point company charges a premium

Thus Pizzas from Pizza Hut costs a premium hence their customers also changes to high income groups.

CORE COMPETENCE

a. Tracing footsteps

Pizza hut is akin to the Indian heart and taste buds. Pizza hut has been able to capture the heart and soul of Indians. They achieved through rapid Indianization of pizzas. Chicken tikkas, tandoori range and spicy korma were welcomed by pizza lovers. In addition to this, pizza hut takes pride in having the only 100% vegetarian pizza hut in the world at ahmadabad, surat and mumbais chow patty. It also has a special jain friendly menu without root based ingredients and even serves salad dressings without eggs.

b. Through the looking glass

Thinking out of the box was never new at pizza hut. With the palat campaign, they even nudged Indians to eat pizza backwards. The vehicle for this change was the stuffed crust Pizza which has become a huge hit. The pizzas outer crust has a stuffing of mozzarella cheese and one can run into people eating these pizzas backwards in many outlets. Talk about bringing changes Pizza hut is really going global. Tuscani pastas that is truly italian is now at every pizza hut outlet. With changing tastes of Indians and greater acceptance of international cuisines, pizza hut has introduced 30 new items on its menu for this festival season. These include beverages, pasta and desserts. Pizza hut express outlets were launched at malls, airports, department stores and gas stations which offers a reduced version of the menu for globe trotters and busy bees. Moreover pizza hut is not just a hangout zone for youngsters. It organizes birthday bashes, kitty parties and corporate lunches. Pizza hut express outlets were launched at malls, airports, department stores and gas stations which offers a reduced version of the menu for globe trotters and busy bees.

c. Dream Big

Pizza hut aims to be the number one restaurant chain in India and expects a turnover of 1 billion by 2015. The YUM restaurants plans to invest $150 million in the next 5 years to expand the number of outlets from 1000 from existing 230.

Sustaining, building relationships and Exploiting Changing Conditions

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 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 etc. Pizza Hut also has a community called as VIP- Members joining this club is at no extra cost one can avail greater offers.

Workforce of Pizza Hut is chosen with the motto Together we grow with primary concern being quality of service, be it in terms of delivery or quality of pizzas. A critical factor in Pizza Huts 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 root73 based ingredients. Moreover Pizza Hut is not just a hangout zone for youngsters. It organizes birthday bashes, kitty parties and corporate lunches. They also have a variety of combinations of menu items which a customer can choose so that both the customer and the company can have a win-win situation. The company can have the maximum of the consumer surplus at the same time the consumer might feel that this was the best offer.

From the menu card one can see the family size variants and the different pizza combinations in the same one pizza are all the different ways of pricing. The company attains the maximum profit in the meat items, so they give the selection of pizzas slices of different varieties and they are clubbed together to form a single pizza. Once the customer dines / orders @ home, normally discount coupons are given to the customer so that there is an incentive for the customer to order from pizza hut. Thus customers are forced to maintain loyalty towards Pizzahut.

PESTEL

POLITICAL FACTORS: The political environment is composed of laws, government policies, and pressure groups that can affect your business that can affect your business. Government can affect trade negotiation and protection, antitrust action, deregulation of industry, and the level of privatization. Government legislation has been institute to define and prevent unfair competition to protect consumers from disreputable business practices such as deceptive offers and bait pricing, and to protect the interests of society. The political factor would affect Pizza Hut business is the legalization to establish more franchisee in India. Besides that, if the policies do not protect the legal rights then it will have lesser franchisee. This will then limit the amount of franchises that can be established by Pizza Hut and will affect their business. In addition to that, political factors of India with foreign countries will also play a role in affecting tourism in India, with more tourists coming to India; Pizza Hut will receive more exposure and recognition.Economic Factors: Economic forces are the forces that will affect business. Factors in the economy consist of the unemployment and the inflation rates. Economic is one of the forces that we couldnt control because this will be based on the country inflations. When it comes to economic problem, the consumer will change their buying power and their spending patterns because they have to buy what they need first then they only can look for their wants. Besides that, some consumers debt level are rising and their income are still the same, therefore this kind of consumer have to look for their needs first and their spending patterns will change base on their incomes and debts. Not only that, for some of the riches like businessman, when comes to economic problem there are lesser rich people to buy Pizza Hut franchisee because they will surely loss a large amount of money instead of profits. Furthermore, there are many competitors in the market such as Dominos Pizza, Papa Johns, and any other restaurant sell Pizza with the lower cost. For examples, in India now have many others competitors such as Dominos Pizza because Dominos are more on delivery but still Dominos Pizza franchisee are strong. Therefore, Pizza Hut has to come up more special promotion or beneficial thing to attract more customers.

SOCIAL FACTORS: social environment is also another factor that influences Pizza Huts company. Cultural environment refers to institutions and also other forces based on societys basic values, perception, preference and behavior. All these things will indeed affect Pizza Hut as the factors in cultural environment influences potential customers of Pizza Hut. The diversity that exists in India will play a major role because people of different races have different culture and their culture will influence the choice of the food they consume. For instance, if pizza hut were to serve pork in their dishes, then Malay people will not choose to dine in pizza hut as it is against their culture to consume pork. Besides that, influence of one person to another person also influences their decision on whether to eat in pizza hut or not. If a major part of a particular city is not of interested in having pizza then it will decrease the number of potential customers of pizza hut.

TECHNOLOGICAL FACTORS: The technology environment would be a factor that affects business because in this new era technology are mushrooming day by day. Organization has to keep track of new technology if the organizations want their business to survive. Nowadays people are looking for more fast, easy, and convenient way to do something. It is designed to serve people better. Today, everyone around the world are talking about online shopping, purchase thing and order thing through online because it is very convenient and the customer dont need to go out. In the past elderly will say that online shopping doesnt make sense but technology is a thing that no one can control. In addition to that, it will make everything simple and easy and have the opportunities to get more profits in an organization. Besides that, technology doesnt mean only on internet but phone calls or other electronics thing. For example, Pizza Hut has provided order via using online or by the phone call and the delivery service. Besides that, any new flavors and promotions will be found on the internet. Other than that, Pizza Hut in India always comes out with more variety of pizza to attract customer whereas other competitors are doing promotions only. They can use the social media for advertising their new products.

ENVIRONMENTAL FACTORS: Natural environment also a external factors that affect business. As the word natural means something comes suddenly and it couldnt control. Natural environment such as natural pollution, cost of raw materials and any other natural forces. For example, Pizza Hut has the high overhead cost because they are not just serving deliveries but also walk in customer. In this point, they have to loads many raw materials. As the natural forces have made the cost of raw material growth, therefore the cost for the raw materials for Pizza Hut is high. Besides that, pollution nowadays is increased. This may affect those producers to produce raw material for them. In addition, when pollution comes, may people will not eat outside.

How KFC & McDonald's plan to target each other in India

Jalandhar is chicken country, as one would expect every nook and cranny in Punjab to be. It also happens to be a harbinger of India's fast-food future, thanks to a head-to-head fight between two iconic American companies in this bustling city.

KFC and McDonald's, whose famous signages the Golden Arches and Colonel Sanders dot the highways and high streets of the world, are now squaring off in Butter Chicken Country. KFC has opened an outlet half a kilometre from McDonald's second restaurant in the town. In restaurateur talk, that is sniffing distance.

The people of Jalandhar now have two choices to "pull open the glass door, feel the rush of cool air, walk in, get on line, study the backlit colour photographs above the counter, place your order, hand over a few dollars (rupees), watch teenagers in uniforms pushing various buttons, and moments later take hold of a plastic tray full of food wrapped in coloured paper and cardboard", as Eric Schlosser wrote in Fast Food Nation.

The fight between KFC and McDonald's, bitter rivals for market sweepstakes in many parts of the globe, is cast in the same mould as some of the greatest brand battles in corporate history Coke vs Pepsi and Nike vs Adidas. But for nearly 15 years since they entered India, the competition between the two resembled a boxing bout that promised a knockout, only to be called off before start. Jalandhar changed that.

Battle Royale

In the past few months, the fast-food restaurant chains have taken jabs at each other, offering similar dishes, matching prices and opening restaurants in close proximity. KFC, which primarily serves chicken, has taken aim at its burger rival with some of its own burgers called Zingers.

For customers who prefer chicken inside buns, there is a snack called, well, Snackers. McDonald's has responded with nuggets for those who like to chomp on chicken.

A hamburger company in the eyes of the world, McDonald's was quick to adapt to India's vegetarian ways with a fare packed with McAloo Tikki Burger, McVeggie and Veg Pizza McPuff. KFC has retaliated with the Veg Zinger burger, Veg Strips and Veggie Snacker.

Big Mac has targeted KFC's signature dish, the Hot and Crispy Chicken, with the recently launched the McSpicy Chicken Burger. Pat came the Hot Zinger from KFC.

Not long ago, the beverages menu at McDonald's was limited to a coffee, cold coffee and Coke. In contrast, KFC's Krushers label of beverages includes variants of yoghurt, sparklers and dairy products.

McDonald's has now bumped up its beverage range to include mocha, hot chocolate, tea, iced tea and cappuccino. KFC, meanwhile, has introduced a Kafeccino variant.

The fight has also spilled over to pricing. KFC recently began offering its Streetwise range targeted at college students for less than Rs 50, nearly seven years after McDonald's has kept its

Happy Price Menu untouched at Rs 20. The companies have also started operating outlets within a stone's throw away from the other. At Andheri in Mumbai, for instance, KFC opened a third restaurant recently, matching its rival's tally. They also co-exist in Delhi's crowded Lajpat Nagar market, among other places.

The gloves are finally off in the KFC-McDonald's fight. Their battle royale promises to define not just their fortunes in India, but also that of a raft of smaller rivals, some foreign, many Indian and the limits to which the Indian restaurant industry can be stretched to accommodate all.

What's Cooking?

Both companies have begun an ambitious expansion strategy in India, powered by breakneck investments. KFC will add 50 restaurants to its existing 120 by the year end.

The company's ambition is to operate 500 restaurants in India by 2015. It has invested $100 million to date. Plans are afoot to invest another $120 million.

McDonald's is no less ambitious. The company is targeting 1,000 restaurants by 2020. It opened 33 new restaurants last year. Hardcastle Restaurants, which runs McDonald's in the south and west and recently bought out the joint-venture stake of the parent company to become a licencee, plans to open up to 70 stores next year, says vice-chairman Amit Jatia. It will be the franchisee's biggest expansion in the past 15 years. McDonald's also plans to invest Rs 1,000 crore to boost growth.

Given the scale of investments and the pace of expansion, the two rivals look certain to step on the other's toes frequently.

But Vikram Bakshi, managing director of Connaught Plaza Restaurants that has a joint venture with McDonald's in the north and east, says he is not worried. "Even if they [KFC] come right next to us they do that often they realise they gain nothing."

The Jalandhar outlet, he says, continues to be one of McDonald's' highest selling restaurants. Still, Bakshi admits to gaps in the pool of products.

"To their Zinger, we've had our Spicy Burger. [But] I don't have to tell you how worried they were...they had to call their Zinger Hot Zinger," he chuckles. Jatia, however, sought to play down the contest between the companies. "We compete with everybody in the market."

Niren Chaudhary, managing director of Yum! Restaurants India, which operates KFC, Pizza Hut and Taco Bell in the country, shared a similar sentiment. He pointed to the "gigantic" potential of the Indian restaurant industry. "The branded restaurant business is estimated to be less than 2% of the total industry," he says. That is piecemeal for an industry estimated at Rs 43,000 crore and growing at 5-6% a year. The organised segment is estimated at Rs 8,500 crore and growing at 20% a year.

Even Bakshi says "the size of the market is so huge that everyone can co-exist".

Thought For Food

The National Restaurants Association of India views the market with the same rose-tinted glasses. India's 1.2 billion people are getting richer and eating out more, it said in a report last year. "With the increase in disposable incomes of the average Indian consumer, the market size and potential of restaurants are expected to further grow."

Shushmul Maheshwari, CEO of research firm RNCOS, says the food consumption pattern of urban Indian families have changed dramatically with the growing influence of western culture. "Indians have started dining out and have moved on to accept different varieties of delicious food from the world." As if on cue, plenty of restaurant chains, including Starbucks, Hooters, Burger King and Grand Canyon Coffee, are betting on India.

Given the impending entry of rivals, KFC and McDonald's seem to have combined the luck and skill needed to be in the right place at the right time. The development in many cities of the infrastructure needed for fast food to flourish, including malls with food courts and highways with drive-through locations, has been a big help.

Today, after 15 years in India, both chains say with confidence that they have put fast food on the Indian menu. From modest beginnings KFC was forced to shut shop a year after it entered India in 1995 while McDonald's 100th restaurant took 10 years since its entry in 1996 they are expanding fast, selling a broad range of foods wherever paying customers may be found.

That includes rural areas and small towns, the unlikeliest of places for burgers and crispy chicken to flourish. Colonel Sanders and Ronald McDonald have made their way to airports, railway stations, BPOs and even SEZs. They have also taken root along the highways.

"There is a significant spring in their step now," says Arvind Singhal, managing director, Technopak Advisors. Piping Hot

They are also making money. KFC's Chaudhary says the company has grown nearly two times in the past four years. McDonald's says its south and west offshoot has turned profitable. The offshoot's revenues grew at a compounded 35% in six years. The north and east division is doubling turnover every three years. Both their investments will be funded through internal accruals.

Bakshi says McDonald's has finally reached a "takeoff point". Chaudhary says the market is ready only now and KFC has the advantage of just starting out in India. Never mind that it took 16 years. Their optimism stems from a burgeoning population short of time and flush with money who frequent hotels, restaurants and malls. Likewise, half the population is 25 years or younger. They are the target consumers for both KFC and McDonald's.

RNCOS' Maheshwari says the varied demographics in India present a big opportunity for fast-food business. "Every age group represents a separate market Indians below 14 years of age are more than the total population of most of the emerging markets."

The new markets look just as promising. McDonald's is considered the poor man's meal in the West, but in India's small towns, the company's executives are pleased that it holds a halo of aspiration around it. "In B-towns, people come to McDonald's as if on an outing in large numbers and in their best attire," says Bakshi.

Still, some analysts have chafed at the snail-paced growth of the fast-food giants in India. "Hundred-odd outlets in 15 years is minuscule," says Singhal. "They have underestimated India's potential and over-hyped the challenges." He says the opportunity was there 15 years ago. "I would have gone to eat a burger 15 years ago."

The growth of the two chains in India is the polar opposite of that in the US. According to financial services company UBS, three-quarters of Americans already live within three miles of a McDonald's outlet. Two-thirds live within three miles of a KFC.

"They have not been able to expand yet as the majority of the population in India still prefer home-prepared food to fast food," says Maheshwari.

Local rivals, meanwhile, are chomping at their tail. Restaurants such as Bikanerwala and Haldiram's have learned to sell traditional road-side cuisine and dishes in a clean and hygienic environment through modern-format setups. A clutch of ethnic fast-food chains such as Jumbo King and Goli Wada Pav of Mumbai, Kaati Zone of Bangalore, Ashrafilal Kulfi and Honest Pav Bhaji of Ahmedabad too is bracing for a fight.

There is also the threat of Domino's Pizza, which has emerged stronger after initial hiccups, and other MNC rivals such as Subway, Papa John's, Texas Chicken, Chilli's Grill & Bar and Cinnabon. Domino's runs 392 stores across India as of June 2011. Ajay Kaul, chief executive officer of Domino's, says the company will continue to expand the store footprint. "Even in existing cities, there are opportunities for opening more stores."

For their part, McDonald's and KFC say the slow-paced progress was intentional. "What we have done in these 15 years is getting our model right, from the menu to pricing to the viability of the business," says Bakshi. KFC's Chaudhary says one has to be careful against getting misled by the "1.2 billion number". "The macro-economic environment in India is far better now than it ever was," he says.

Restaurants, they say in unison, are unlike other retail businesses. For one, the infrastructure is boggling. And the chains are willing to wait out to open a restaurant at a prime location. McDonald's' first shop in Delhi did not come up at the central Connaught Place but at Basant Lok.

Pinakiranjan Mishra of Ernst & Young, a consultancy, gives the companies credit for the caution. "They have spent years looking at the price points and the fare in India. They have understood the market."

That's not to suggest the future is bright. Besides competition, the restaurant business in India is also fraught with troubles. Supply remains iffy in small towns and rural areas while the cold chain continues to be patchy. KFC and McDonald's are known for fattening products. India is no different and the scrutiny will only increase in future. Rentals and real estate prices continue to escalate and could take a take a toll on liquidity. There has been no letup in commodity prices in recent months.

Loyalty is not one of the virtues of the teenager, the target consumer of these companies. The rest are finicky, to put it mildly. During the initial years, McDonald's' service time averaged 75 seconds. Today, it has improved it to 58 seconds. But the customer thinks "we've become slow", says Bakshi. And both restaurant chains sorely miss skilled people.

In this setting, industry watchers predict an interesting fight between the two rivals. Besides their newfound affinity for breakneck expansion, they share a similar growth strategy. They plan to fill gaps in metros and flock to emerging towns. KFC is present in Kochi and McDonald's is studying the market there. McDonald's will launch a dessert called McFlurry in September. Its dessert menu appears thin while KFC serves three varieties, including sundaes.

Bakshi says McDonald's holds huge advantages over KFC. "Our entire logistics and backend allow us to keep prices at a certain level." Truth is KFC has managed to keep prices on a par with its rival on most of its fare. For now, the verdict among experts is overwhelmingly in favour of McDonald's. Future Brands MD and CEO Santosh Desai says McDonald's has got it right from the beginning. "They have been careful to portray itself as a family restaurant."

Maheshwari says McDonald's has been faster in understanding the Indian market. "KFC is still perceived as a non-vegetarian restaurant."

Still, KFC has hit the ground running in India after its re-entry in 2003. Its 100th store came up in Chennai's T Nagar in 2010 while McDonald's took 10 years to reach the milestone.

"India is a land of infinite opportunities. They [McDonald's] are chasing their own destiny and we ours," says KFC's Chaudhary.

Regardless of how they fare, experts say the upshot of the competition will be fast food becoming commonplace in India, a fact of modern life, though Singhal says it will take a great deal of doing to dislodge the samosa in India. A McSamosa then? Yes, if it is on a tray off the counter and wrapped in paper.

Fast food growth rate set to be a whopper in India

While the indian economy slows, its consumers taste for burgers and pizza is growing fast, with one research agency suggesting the fast food market there will double over the next three years.

According to a report published by Crisil, the Indian unit of Standard & Poors rating agency, the QSR market will be worth around Rs70bn (US$1.13bn) by the end of 2016, from its current value of Rs34bn (US$549m). It says the growth will driven largely by new store additions, although during this period, same-store-sales are expected to decline considerably thanks to intensifying competition in tier I cities coupled with the economic slowdown.

Growth spreading to the heartlands

Crisil expects the new stores will grow by 16-18% each year, especially as multinationals blaze a trail into tier II and III citieswhich at the moment only account for around one-quarter of total stores.

In tier I cities, we expect the [average] annual QSR spend per middle-class household to surge by over 1.5 times to around Rs6,000 [US$96.88] by 2015-16, said Crisils Prasad Koparkar.

This quantum jump in QSR spend in urban areas will be propelled by the increase in nuclear families and working women, steady growth in incomes, changing lifestyle and eating patterns and, importantly, greater accessibility of QSR outlets.

Global brands currently account for 63% of the domestic QSR market and will continue to grow on the back of expansion into smaller cities.

Question of Indian tastes

While the likes of McDonalds have been successful in adapting their menu and products to local tastes, they have found it difficult to incorporate Indian food into their assembly line production.

On the other hand, foreign cuisine can be served quickly, and is more amenable to the cold

storage format and a centralised kitchen, said Ajay Dsouza, Crisils research director.

McDonalds and Dominos Pizza have shown over the years that the Indian consumer is

comfortable with Western fast food.

Growth prospects of Fast Food industry in India

The Indian fast food market has been witnessing rapid growth on the back of positive developments and presence of massive investments. Currently, market growth is largely fuelled by the rising young population, working women, hectic schedules, and increasing disposable income of the middle-class households. Some of the unique properties of fast food like quick served, cost advantage, etc are making it highly popular among the masses. Thus, India offers enormous opportunities for both domestic as well as international players. According to this new research report, Indian Fast Food Market Analysis, the Indian Fast Food Industry is anticipated to grow at a CAGR of around 34% during 2012-2017. Anticipating the future growth, many big

International players are entering into the market by making deals with the domestic players. And those already present in the Indian market are expanding their presence in different provinces of the country. This trend will emerge more strongly during BMIs forecast period, providing opportunities to local players to widen their product portfolios.

BMI research further revealed that there is a large scope of growth in the untapped tier-II and tier-III cities, owing to which, major fast food retailers have already started applying various marketing strategies in popularizing their brands in these cities. Furthermore, they are aiming to provide affordable and customized products to suit the needs of people that would ultimately provide necessary boost to the Indian fast food industry.

Dominos competitive advantgse-global leader in pizza take away/home delivery

Unique Supply chain model : Better quality & consistency

unique global model:allows flexibilty at the regional level

level Leaner Stores : Better operating margins

focussed on the core competency of delivery

Order placement

Assembly line

Cooking

packing

product is served to end consumer or delivered