Chapter -3

Chapter 3


3.1 Introduction

       Services sector in India is the largest contributor to the national GDP. The United
Nations central product classification (UNCPC) classified the service sector but India has
its own classification and the basic difference is that while construction is not a part of the
service sector in India, it is a part of UNCPC. Since many services are rendered in the
unorganized or informal sector, it is difficult to get the exact figure about the service sector.
In the last decade the contribution of services to Gross Domestic Product (GDP) has
outweighed the combined contribution of agriculture and industry. Different types of
services have contributed in different ways for the overall growth of the service sector but
basically the growth is driven by telecommunications, financial services along with export
of Information and Communication Technology (ICT). Although there has been
disagreement about the role of service sector in the generation of jobs (Bosworth &
Maertens, 2010; Kochhar et al.), still there has been a lot of potential and prospective.
Bosworth & Meurtens (2010) mentioned that the Total Factor Productivity (TFP) was the
highest in the service sector. India’s projected economic growth at 7.3 % by 2025 will drive
the country’s total consumption (Mc Kinsey & Company; 2007). As per reports, there will
be demand for different types of services but the demand for education, healthcare,
personal care, hotels and restaurants will be maximum.

Chapter -3                          Growth and Progress of Quick Service Retailing in India

       Table 3.1: Services under Service Sector in National Industrial Classification 2008

    1. Wholesale and retail trade; repair of motor vehicles and motorcycles
    2. Transportation and storage
    3. Accommodation and food service activities
    4. Information and communication
    5. Financial and insurance activities
    6. Real estate activities
    7. Professional, scientific, and technical activities
    8. Administrative and support services
    9. Public administration and defense; compulsory social security
    10. Education
    11. Human health and social work activities
    12. Arts, entertainment, and recreation
    13. Other service activities
    14. Activities of households as employers; undifferentiated goods and services
         producing activities of households for own use
    15. Activities of extraterritorial organizations and bodies
Source: National Industrial Classification, 2008

         Since 1980 the share of service sector to GDP is increasing (Table-3.2) and in the
last decade it has surpassed other sectors as well.

         Table 3.2: Average by Decade of the Share of Sectors in India’s GDP (%)
Sector              1950s           1960s          1970s    1980s        1990s        2000s
Agriculture          55.3           47.6           42.8      37.3        30.9          21.8
Industry             14.8           19.6           21.3      22.3        23.3          24.5
Services             29.8           32.8           35.9      40.3        45.7          53.7
Source: ADB Economics Working Paper Series No. 352
         The in growth in the service sector has led to the increase (Figure-3.1) in per capita
annual household income of Indian families.

Chapter -3                      Growth and Progress of Quick Service Retailing in India

Source: Gain Report Number In5089
                Figure 3.1: India's Per Capita Annual Income 2019-2014

Source: Gain Report Number In5089
         Figure 3.2: India's Share of Aggregate Consumer Expenditure in 2014

Chapter -3                     Growth and Progress of Quick Service Retailing in India

The increase in per capita household income has led to the increase (Figure-3.2) in
consumer expenditure on Food and Non-Alcoholic Beverages.

3.2 An Overview of Restaurant Industry in India

         The restaurant industry in India is comprised of both unorganized as well as
organized sector. In India the restaurant industry is dominated by unorganized sector which
is characterized by road side location and with no technical as well as accounting standards.
The organized sector is characterized by quality control, organized supply chain,
accounting transparency, multiple outlets and dominated by global players. The organized
sector is again segmented in to four types namely full service, quick service restaurants,
bars & Lounge and kiosk/cart. The full service is further segmented in to fine dining and
casual dining, while the quick service restaurant is further segmented in to – take away,
home delivery and eat in. Although Indians take pride in eating home food, but there is an
increasing demand for fast food.

         The growth in the Quick Service Restaurant (QSR) is driven by several factors like
expanding middle class, urbanization, youth spending, nuclear families, better logistics,
increased income, mall and multiplex boom. The quick service restaurant industry at the
same time is also facing different problems like health and hygiene concern among buyers,
localization of menu, standardization of products across outlets, ordering service time,
talent acquisition, high attrition rate, building a cost effective supply chain, establishing a
supply chain in a new region, monitoring quality of products procured from third parties
etc. Most of the different quick services retailing brands are located near the malls, tourist
hubs, corporate hubs, shopping centers, multiplexes, airport, railway station, college and
Universities with an objective to create an adequate experience as well as ambience for the
success of the brand.

3.3 Growth of Quick Service Restaurant Industry in India

         According to a Mckinsey Global Institute (MGI) study, by 2030 more and more
people will live in urban areas (Figure-3.3) and there will be a trend where both husband
and wife are employed which will fuel the growth of Quick Service Restaurant industry in

Chapter -3                        Growth and Progress of Quick Service Retailing in India

Source: Mckinsey India, Urban Awakening Report
                       Figure 3.3: Indian Urban Population (millions)

Source: Enterprise Consulting Athena Infonomics
                                Figure 3.4: Contract Cultivation

Chapter -3                        Growth and Progress of Quick Service Retailing in India

        One notable change that is taking place in India that is further fueling the growth of
Quick Service Restaurant industry is that, global brands are directly procuring (Figure-3.4)
by contract farming. Global players are showing much interest in India because a lot of
changes and improvements are taking place like cold storage, warehouse and improved
logistics facilities.

Source: Enterprise Consulting Athena Infonomics
       Figure 3.5: Indian Food Consumption over the Next Decade (INR billions)
According to a study by Mckinsey Global Institute (MGI) study titled “Bird of the Gold:
The Rise of India’s Consumer Market,” it is estimated that the food consumption will
accelerate (Figure-3.5) in the next decade.

Source: Athena Infonomics and National Restaurant Association of India
                        Figure 3.6: Fast Food Consumption, by Age Group

Chapter -3                        Growth and Progress of Quick Service Retailing in India

        India’s fast food market is at the center stage because the demand for fast food is
driven by favorable demographics. As per Census 2011, more than half of the population of
India is below 25 years of age and the age group of 21 to 30 years is the largest segment
(Figure-3.6) to consume fast food in India.

Source: Grant Thornton Analysis
             Figure 3.7: Food and Beverage Service Industry (INR lakh crore)

        The food and beverage sector in India comprises of both organized as well as the
unorganized sector. The Food and beverage sector in India is dominated by the unorganized
sector, but in the next 5 years the unorganized sector will decline but the total food and
beverage sector will grow (Figure-3.7) and the market is likely to touch 3,80,000 by 2017.

Source: Technopak analysis
              Figure 3.8: Food and Beverage Service Industry Composition

Chapter -3                        Growth and Progress of Quick Service Retailing in India

        Quick service restaurants comprise 45% of the Food & Beverage sector (Figure-3.8)
followed by casual dining comprising 32% and followed by café which comprises 12% of
the Industry.

Source: Grant Thornton Analysis
                                   Figure 3.9: Segment Share
        The unorganized players in Food & Beverage sector (Figure-3.9) which comprised
70% in the food and beverage industry is likely to fall to 61% by 2018.

Source: Grant Thornton Analysis
                      Figure 3.10: Distribution of Routine Expenditure

         Rural Indians spend 55% of their income on food followed by urbanites(Figure-
3.10) with 45 % of their income.

Chapter -3                         Growth and Progress of Quick Service Retailing in India

Source: Grant Thornton Analysis
                                  Figure 3.11: Age Group Profile

        Although Indians took pride in eating at home but there is an increasing trend to eat
outside and the age group of 40 years and above (Figure-3.11) comprises 40 % of total
people to eat outside. People eat outside due to various reasons but 10% people (Figure-
3.12) consider eating outside as their favorite outdoor activity.

Source: Grant Thornton Analysis
                   Figure 3.12: Favorite Outdoor Entertainment Activity

Chapter -3                        Growth and Progress of Quick Service Retailing in India

Source: Grant Thornton Analysis
                    Figure 3.13: Market Break-Up of QSR (INR crore)

        The quick service restaurant segment which is popularly known as fast food is
likely to grow at an annual growth rate (CAGR=16.6) and the market is estimated to reach
(Figure-3.13) INR 1,98,284 Crores by 2017.

Source: Grant Thornton Analysis
                       Figure 3.14: Market Break-Up of QSR Growth

        Domestic players in the quick service segment grew by 37% (Figure-3.14) in terms
of number of outlets, against a growth of 63% by foreign players.

Chapter -3                        Growth and Progress of Quick Service Retailing in India

3.4 Casual Dining

        The casual dining segment which is characterized by quick table service and
moderately priced food is estimated to grow (Figure-3.15) at an annual rate of 10.12% and
the market will reach a size of INR 106,818 crores.

Source: Grant Thornton Analysis
               Figure 3.15: Market Break-Up of Casual Dining (INR crore)

3.5 Fine Dining

Source: Grant Thornton Analysis
                Figure 3.16: Market Break-Up of Fine Dining (INR crore)

Chapter -3                        Growth and Progress of Quick Service Retailing in India

          Fine dining is a premium segment in the food and beverage category and by 2018
the market is estimated (Figure-3.16) to reach INR 13,000 crore.

3.6       Cafés

Source: Grant Thornton Analysis
                    Figure 3.17: Market Break-Up of Cafés (INR crore)
          Café, the favorite hangout place for the youth with an average annual growth rate of
10.68 and by 2017 the market is estimated to reach (Figure-3.17) a size of INR 41,800

                      Table 3.3: Important Indian Restaurant Brands

      #                 Indian Restaurant Brands
      1                 Java green
      2                 Café Mocha
      3                 Brewberrys Café
      4                 Coffee N U
      5                 BRU World Café
      6                 Cuppa Joe
      7                 Barista
      8                 Café Coffee Day
      9                 Bangs Fried Chicken
      10                Coffee World, ,
      11                The Donut Baker
      12                Pizza Corner,
      13                Cream & Fudge Ice Cream
      14                US Pizza
      15                Smokin’ Joes
      16                Garcia’s Famous Pizza
      17                Slice of Italy
      18                Yo! China

Chapter -3                    Growth and Progress of Quick Service Retailing in India

      19              Dosa Plaza
      20              Jumboking
      21              Kaati Zone
      22              Nirula’s
      23              Kailash Parbat
      24              Bikanervala & Bikano Chat Café
      25              Sagar Ratna
      26              Tibbs Frankie
      27              Faaso’s
      28              Vaango
      29              Café Mangii;
      30              Falafel
      31              Manchester United Café Bar and Restaurant;
      32              Khandani Rajdhani;
      33              Spaghetti Kitchen;
      34              Bombay Blue
      35              China Town by Noodle Bar
      36              Gelato Italiano;;
      37              Copper Chimney;
      38              Café Moshe’s
      39              Moti Mahal
      40              Goli Vada Pav No. 1
      41              Cookie Man
      42              Daily Bread
      43              Mr. Idli Red Curry Hospitality
      44              Juice Lounge
      45              Panchavati Gaurav
      46              Mumbai Tawa – Just Tawalecious™
      47              Tikka Town
      48              Café Buddy’s
      49              Cream Center
      50              Hokey Pokey
      51              Cuppa
      52              The Pasta Bar Veneto
      53              Crepeteria
      54              South Indies
      55              Little Italy
      56              Incy Wincy Spider
      57              The Chocolate Heaven
      58              Maroosh
      59              Two one Two Café
      60              Da Vinci
      61              Grillopolis
      62              Rain Forest Resto-Bar
      63              Wraps & Rolls
      64              Café Chokolade
      65              Zaffran Restaurant
      66              New York Pizza and Fried Chicken (NYPFC)
      67              American Fried Chicken (AFC)
      68              Momo Station
      69              Monginis
Source: Own Compilation

Chapter -3                   Growth and Progress of Quick Service Retailing in India

             Table 3.4: Important International Restaurant Brands in India
    #               International Restaurant Brands In India
    1               McDonalds (USA)
    2               Kentucky Fried Chicken (USA),
    3               Swensen’s (USA)
    4               Costa Coffee (UK),
    5               Pizza Hut (USA),
    6               Tacobell (USA),
    7               Dominos (USA),
    8               Dunkin Donuts (USA)
    9               Papa John’s (USA),
    10              Chili's (USA)
    11              Subway (USA)
    12              Quiznos (USA)
    13              Yogurberry (USA)
    14              TGI Friday’s (USA)
    15              Starbucks (USA)
    16              Sbarro (USA)
    17              Hard Rock Café (USA),
    18              Pinkberry (USA)
    19              Trader Vic's (USA),
    20              California Pizza Kitchen (USA),
    21              Great American Cookies (USA)
    22              Quiznos (USA)
    23              Forever Yogurt (USA)
    24              The Coffee Bean & Tea Leaf (USA)
    25              Qwiky’s Coffee (USA)
    26              Baskin Robbins (USA)
    27              Cinnabon (USA)
    28              Manhattan Pizza
    29              Luv’nberry Frozen Yogurt (USA)
    30              Wetzel’s Pretzels (USA)
    31              Au Bon Pain (USA)
    32              Smoothie Factory (USA)
    33              Lemp Brewpub & Kitchen (USA)
    34              Krispy Kreme (USA)
    35              Pizza Metro Pizza (UK)
    36              Costa Coffee (UK)
    37              Gloria Jean’s (Australia)
    38              Di Bella Coffee (Australia)
    39              Eagle Boys Pizza (Australia)

Chapter -3                       Growth and Progress of Quick Service Retailing in India

     40                Café Pascucci (Italy)
     41                Barista Lavazza (Italy)
     42                Ci Gusta! (Italy)
     43                Mad Over Donuts (Singapore)
     44                Bread talk (Singapore)
     45                Le Pain Quotidien (Belgium)
     46                Leonidas Chocolates (Belgium)
     47                Chicking (UAE)
     48                Japengo Café (UAE)
     49                Marry brown (Malaysia)
     50                Mango Tree Bistro (Thailand)
     51                Patchi (Lebanese)
     52                Burger King (USA)
Source: Own Compilation

3.7 Key Players Segmentation

          The quick service retailing market is segmented in two ways, i.e., on the size of the
chain (Table-3.5) and on the type of cuisine (Table-3.6).
                     Table 3.5: Segmentation Based on Size of the Chain
Local Chain                      National Chain                       International Chain
Jumboking                        Dosa Plaza                           KFC
Nirulas                          Kailash Parbat                       Subway
Mast Kalandar                    Yo! China                            Wimpy
Kaati Zone                       Smokin’ Joes                         Dominos
Garcia’s                         US Pizza                             PizzaHut
Falafel’s                        Barista                              Pizza Corner
Bang’s Fried Chicken             Café Coffee Day                      Papa Johns
Haldiram’s                       Tibbs Frankie                        Tacobell
Sagar Ratna                                                           Costa Coffee
Bikano Chat Café                                                      Gloria Jeans
Kents FastFood

Chapter -3                        Growth and Progress of Quick Service Retailing in India

                         Table 3.6: Segmentation Based on Cuisine
Pizza           Burger & Sandwich      Coffee Shop    Indian              Specialty Cuisine
Dominos         McDonalds              CCD            Comesum             Jumboking
Pizza Hut       KFC                    Barista        Monginis            Yo!China
Pizza Corner    Wimpy                  Costa Coffee   Kailash Parbat      Tabobell
Papa Johns      Subway                 Gloria Jeans   Mast Kalandar       Falafel
Smokin Joes     Kents Fast Food                       Kaati Zone          Tibbs
Garcia                                                Haldirams           Frankie
Sliceof Italy                                         Nirulas
US Pizza                                              Bikano Chat Cafe

3.8 New Trends in Indian Quick Service Restaurant Industry

         There are a lot of new trends in Quick Service Retailing (QSR) industry in India as
global and domestic brands are targeting smaller cities with small formats like express
outlets, smart carts and Kiosk etc.

         There are a lot of changing trends in cuisines as well and popular street foods like,
Vada Pav, Ice Gola etc., which are making their way to organized restaurants.

         Similarly, regional cuisines like Kebab Lucknow Wale, Chicken Tandoori, Sub at
Subway are bright examples of Indianisation of menu.

         Another interesting trend in QSR is the integration of concepts like Mc Donald’s
serving coffee and CCD offering sandwiches. The online ordering system enabled by
Interactive Voice Response (IVR) and online payment system is also a new trend in QSR.

Chapter -3                        Growth and Progress of Quick Service Retailing in India

             Table3.7: Delivery Models in the Organized Food Service Industry
City Total No. of Food Service Outlets          Outlets with Delivery Service   % of Total Outlets
Ahmedabad             2163                                   727                      34%
Bengaluru                  5457                              2608                      48%
Chandigarh                 1169                              549                       47%
Chennai                    3804                              2187                      57%
Delhi/NCR                  9790                              6006                      61%
Hyderabad                  3458                              1301                      38%
Indore                     834                               312                       37%
Jaipur                     1135                              372                       33%
Kolkata                    2701                              1313                      49%
Lucknow                    847                               265                       31%
Ludhiana                   579                               194                       34%
Mumbai                     9972                              7783                      78%
Pune                       3726                              2179                      58%
Source: Technopak Analysis, India Food Service Trends 2014

          The popularity of organized food service industry is evident from the popularity of
apps like food Panda, Tasty Khana, Just Eat etc. Home delivery is a grey area (Table-3.7)
where there is a lot of opportunity.

          Marketers are ready to take advantage of increasing number of mobile phone, smart
phone, notebook and personal computer users in India (Table-3.8).

          Table 3.8: Number of Users of Various Digital Devices in India (millions)
Communication Device                2012                      2013                   2019 (P)
Mobile Phones                       406                        475                     522
Smart phones                         27                         65                     365
Personal Computers                   31                         32                      34
Notebooks                            15                         17                      21
Source: Technopak Analysis, India Food Service Trends 2014

          The size of membership (Table-3.9) and the number of followers (Table-3.10) is
also increasing day by day which implies that the online platform will play a crucial role in
the success of business.

Chapter -3                        Growth and Progress of Quick Service Retailing in India

      Table 3.9: Membership on Social Media Channels for Food Service Brands

F&B Brand                     No. of Facebook Fans            Avg. No. of Posts Per Month
Pizza Hut                             1,329,186                           42
Café Coffee Day                       4,010,719                           38
Domino’s Pizza                        5,707,034                           85
Cocoberry                             2,204,297                           40
Mcdonald’s                            1,177,503                           44
Barista Lavazza                        244,118                            26
Source: Technopak Analysis, India Food Service Trends 2014

       Table 3.10: Followers on Social Media Channels for Food Service Brands

F&B Brand                     No. of Twitter Followers       Avg. No. of Tweets Per Month
Café Coffee Day                          14,680                         9,092
Hard Rock Café                           13,115                         8,343
Domino’s Pizza                           25,477                         12,999
Kfc                                       5,261                         2,271
Barista Lavazza                           1,596                         2,620
Cocoberry                                  688                          3,289
Source: Technopak Analysis, India Food Service Trends 2014

        Convenience foods of different types (Table-3.11) like frozen vegetables, dairy
products, processed milk and ready-to-eat products is gaining popularity among the urban

        Today convenience food is not only a solution to tackle the problem of time but has
also become a boon for the food and beverage operators to tackle the problem of high labor
cost, dependence on skilled labor, price fluctuations etc.

Chapter -3                        Growth and Progress of Quick Service Retailing in India

               Table 3.11: Convenience Foods: Categories and Major Brands

Product Categories     Sub Categories                 Brands
Sauces & Sauce Powders Mayonnaise, Tomato Ketchup, Cremica, Fun Foods, Kissan,
                       Chinese    Sauces,     Western Best Foods, Maggi, Monin,
                       Sauces, Dessert Sauces         Mapro
Soups                  Indian, Western, Oriental      Knorr, Maggi, Keya, Ching’s
Frozen Vegetables              Potatoes, Peas, Beans              Safal, Mccain, Lamb Weston
Processed Meats                Salamis, Sausages, Ham, Bacon,     Venky’s, Sumeru, Al Kabeer,
                               Meat Patties, Cuts of Meat         Alchemist, Godrej Tyson, Pollo
Ready-To-Eat                   Gravies,     Dals,     Parathas,   Kitchens of India, Mtr, Maiyas,
                               Theplas, Biryanis, Vegetables      Aashirvad, Kohinoor, Knorr,
Ready-To-Cook                  Dosa Premix, Idli Premix, Mtr, Gits, Quaker
                               Dessert Premixes, Breakfast
Ready-To-Drink                 Juices, Milk Beverages, Cold Real, Tropicana, Priya gold,
                               Coffees                      Amul, Nestle
Source: Technopak Analysis, India Food Service Trends 2014

          Today there is an ever increasing demand for sides and dessert (Table-3.12) and last
but not the least the latest trend in QSR is health foods. Consumers are highly conscious
about their health and hence they are interested in natural, organic, zero trans-fat, zero
cholesterol, zero calorie, antioxidant and other different types of health foods (table).

                           Table 3.12: Drivers of Sides and Dessert

Demand Side                                        Supply Side
Guests seek variety to complement the main Sides and desserts are seen as differentiators
product                                            and add value to the core proposition
Growing trend of beverage consumption and Add to APC and sales value
the need for complementary sides
Growing youth population that demands more Offer higher gross profit due to lower costs
Increasing resistance to potato-based sides for Add to business during non-peak hours
health reasons resulting in a demand for
healthier options
Source: Technopak Analysis, India Food Service Trends 2014

Chapter -3                        Growth and Progress of Quick Service Retailing in India

Source: Technopak Analysis, India Food Service Trends 2014
                                   Figure 3.18: Healthy Foods

3.9 Franchising in Quick Service Retail Brands

          India’s sluggish growth rate has once again gained momentum due to a number of
corrective measures and reforms taken by the government. Today India is able to attract a
number of globally reputed companies and has occupied a prominent place in the
international stage. India as a prospective market has attracted global players which in turn
have increased the foreign direct investment as well as franchising business. India, the
second largest populous country with an impressive gross domestic product (GDP) is on
the way to become one of the largest economies of the world.

          A study by Kharas & Gertz (2010) have outlined that by 2030 the middle class
Indian consumers may outweigh even that of China and U.S.A. and this is also one of the
important factors for attracting global players to India. Although foreign direct investment,
licensing, joint venture, alliance etc., are the different modes of entering Indian market but
franchising business is the much sought after mode especially in the food and beverage

          Franchising model of business is gaining popularity day by day due to different
corrective measures taken by the government from time to time. Today not only foreign
players are adopting the franchising model of business but even domestic players have also
adapted the franchising model, which speaks a lot of the ease of doing business in India.

          Although in India there is no franchise law but franchising model of business is
guided by several legislations like Indian Contract Act, 1982; Trademark Act, 1999;

Chapter -3                      Growth and Progress of Quick Service Retailing in India

Designs Act, 2000; Patents Act, 1970; Copyright Act, 1957; Competition Act, 2002;
Foreign Exchange Management Act, 1999; Consumer Protection Act, 1986 and Arbitration
and Concentration Act, 1996. Indian market is very lucrative however, investors should be
careful before investing and venturing into India because the FDI policy changes very
                            Table 3.13: Licensing Requirements
Type of License                                Requirement/Issuing Authority
Food Safety and Standards (Licensing and       Compliance is mandatory; obtained from Food
Registration of Food Businesses) Regulations,  Safety and Standards Authority of India and
2011                                           Commissioner of Food Safety
Registration under Factories Act               If number of employees exceeds 20; issued by
                                               Department of Labour
Shop and Establishment Act                     Mandatory; issued by Department of Labour
Liquor License L-4 (L-17 as per new Excise For service of liquor in the restaurant,
Rule)                                          otherwise not needed; obtained from
                                               Department of Excise
Environmental Clearance                        Mandatory; obtained from Pollution Control
No Objection Certificate/Fire License          Mandatory; obtained from state’s Fire
State Tax and Value Added Tax                  Obtained from Department of Commercial
Trade License                                  Mandatory; obtained from Corporation or
                                               Municipality of the area
Health Department Clearance                    Mandatory;       obtained       from     Health
                                               Commissioner, Corporation or Municipality of
                                               the area
Signage License                                Mandatory; obtained from Corporation or
                                               Municipality of the area
Eating House License                           Mandatory; issuing authority is the Police
Playing of Music in Restaurants–License        Mandatory when recorded / live music of the
                                               two copyright holders is played in the
Lift License                                   If lift is to be installed; issuing authority is
                                               Electrical Inspector, Office of the Labour
Insurance required to be taken: Public Mandatory
Liability, Product Liability, Fire Policy, and
Building & Asset
Source: Athena Infonomics

Chapter -3                        Growth and Progress of Quick Service Retailing in India

             Table 3.14: Foreign QSR Players and their Indian Counterparts

Brand                    Year of Entry Mode of Entry         Indian Partner
Wendy’s (Us)                2015       Master Franchise      Sierra Nevada Restaurants
Barcelos (South                                              Company-Owned
                              2015        Company-Owned
Burger King (Us)              2014        Master Franchise   Everstone Group
Fatburger (Us)                2014        Master Franchise   Vazz Foods Private Limited
Johnny Rockets (Us)           2014        Master Franchise   Prime Gourmet Private Limited
Dunkin' Donuts (Us)           2012        Master Franchise   Jubilant Food Works
Starbucks (Us)                2012         Joint Venture     Tata Global Beverages
Krispy Kreme (Us)             2013        Master Franchise   Citymax Hotels India Pvt. Ltd.
Pizza Express (UK)            2012         Joint Venture     Bharti Group
Source: Grant Thornton Analysis

3.10 Challenges in Quick Service Retailing Industry in India

        There are many challenges that the quick service restaurant industry is facing like
inflation in food price, high staff cost, energy cost, occupancy cost etc. Inflation in food
price is a major challenge which has a significant effect on the net operating cost as well as
profit of the organization. It is a well-known fact that food category is witnessing
maximum inflation in comparison to other categories (Figure-3.19).

Source: Technopak Analysis, India Food Service Trends 2014
                             Figure 3.19: Inflation by Commodity

Chapter -3                     Growth and Progress of Quick Service Retailing in India

3.11 Company Profiles

3.11.1 Café Coffee Day (CCD)

       Café Coffee Day one of the largest retail café chains in the country is a part of
Amalgated Bean Coffee Trading Company Limited. CCD opened its first store in 1996 in a
posh locality of brigade road in Bengaluru. CCD with an aim to target the youngsters is
successful to attract the young and “the young at heart”. Today CCD has become the
meeting point of the youth where they make conversations, discussions and even make fun.

       The first CCD café was opened in 1996 in the southern city of India – Bengaluru.
Today CCD has become one of the prominent and most adorable meeting points of the
youth. On an average around thirty thousand customers visit CCD every day.

       Since its inception CCD has made its presence felt in two hundred cities across the
length and breadth of the country. To this day more than sixteen hundred outlets are
operating successfully. CCD Outlet Formats

1. The Lounge: With an objective to reach beyond the youth and to attract different types
of customers, this type of outlet is operating to address the meal requirement along with
coffee. The Lounge with around fifty stores is strategically located in important cities.

2. The Square: This type of outlet is targeted at the premium segment with only four
outlets in the country. The square serves customers with different types of food along with
coffee and the combination is marvelous.

3. Express Outlets: This type of outlet is meant for the mobile population of the city.
Express outlets are small in size, which is usually 60 Sq ft. Today more than five hundred
Express outlets are strategically located near malls, colleges, railway station, airports etc.
The concept of this type of outlet is to provide coffee to the customers any time and at

Chapter -3                      Growth and Progress of Quick Service Retailing in India CCD Group Companies

1. Coffee Day beverages: With a growing demand of coffee vending machine, the
company has launched its brand - Celesta and which as per international standards.

2. Coffee Day Fresh and Ground: Coffee Day Fresh and Ground is meant for people who
want to have a sip of coffee at their home. The company takes utmost care to procure the
best coffee and process it in to powder form. The company never compromises with quality
and stringent measures are taken to ensure the quality of coffee powder. Fresh and ground
stores provides twenty blends of coffee and tea powder along with accessories like filters,
brewing machines, coffee mugs etc. The company launched its first store in 1996 in
Bengaluru which has now expanded to around 420 stores in different cities of south India.
The company maintains a strong relationship with the customers by serving round the year.

3. Coffee Day Exports: Since 1999 Coffee Day exports is one of the largest exporter of
coffee to different parts of the world. Empowered with upgraded technology and research
the company not only exports but also takes utmost care to grow coffee, pack it most
hygienic conditions and ultimately trade it. The positioning strategy of the company is very
successful and it takes regular feedbacks from its customers which are ultimately supported
by a strong research and development department.

4. Coffee Day Hotels and Resorts: Motivated by the customer response and business
success, ABTCL entered itself in to Hotels and resorts, w2ith its first resort opening in
2008 in Chikmaglur. The resort provided the right ambience, where guests could enjoy the
serene beauty of coffee plantations. The company has expanded its resorts to other
locations and is still planning to expand in the near future.

3.11.2 Kentucky Fried Chicken (KFC)

       The moment we hear “KFC” we start to hymn its tag line "Its finger licking good!",
which has now become “So Good”. “So Good” gives a higher brand recall as we all use
this phrase quite often. Additionally, old tag line was just to do with eateries; the new tag
line goes along with beverages as well.

       KFC is an acronym of Kentucky Fried Chicken. It is established with its
headquarters at Louisville, Kentucky in United States. This fast food restaurant chain

Chapter -3                     Growth and Progress of Quick Service Retailing in India

having specialization in fried chicken is the world second largest restaurant chain, which is
measured by sales. This subsidiary company of Yum! Brands, having a wide spread no of
18875 outlets in 118 countries and territories as of December 2013, and yet are regularly
popping up at various places. While discussing about KFC, we cannot ignore the white
headed, beard man with spectacles on, pleasant face with a broad smile wearing a red apron
with three vertical white strips on the left side of his apron having a bright red background
with bold white color KFC embossed in it. This pleasant faced man on the KFC logo is
none other than the founder itself, Harland Sanders.

       Harland Sanders had begun his entrepreneurship by selling fried chicken from his
road side restaurant in Corbin, Kentucky during the great depression. It was then when
Sanders could identify the potential of the restaurant franchisee concept. This thought of
his, revolutionized the business the fast food chains, and with the span of time expanded it
internationally. First “Kentucky Fried chicken” franchise opened in Utah in 1952. It got
popularized and diversified the market by challenging the established dominance of
Hamburger. It was in mid-1960 that it expanded over Canada, United Kingdom, Mexico
and Jamaica. In 1964, Sanders sold the company to a group of investors led by John Y.
Brown and Jack C. Massey. In early 1970s KFC was again sold to the Sprit distributor
Heublein, who were further taken over by R. J. Reynolds food and tobacco; who sold the
chain to Pepsico. The chain flourished and made its distinct mark by entering the market of
china, in 1987, being the first western restaurant chain in that market. Today china market
is company’s single largest market. Hence, proving how the stake of risk to enter an
untouched market proved beneficial.

       Pepsico spun of its restaurant division as Tricon Global Restaurants, which was
later renamed as Yum! Brands. The pressure fried chicken pieces, seasoned with Sanders
recipe eleven herbs and spices, and was KFC’s original product. These herbs and spices
used in the recipes served as a business trade secret.

       KFC serves its customers in either individual servings or in family size cardboard
bucket, having six to sixteen chicken pieces. Other KFC products include chicken burger
both ginger and tower burgers; wraps and a variety of other foods like chicken popcorn,
crispy chicken strips, hot wings and chicken mudgets. The major key marketing strategy of
KFC is backed by its approach to adapt as per regional taste.

Chapter -3                     Growth and Progress of Quick Service Retailing in India

3.11.3 Pizza Hut

       Pizza Hut is an American restaurant chain and international franchise, known
for pizza and side dishes. It is now corporately known as Pizza Hut, Inc. and is a subsidiary
of Yum!      Brands, Inc., the world's largest restaurant company. In 2015, the company had
more than 6,000 Pizza Hut restaurants in the United States and 5,139 store locations in 94
other countries and territories worldwide. Pizza Hut has a total of 11,139 branches
worldwide. Pizza Hut was founded in 1958 by two Wichita State University students, Dan
and Frank Carney, as a single location in Wichita, Kansas. Before closing in 2015, the
oldest continuously operating Pizza Hut was in Manhattan, Kansas, in a shopping and
tavern district known as Aggieville near Kansas State University. The first Pizza Hut
restaurant east of the Mississippi was opened in Athens, Ohio in 1966 by Lawrence
Berberick and Gary Meyers.

       Pizza Hut's international presence includes Canada and Mexico in North America,
India, Bangladesh, Pakistan, United Kingdom, Sweden, Honduras, Costa Rica, El Salvador,
Guatemala, Colombia, Venezuela, Peru, Ecuador, Nicaragua, and its Asian presence
includes Qatar, The Philippines, Vietnam, Thailand, Malaysia, Indonesia, China, Hong
Kong, and Macau. Pizza Hut was one of the first American franchises to open in Iraq.

       The company announced a rebrand to begin on November 19, 2014. The rebrand is
the result of an effort to increase sales, which dropped in the previous two years. The menu
will be expanded to introduce various items such as crust flavors and eleven new specialty
pies. Work uniforms for employees were also refreshed.

3.11.4 Monginis

       Monginis is an Indian pastry and bakery chain based in Mumbai with outlets in
different cities in India and Egypt. In the Brand Trust Report 2012, Monginis was ranked
605th among India's most trusted brands and subsequently, according to the Brand Trust
Report 2013, Monginis was ranked 541st among India's most trusted brands. In 2014
however, Monginis was ranked 256th among India's most trusted brands according to the
Brand Trust Report 2014, a study conducted by Trust Research Advisory, a brand analytics

Chapter -3                     Growth and Progress of Quick Service Retailing in India

         Early in the 20th century, two Italian brothers ran a catering service in Mumbai's
Fort precinct, which was popular with the city's European residents. In 1958, Monginis
catering was taken over by the Khorakiwala family, and became Monginis Foods Limited.
In 1971, the company adopted the franchise model of business, with a stated emphasis on
localized production for local tastes. It also models itself on the "food boutique" concept,
focusing on quality, presentation and service. It has thereby expanded its brand and reaches
across the country with a total worth of about 950 million rupees by 2012.

         Monginis sells ready-made as well as order-made cakes for catering or carry-out.
Individual cake slices are also kept in Monginis stores for dine-in customers. The chain
sells both Indian and Western savouries, including samosas, puffs, cutlets and doughnuts.
Apart from these, snack foods and breads are also sold at Monginis shops. Monginis has a
product line for diabetics, and offers themed products during festivals. The Egyptian brand
has called itself Monginis bakery producing chocolates, cakes, pastries and oriental sweets.
Fast food snacks include more than 50 items. Monginis also produce more than 30 different
gateaux. Monginis also provides accessorized carry-out catering, with telephone and
internet ordering options. It counts 558 exclusive franchises in total, and at least one
production center each, in 38 cities. Besides Mumbai the company is present in
Ahmedabad, Aurangabad, Bangalore, Bhubaneswar, Bhiwandi, Chennai, Coimbatore,
Cuttack, Delhi, Goa, Hyderabad, Indore, Kochi, Kolkata, Nashik, Pune, Palanpur, Rajkot,
Secunderabad, Surat and Vadodara. It is also present in Alexandria, Cairo and Mansoura in

3.11.5 Donimo's Pizza

         Founded in 1960, Domino´s Pizza is the recognized world leader in pizza delivery
segment operating a network of company-owned and franchise-owned restaurants in the
United States and international markets. Domino’s Pizza’s Vision illustrates a company of
exceptional people on a mission to be the best Pizza Delivery Company in the world.
Domino´s started out small with the legendary Tom Monaghan who bought his first pizza
restaurant and called it Dominick’s. It was re-christened Domino´s Pizza in 1965.
However, in 1978, the 200th Domino´s restaurant opened, and things really began to cook.
By 1983 there were 1000 Domino´s restaurants, rising to 5000 in 1989. Today, there are
more than 9000 franchised and company owned restaurants in the United States and 60

Chapter -3                     Growth and Progress of Quick Service Retailing in India

international markets Domino’s is listed on the NYSE under the symbol "DPZ." The
Domino’s Pizza® brand was named a Megabrand by Advertising Age magazine. It was
also named as "Chain of the Year" by Pizza Today magazine, the leading publication of the
pizza industry. In 2009, Domino’s ranked number one in guest satisfaction in a survey of
consumers of the U.S. largest limited service restaurants, according to the annual American
Guest Satisfaction Index (ACSI). Domino’s has expanded its menu significantly since 2008
to include Oven Baked Sandwiches and Bread Bowl Pasta, and recently debuted its’
Inspired New Pizza’- a permanent change to its core hand-tossed product, reinvented from
the crust up with new sauce, cheese and garlic seasoned crust.

3.12 Conclusion

       Indian Quick service retailing industry is changing very significantly and efficiency
has become a key factor for growth. Fixed price menus have become popular among the
Indian Youth. Day by day global players are including local delicacies in their menu. Lack
of time and busy schedule has driven the demand for takeaway and home delivery services.
Nowadays convenience food in the category of ready to eat, ready to cook and ready to
drink is also gaining popularity. Infusion of health foods by quick service restaurant
operators has also attracted the health conscious consumers to the quick service restaurants.
Growth in the number of airports, metro stations, shopping malls and shopping centers will
also drive the growth quick service restaurant industry.

Chapter -3                   Growth and Progress of Quick Service Retailing in India


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