INTRODUCTION - Shodhganga
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
CHAPTER 1
INTRODUCTION
1.1 Introduction
The Indian food industry is roaring for wide growth, increasing its
participation to world food trade every year. In India, the food sector has comes up
as a rapidly growing and high-profit sector due to its strong potential for value
addition, mainly within the food processing industry.
Accounting for about 32 per cent of the country’s total food market, The
Government of India has been active in the growth and development of the food
processing industry. The government through the Ministry of Food Processing
Industries (MoFPI) is working hard to encourage investments in the business. It has
approved proposals for joint ventures (JV), foreign investment industrial licenses
and 100 per cent export oriented units.
The Indian food and grocery market has sixth place in the entire world, with
retail contributing 70 per cent of the sales. The processed food sector is of 32 per
cent of the country’s total food sector, food processing being one of the largest
industries in India and is ranked fifth in terms of production, consumption, export
and expected growth. It contributes around 8.80 and 8.39 per cent of Gross Value
Added (GVA) in Manufacturing and Agriculture respectively, 13 per cent of India’s
exports and six per cent of total industrial investment. The online food ordering
business in India is in its beginning stage, but witnessing substantial growth. With
online food delivery players like FoodPanda, Zomato, TinyOwl and Swiggy
building scale through partnerships, the organised food business has a huge potential
and a promising future. The online food delivery industry grew at 150 per cent year-
on-year with an estimated Gross Merchandise Value (GMV) of US$ 300 million in
2016. (https://www.ibef.org/industry/indian-food-industry.aspx)
Chapter 1- Introduction 2
Source: https://www.linkedin.com/pulse/qsr-sector-india-vaishali-kanyal
Figure 1.1: QSR Sector in India
The Department of Industrial Policies and Promotion (DIPP) states that the
food processing sector in India has received around US$ 7.54 billion worth of
Foreign Direct Investment (FDI) during the period April 2000-March 2017. The
Confederation of Indian Industry (CII) estimates that the food processing sectors
have the huge potential to attract as much as US$ 33 billion of investment over the
next 10 years span and also to produce employment of nine million person-days.
Chapter 1- Introduction 3
Source: https://www.franchisehelp.com/industry-reports/fast-food-industry-report/
Figure 1.2: Major players in the Indian Market
1.2 Major Investments
Some of the major investments in this sector in the recent past are:
x Global e-commerce giant, Amazon is planning to enter the Indian food
retailing sector by investing US$ 515 million in the next five years, as per
Mr Harsimrat Kaur Badal, Minister of Food Processing Industries,
Government of India.
x Parle Agro Pvt Ltd is launching Frooti Fizz, a succession of the original
Mango Frooti, which will be retailed across 1.2 million outlets in the country
as it targets increasing its annual revenue from Rs 2800 crore (US$ 0.42
billion) to Rs 5000 crore (US$ 0.75 billion) by 2018.
x US-based food company Cargill Inc, aims to double its branded consumer
business in India by 2020, by doubling its retail reach to about 800,000
outlets and increase market share to become national leader in the sunflower
Chapter 1- Introduction 4
oil category which will help the company be among the top three leading
brands in India.
x Mad Over Donuts (MoD), outlined plans of expanding its operations in India
by opening nine new MOD stores by March 2017.
x Danone SA plans to focus on nutrition business in India, its fastest growing
market in South Asia, by launching 10 new products in 2017, and aiming to
double its revenue in India by 2020.
x Uber Technologies Inc plans to launch UberEATS, its food delivery service
to India, with investments made across multiple cities and regions.
Source: Agricultural & Processed Food Products Export Development Authority
Figure 1.3: Exports in US $ billion
1.3 Actions taken by Indian Government
Some of the major actions taken by the Indian Government to uplift the food
processing sector in India are as under: (https://www.ibef.org/industry/indian-food-
industry.aspx)
x The Government of India aims to boost growth in the food processing sector
by leveraging reforms such as 100 per cent Foreign direct investment (FDI)
in marketing of food products and various incentives at central and state
government level along with a strong focus on supply chain infrastructure.
x In Union Budget 2017-18, the Government of India has set up a dairy
processing infra fund worth Rs 8,000 crore (US$ 1.2 billion).
Chapter 1- Introduction 5
x The Government of India has relaxed foreign direct investment (FDI) norms
for the sector, allowing up to 100 per cent FDI in food product e-commerce
through automatic route.
x The Food Safety and Standards Authority of India (FSSAI) plans to invest
around Rs 482 crore (US$ 72.3 million) to strengthen the food testing
infrastructure in India, by upgrading 59 existing food testing laboratories and
setting up 62 new mobile testing labs across the country.
x The Indian Council for Fertilizer and Nutrient Research (ICFNR) will adopt
international best practices for research in fertiliser sector, which will enable
farmers to get good quality fertilisers at affordable rates and thereby achieve
food security for the common man.
x The Ministry of Food Processing Industries announced a scheme for Human
Resource Development (HRD) in the food processing sector. The HRD
scheme is being implemented through State Governments under the National
Mission on Food Processing. The scheme has the following four
components:
o Creation of infrastructure facilities for degree/diploma courses in
food processing sector
o Entrepreneurship Development Programme (EDP)
o Food Processing Training Centers (FPTC)
o Training at recognized institutions at State/National level
Source: Department of Industrial Policy and Promotion (DIPP)
Figure 1.4: FDI Inflows in Processing Sector
Chapter 1- Introduction 6
Anticipating the future growth of Indian Food Industry, many big
international players are entering into the business by making deals with the
domestic ventures. And those already present in the Indian market are growing their
presence in different parts of the nation. This tendency will appear more strongly
during incoming period, creating opportunities to local ventures to widen their
product ranges.
The research further concluded that there is a large scope of growth in the
untapped tier-II and tier-III cities, owing to which, major fast food ventures have
already began applying various marketing strategies in popularizing their products in
these cities. They are planning to make available cheaper and demand based
products to fit the needs of masses that would finally provide necessary growth to
the Indian fast food industry.
Fast food is one of the world's fastest growing food types. It is growing at a
faster pace, despite criticism the category has received over the past few years.
Expansion has occurred not only in the BRICS (Brazil, Russia, India and China), but
also in the U.S. and Europe. Fast food companies have succeeded by using a variety
of different strategies some reacting to healthier trends, others focusing on their
original roots.
India offers great opportunity for growth, as fast food there holds an
aspirational status. It now accounts for roughly half of all restaurant revenues in the
developed countries and continues to expand there and in many other industrial
nations in the coming years ahead. But some of the fastest growth is occurring in the
developing countries, where it's considerably changing the way people eat. People
purchase fast food because it's low-priced, effortless to prepare, and heavily
marketed.
1.4 History of Indian Fast Food Industry
The fast food format started in India about 15 years ago with the arrival of
multinational players such as McDonalds, KFC, Domino’s Pizza and Pizza Hut.
These fast food ventures in the beginning had a tough time understanding the Indian
Chapter 1- Introduction 7
purchasers, as their home-market models did not work well in India. Over the last
decade, though, many of these ventures have got their act together through a better
perception of the Indian market in the form of Indianised menus, breakfast menus,
sit-and-eat formats and positioning their outlets as destinations for family outings
like KFC, Domino’s Pizza and Pizza Hut.
The Indian fast food market has been observing a rapid growth on the back
of positive developments and reality of massive investments. Currently, market
growth is largely boosted by the rising young population, working women, hectic
schedules, changing food habits and increasing disposable income of the middle-
class households. Some of the exclusive properties of fast food like rapid served,
cost advantage, etc., are making it highly trendy among the population. Thus, India
offers enormous opportunities for both domestic as well as international ventures in
the fast food sector.
Another major fast food venture, Pizza Hut, which operates a chain of 360
outlets in India presently (https://timesofindia.indiatimes.com/business/india-
business/pizza-hut) aims to double this number over the next few years. According
to Pizza Hut, it opened a dozen outlets in India in 2009 and increasing the numbers
their number each coming year.
Indian fast food market is about to grow at a CAGR of 18% by 2020 due to
changing consumer behavior and demography. Fast food market in India is expected
to be worth US$ 27.57 billion by 2020. About 10% of the fast food market in India
is in organized sector. Vegetarian fast food constitutes of around 45% of the whole
fast food market in India and is expected to grow at a CAGR of 18% by 2020. Fast
food Casual dining restaurants (CDRs) market in organized fast food sector in India
is projected to grow at a CAGR of 27% by 2019-20.
Quick Service Restaurants (QSRs) market in organized fast food sector in
India is projected to grow at a CAGR of 20% by 2019-20. Millions of people eat
ethnic fast food every-day from pani-puri to vada pav to dosa. To leverage the
growth of ethnic fast food market many ventures are entering this market in an
Chapter 1- Introduction 8
organized way. Ethnic fast food market in India is projected to grow at a CAGR of
31.95% by 2019-20.
India’s Quick Service Restaurants (QSR) market, estimated to be at Rs 8,500
crore currently, is growing at a compounded annual growth rate (CAGR) of 25 per
cent. The QSR sector in India is likely to grow three-fold to Rs 25,000 crore within
five years) “McDonald's and Domino's Pizza have shown over the years that
consumers are liking the Western fast food. To provide more value offerings to the
consumers, restaurants have been offering the low price point products or increased
discounts and promotions. Dominos, the pizza chain, is giving buy one – get - one
free offer, combo offers, complementary items, free gifts and many more which is
drawing more and more customers for the food store.
Source: http://slideplayer.com/slide/1581629/
Figure 1.5: Porter’s 5 Forces Analysis of Indian Fast food Industry
Chapter 1- Introduction 9
The report also finds that the amount spent by the middle income households
on QSR is likely to be higher in smaller cities compared to the metropolitan cities
(Minal et.al., 2013)
Source: http://www.indiaretailing.com/2017/07/05/food/food-service/exclusive-what-makes-indias-
qsr-market-tick/
Figure 1.6: Major players in Indian fast food market
The fast food industry is popular for having low skilled-labor that
discourages highly skilled workers from applying for vacant positions (Batt. et al.,
2014; Kwon, 2014). Fast food restaurants primarily hire students with less
experience or no experience that implies highly skilled workers are over qualified.
Indian fast -food industry is of considerable size and has been growing rapidly
(Parker, 2009). It consists of several multinational as well as local Indian brands.
1.5 Introduction of McDonald’s
McDonald's™ is the number one global food service retailer with more than
32,000 local restaurants serving more than 58 million people in around 130 countries
each day. 70 percent of it’s restaurants worldwide are owned and operated by
independent, local businessmen and businesswomen. In India, the brand is managed
by two business entities.
Chapter 1- Introduction 10
x Connaught Plaza Restaurants Private Limited, led by Mr. Vikram Bakshi, JV
Partner and Managing Director, North & East India
x Hardcastle Restaurants Private Limited, led by Ms. Smita Jatia, Managing
Director, South & West India
McDonald's™ philosophy of QSCV (Quality, Service, Cleanliness and
Value) is the driving force behind its service to the consumers in India. Because of
it’s philosophy of being sensitive to local food and cultural preferences, India was
the first country in the McDonald's™ system where it served non-beef and non-pork
products. More than 70 percent of the menu in India has been locally developed with
complete segregation of vegetarian and non-vegetarian products right from the food
processing plants to the point of serving the customers.
Source:http://www.ibtimes.co.in
Figure 1.7: Outside view of McDonald’s Family Restaurant
McDonald's™ commitment to it’s Indian consumers is visible even in
development of special sauces that use local spices and chilies. The mayonnaise and
all other sauces are egg-less. McDonald's™ also pioneered the establishment of
Cold Chain across India.
McDonald's™ regular scrumptious menu includes wide range of products
like McAloo Tikki™, Filet-O-Fish™, Spicy Range, Chicken McGrill™, McChapter 1- Introduction 11
Veggie™, Veg Pizz a McPuff™, Chicken Mcnuggets®, Fries, Wraps, an assortment
of Sundaes, Soft Serve and refreshing beverages such as Ice Tea & Cold Coffee with
outstanding service in a vibrant and lively ambience, for which McDonald's™ is
known worldwide.
Keeping pace with the customer evolving needs McDonald's™ also
functions on models that drive convenience and create unique differentiation like
McDelivery, Drive thru, Breakfast Menu, high ways and extended hours. (Currently,
available in select cities) At present, there are 300 McDonald's™ restaurants in In
1.6 Introduction of Pizzahut
Pizza Hut is an American restaurant and fast food outlet and international
franchise founded in 1958 by Dan and Frank Carney. The company is known for its
Italian-American cuisine menu including pizza and pasta, as well as side dishes and
desserts. Pizza Hut has over 15,000 locations worldwide as of 2015, and is a
subsidiary of Yum! Brands, Inc., one of the world's largest restaurant companies.
Pizza Hut has several different restaurant styles: the popular family-style dine-in
restaurants; upfront delivery and take-way locations and combined outlets that have
carry-out, delivery, and dine-in options. Some full-size Pizza Hut restaurants have a
lunch buffet, with various types of pizza, salad, bread sticks, and a pasta bar. Pizza
Hut has other business concepts independent of the store type.
According to a senior company executive the pizza-hut plans to double its
store count to over 700 in the next five years, riding the wave of growing popularity
of western fast-food in the country. According to pizzahut as a result of a study
pizza had become the biggest food category in the country, giving impetus to the
company's growth. Five to six years ago, the western food format stood third in
preferences after Indian and Chinese, and within that pizza was the highest.Chapter 1- Introduction 12
Source: http://www.livemint.com/Companies
Figure 1.8: Outside view of Pizza Hut Express
Recent studies show pizza is the biggest category, and has become the most
accepted food across all consumer categories (https://timesofindia.indiatimes.com/
business/india-business/pizza-hut).
More than 35 per cent of sales of pizzahut comes through home delivery and
has grown in the last few years. Two years back, the country started online ordering
through the website and app. Now over 60 per cent of home deliveries happen
through online as compared to call-centers earlier.
1.7 Introduction of Domino’s Pizza
Jubilant FoodWorks Limited (the Company) is a Jubilant Bhartia Group
Company, The Company was incorporated in 1995 and initiated operations in 1996,
The Company got listed on the Indian bourses in February 2010, Mr, Shyam S,
Bhartia, Mr, Hari S, Bhartia and Jubilant Enpro Private Ltd, are the Promoters of the
Company. The Company & its subsidiary operates Domino's Pizza brand with the
exclusive rights for India, Nepal, Bangladesh and Sri Lanka, The Company is India'sChapter 1- Introduction 13
largest and fastest growing food service company, with a network of 1004 Domino's
Pizza restaurants across 230 cities (as of February 11, 2016).
Over the period since 1996, Domino's Pizza India has remained focused on
delivering great tasting Pizzas and sides, superior quality, exceptional guest care and
value for money offerings. We have endeavored to establish a reputation for being a
home delivery specialist capable of delivering pizzas within 30 minutes or else
FREE to a community of loyal consumers from all our restaurants around the
country.
Domino's constantly strives to develop products that suit the tastes of our
consumers and hence delighting them. Domino's believes strongly in the strategy of
'Think global and act local'. Thus, time and again we have been innovating with
delicious new products such as crusts, toppings and flavors suitable to the taste buds
of Indian Consumers. Further providing value for money and affordable products to
our consumers has been an important part of our efforts.
Source: dominos.com
Figure 1.9: Outside view of Domino’s PizzaChapter 1- Introduction 14
Our initiatives such as Fun Meal and Pizza Mania have been extremely
popular with consumers looking for an affordable and value for money meal option.
Domino's believes that when a box of pizza is opened, family and friends come
together to share the pizza. Hence the brand positioning: ‘Yeh Hai Rishton Ka Time'
is proving itself.
1.8 Introduction of KFC (Kentucky Fried Chicken)
Kentucky Fried Chicken (KFC): KFC©, a subsidiary of Yum! Brands, is the
world’s most popular chicken restaurant chain specializing in OriginalRecipe©,
Extra CrispyTM, Kentucky Grilled Chicken©, Extra CrispyTM Strips and Extra
CrispyTM Boneless, with home-style sides, Hot WingsTM, and freshly made chicken
sandwiches. KFC, benefited from its positioning in China as the “new fast food” and
has more outlets in China than any other fast food brand. • Tim Horton’s, Canada’s
largest fast food chain specializing in coffee and baked goods, ranked number five in
the category. It is one of the most successful chains with a unique value.
Source: http://thecsrjournal.in/wp-content
Figure 1.10: Outside view of KFC RestaurantChapter 1- Introduction 15
Proposition that is a little more upscale. The brand continues expansion in
the India and has it’s more than 300 outlets in 80 different cities presently.
1.9 Introduction of Burger King
Burger King: Every day, more than 11 million guests visit BURGER KING®
restaurants around the globe. And they do so because these restaurants are known
for serving high-quality, great-tasting, and affordable food. Founded in 1954,
BURGER KING® is the second largest fast food hamburger chain in the world with
about 13,000 restaurants operating in 100 countries. The original HOME OF THE
WHOPPER®, our commitment to premium ingredients, signature recipes, and
family-friendly dining experiences is what has defined our brand for more than 50
successful years Burger King increased its brand value and revenue by pursuing a
back-to-basics strategy that stresses the brand’s original core burger offering. It also
used new-media initiatives such as Xbox console games that can be bought with a
Burger King meal to successfully target young men who visit fast-food restaurants
frequently. Presently the chain has more than 100 outlets in India.
Source: http://www.restaurantindia.in/article
Figure 1.11: Outside view of Burger KingChapter 1- Introduction 16
1.10 Job Satisfaction
Employee turnover has an effect on employee efficiency that influences
business financial performance in a negative fashion. The lack of organizational
support, work socialization, and employee involvement creates isolation among
employees, which results in lower productivity and effectiveness (DiPietro & Strate,
2008). Employee turnover is caused by lack of employee training, which affects
employee competence (Perez & Mirabella, 2013). Employee incompetence affects
the quality service of the fast food restaurants and thus diminishes the frequency of
positive customer experiences (Harrington, Ottenbacher, Staggs, & Powell, 2012)
Job satisfaction is the extent to which an employee is happy with his/her job.
This can help to improve an employee’s positive attitude towards work. Stone
(2005:413) has stated that job satisfaction is the degree to which employees have
positive attitudes towards their jobs. According to Locke (1976), cited in Fulford
(2005:74), job satisfaction is a pleasurable or positive emotional state resulting from
the appraisal of one’s job or job experiences. As aforementioned, employee turnover
in the fast food industry is at a record high due to job dissatisfaction. Absenteeism
has also multiplied owing to work related stress, as jobs in the industry are
monotonous and not often rotated to develop their skills and performance, could
bring about ultimate job satisfaction (Ukpere, 2007). Ivancevich (2007) interjected
that there should be a feeling of the right job so that employees can be productive,
since workers spend one-third of their day at work and, therefore, require a good
working conditions, working environment and co-operative coworkers in order to be
comfortable in the workplace (Charner & Fraser, 2003). To keep employees
satisfied, there must be good remuneration, medical aid and fringe benefits in order
to deliver good quality services. Employees tend to produce good quality work and
good customer services when they are satisfied and motivated. Unsatisfied workers
will result in high absenteeism, low quality outputs and high rate of employee
turnover (Ivancevich, 2007). Poor satisfaction of worker may be as a result of poor
working conditions, less fringe benefits, autocratic management style, and etcetera.
Such vices have adverse implications on employee performance in the workplace,
particularly in the fast food industry. Thus, job satisfaction has been recognised asChapter 1- Introduction 17
an important factor in the fast food industry to ameliorate the negative attitudes of
employees towards their job or organization.
1.11 Need of the Research
Application of motivational practices is changing the way and thus has
significant implications for the way organizations manage their human resource
functions. Although the impact of motivational practices on work and employment
has been the subject of research, little attention has been paid to its effect on work
organization, employees performance and management.
Through this research the researcher attempts to find out major barriers,
imperative characteristics and suggestions on the basis of well supported research
data. It will also focus on various motivational practices involved in the field of fast
food industry. Qualitative and quantitative research analysis has been considered for
the purpose of data analysis.
1.12 Objectives of the Study
Keeping in mind the above factors this study was undertaken with the
following objectives:
(1) To analyze the factors affecting the motivation of the employees within the
fast food industry.
(2) To analyze the relevance of motivation practices in the management of
employees in the fast food outlets.
(3) To identify and study the problems of employees and HR in fast food
companies.
(4) To suggest ways of improving motivation and employees’ performance in
the fast food industry.
1.13 References
x Ministry of Food Processing Industries (MoFPI), Agricultural and Processed
Food Products Export Development Authority (APEDA), Media reports and
Press Releases, Department of Industrial Policy and Promotion (DIPP), PressChapter 1- Introduction 18
Information Bureau (PIB), Confederation of Indian Industries (CII), Union
Budget 2016-17, Union Budget 2017-18
x (Parker, P. M. (2010). The 2009 2014 Outlook for Fast Food in India.
Country Outlook Reports N.PAG.)
x Batt, R., Lee, J. E., & Lakhani, T. (2014). A national study of human
resource practices, turnover, and customer service in the restaurant industry
(Doctoral dissertation, School of International & Public Affairs, Columbia
University). Retrieved from http://rocunited.org/wp-content/ uploads/ 2014/
01/ HRPTCS_Cornell_Report_4.pdf
x Charner, I and Fraser, B.S. 2003. Fast food jobs. National Study of fast food
Employment. Washington DC: National Institute for Workand Learning
Publishers
x Dipietro, R. B., & Strate, M. L. (2008). Management perceptions of older
employees in the US quick service restaurant industry. Journal of
Foodservice Business Research, 9(2-3), 169-185.
x Fulford, M. D. 2005. That’s Not Fair. Journal of Human Resources in
Hospitality and Tourism. 4 (1), 73-84.
x Harrington, R. J., Ottenbacher, M. C., Staggs, A., & Powell, F. A. (2012).
Generation Y consumers key restaurant attributes affecting positive and
negative experiences. Journal of Hospitality & Tourism Research, 36, 431-
449.
x Ivancevich, J.M. 2007. Human Resource Management. 10th ed. New York:
McGraw-Hill.
x Locke, E.A. 1976. The nature and causes of job satisfaction. In M.D.
Dunnette (Ed.), Handbook of Industrial and Organizational Psychology, pp.
1297-1349. Chicago: Rand McNally.
x Perez, J., & Mirabella, J. (2013). The relationship between leadership
practices and restaurant employee turnover International Journal of
Accounting Information Science & Leadership, 6(18), 40-47.
x Ukpere, W.I. 2007. The functional relationship between globalization,
Internationalisation, human resources and industrial democracy. Cape Town:
Cape Peninsula University of Technology PhD Thesis Wyld, D. C. (2014).Chapter 1- Introduction 19
Research briefs: Do happier employees really stay longer? Academy of
Management Perspectives, 28(1), 1-3.
x https://www.ibef.org/industry/indian-food-industry.aspx
x (https://www.ibef.org/industry/indian-food-industry.aspx)
x http://www.indiaretailing.com/2017/07/05/food/food-service/exclusive-what-
makes-indias-qsr-market-tick/
x http://www.restaurantindia.in/article
x Source: http://thecsrjournal.in/wp-content
x Source: http://thecsrjournal.in/wp-content
x Source: http://www.livemint.com/Companies
x MinalKashyap, KomalKashyap and Dr. Anil Sarda (2013) “A Study of
Growth of Fast Food Industry with Reference to Shift in Consumer’s Buying
Habits in Nagpur City”-Special Issue for National Conference On Recent
Advances in Technology and Management for Integrated Growth 2013
(RATMIG 2013) Organized By: GNI Nagpur, IndiaYou can also read
