INTRODUCTION

The retail industry being a significant contributor of GDP to national economy, is certainly

one of the highest revenue generating industries currently in action in the country. According

to a report by National Restaurant Association of India (NRAI) and Technopak the size of the

food services market in India is estimated at $48 billion in 2013. Chains account for as much

as five per cent of the total market. The size of the food service market is projected to grow

at a CAGR of 11 per cent and over the next five years it will reach $78 billion by 2018.In this

apparently unorganized market Interestingly the quick service restaurant(QSR) and casual

dining segments together forms 74 per cent of the chain market while cafes make up 12 per

cent. Cafes are an impulsive option for hanging out while fine dining places are reserved for

families.

The transformations occurring in the retail market is fast-paced & dynamic together with that

changing taste and behaviour of the customers has tradition of previous couple of years, it is

evident that this area has achieved tremendous growth in the overall food retail business.

Whether food or grocery retail in India would grow is no longer a debate today but rather

how fast can it grow and what challenges need to be overcome is of utmost importance.

Major Challenges faced by the industry

•    Penchant for fresh/home-made and value consciousness: The Indian consumer, unlike his

Western counterpart, has a penchant for freshly cooked food over packaged food. This is a

result of dietary patterns, poor electricity supply, low penetration of refrigerators and a family

structure where one of the primary roles of the housewife is feeding the family. The Indian

consumer is extremely value-conscious.

•    Diversity of tastes and preferences : Multiple cultures, languages and religions have a

huge bearing on the tastes and preferences of the Indian consumer. This will pose a challenge

for players aspiring to develop a pan-Indian presence.  

•    Willingness to travel : Given the current density of retail outlets in India, retailers will

have to motivate the consumer to trade convenience with price, range and ambience.

•    Sourcing base and efficiency : The fragmented agriculture supply base coupled with an

inadequate legal framework make it difficult for retailers and food processors to procure

quality produce at competitive costs directly from farmers. The small size of the food

processing industry further limits the supply options.

•    Real estate availability and cost : Rentals account for 7-7.5% of the total costs for

organised retail in India against global benchmarks of less than 3%. Real estate availability

and costs will continue to remain a challenge in the retail industry with factors like adequate

parking, ambience and proximity being the key drivers of footfalls.

•    Manpower availability: As organised retail expands, there is expected to be a dearth of

skilled manpower. The lack of institutions and courses for different aspects of retail

management will have an impact on the overall supply of quality manpower.

Emerging trends in food retailing

•    Big becoming bigger : Globally, retailers have realised that size drives profitability, not

just through economies of scale in operations but also through higher bargaining power

leading to better margins. While many players are entering the retail space in India currently,

the growth stage will be characterised by rapid expansion and consolidation among these

players.  

•    Rise of organic foods and health and wellness segment : Consumer attitudes and

preferences are undergoing a shift owing to factors like increased disposable incomes,

changes in lifestyle patterns, shift in age structure, increased number of working women and

multi-cultural exposure. These would lead to increasing health consciousness in the future.

Organic foods and wellness products would be emerging opportunities in the years to come.  

•    Increasing focus on private labels : As competition in the organised retail market

increases, discounts and promotions are expected to play a critical part in generating footfalls.

To counter the impact on profitability, organised players will find it more attractive to

promote private labels or store brands given their higher margins. The consumer too would

benefit from lower prices.

INDUSTRY PROFILE

DOMESTIC PLAYERS

Nirulas

Who are they?

Nirula brother’s ventured into the fast-food segment of India in 1970s with the opening of

first fast- food restaurant of Delhi in Connaught Place in 1977.There mission was “To give

joyful moments to generations through delicious and affordable, Indian and International

choices in a fun-filled and friendly environment by innovative and passionate people”. This

north India based fast-food chain is mostly popular in NCR Delhi. With over 70 outlets in

Delhi, Haryana, Bihar, Punjab, Rajasthan, Uttar Pradesh states, Nirula’s is a prominent

domestic player in fast-food chain of India.

Offerings

With varied range of products offering finger licking good taste and consistent quality

Nirula’s have penetrated into the market successfully. Some of their products from their long

list of offerings are Indian items like Kebab meals , Mini meals , Thalis of various options to

choose from ,Sandwiches , foot longs , pizzas, burgers , cakes- pastry , beverages etc.

Market Share

India’s pioneering quick serve restaurant Nirula’s have a market share of 9% in the foods and

beverage industry of India.

Competitive environment

With the quick increase in disposable income of Indians the opportunities for the player’s in

this Industry is endless. But the entry of foreign players like Mc.Donalds, KFC, Pizza Hut

etc. and growing number of domestic players in the industry Nirula’s face a high threat from

the competition. All the quick serving restaurants , cafes , and Indian snacks and mithai shops

are traditional threats to Nirula’s. The major threats faced by the company in India are from

Haldiram, Bikanerwala , McDonalds , Dominos , CCD , Local restaurants etc. The

company’s strength lies primarily in

1. High brand awareness in the NCR region

2. High quality image

3. Excellent quality and consistency

4. Significant market share

Production facilities

It includes confectionaries ,bakeries ,cheese plant , ice cream plant , food processing unit and

hot kitchen.

Cafe Coffee Day

Who are they?

In the year of 1996 the first outlet of Café coffee day was opened in Bangalore. Cafe coffee

day is the pioneer of the café culture in India and first to launch Coffee bar concept in India.

With the mission of Creating a better touch point for brands to connect with their audience

CCD has captured its market successfully. With presence in over 200 towns and 1640 stores

across the country CCD is a major entity in the quick serving food and beverages industry

and the fastest growing café in India.

Offerings

A smart, simple space that the young and young at heart could call their own for a while, sit

down, talk and listen to conversations, hold short meetings or even have a lot of good fun - all

over steaming cups of coffee. In two different arrays CCD offers a range of quick serve foods

and hot, steamy , rejuvenating beverages. Foods like sandwich , sweet treats , deserts ,

sundaes , cake away and among beverages hot coffee , cold coffee , chocoholicas , frosteas ,

hot teas , quenchers are major offerings they made at their outlets.

Market Share

With annual revenue of 1000cr and with 1640 stores across the country it has a market share

of 35% in the hot beverages and food segment in India.

Major Competitors

Though Cafe Coffee day is the pioneer of

the concept of coffee bar in India , with

increasing number of players in the Fast

food and hot beverages industry Cafe

coffee day faces major threats from

Barista lavazza , Tea junction , Starbucks

(global competitor). Cafe coffee day also

faces indirect competition from

Haldiram’s , Bikanerwala and McDonalds.

Haldirams

Haldiram’s began as a tiny shop in Bikaner. In 1982 it set up its first shop in Delhi. USA was

the first international market Haldiram’s started exporting to in the year of 1993.Started with

15 products all of which were savouries , they have grown to a $4million brand. And

presently their existence is not only prominent in India but also in USA, UK, Middle east.

Offerings

Haldiram’s came to stand for a food company that is synonymous with taste , hygiene ,

innovation. Their key product variants are Namkeens , sweets , sherbets , pani puri , royal

temptations , minute khana , chips , whoopies and bhujia.

Market Share

Presently the company has a market share of 20% in organized market and 8% market share

overall with a turnover of 30million.A competitive diagram of market share was published by

Nielsen in 2011.

Major Competitors

Major competition is faced from

bikanerwala , unorganized players

, Frito lays & Pepsi foods ,

evergreen’s , Britania etc.

Market share

BaristaMinerva Coffee ShopCafé coffee dayGloria jeansBeyond coffee

Data taken from economic times (2012)

The major strengths are

1. Quality

2. Research development

3. Man power

4. Pricing

5. Latest technology

6. Trust of customers

Beside these major domestic players some more important entities in this segments are

Amul’s restaurant , Bikanerwala , Wow momo , Barbeque nation , vadilal etc.

INTERNATIONAL PLAYERS

Dunkin Donuts

Dunkin Donuts is an American global doughnut company and a coffeehouse chain. It was

founded in the year 1950 by William Rosenberg. With 11000 restaurants spread across 33

different countries it is one of the largest coffee and baked goods chain in the world. For the

year 2013 the franchisee business reported total sales of $9.3 billion. During the full fiscal

year, net income rose 36% to $146.9 million from $108.3 million and revenues increased 8%

to $713.8 million from $658.2 million. U.S. same-store sales rose 3.4% at Dunkin’ Donuts

and 0.8% at Baskin Robbins.

Dunkin brands is home to two of the world’s most recognized and loved brands.

Dunkin Donuts: World’s favourite every day, all day stop for coffee and baked goods

and the world’s leading baked goods and coffee chain.

Baskin Robbins: The world’s largest chain of ice cream speciality shops.

There are nearly 11000 Dunkin Donuts’ restaurants in 33 countries and 7300 Baskin Robbins

retail shops in nearly 50 countries.

Dominos Pizza

Domino's Pizza is an American restaurant chain and international franchise pizza delivery

corporation. It is the largest pizza delivery chain worldwide with more than 10,000 corporate

and franchised stores in 70 countries. Having started in 1960, in 1998, after 38 years of

ownership, Domino's Pizza founder Tom Monaghan announced his retirement, sold 93

percent of the company to Bain Capital, Inc. for about $1 billion. In the year 2013 its

combined revenue is $1.8 billion.

Jubilant Foodworks

Jubilant Foodworks and its subsidiary is the master franchisee of Dominos’ Brand in India.

The company is India’s largest and fastest growing food service company with a network of

772 Domino’s Pizza restaurants (as of 6th August, 2014). The Company is the market leader

in the organized pizza market with a 67% market share in India (as per Euro monitor report

2013)

The Company launched Dunkin’ Donuts in India in April 2012 in Delhi. The Company has

34 Dunkin’ Donuts restaurants in India (as of 6th August, 2014).With the launch of Dunkin’

Donuts in India, the company is now well poised to address two distinct non-competing

segments of the Food Service Industry in India, namely the home delivery of Pizza’s market

and the all day part food and beverage market.

Total revenue in Q4FY14 stood at Rs 4,337.3 million and Rs 17,235.0 million in FY14. The

Profit after Tax in Q4 FY14 stood at Rs 249.5 million and Rs 1,258.0 million in FY14.

Burger King

Burger King, often abbreviated as BK, and founded in 1953, is a global chain of hamburger

fast food restaurants headquartered in US. In late 2010, 3G Capital of Brazil acquired a

majority stake in BK in a deal valued at US$3.26 billion.

BURGER KING is the second largest fast food hamburger chain in the world. It operates in

over 13,000 locations serving more than 11 million guests daily in 91 countries and territories

worldwide. Approximately 99 percent of Burger King restaurants are owned and operated by

independent franchisees, many of them family-owned operations that have been in business

for decades.

Burger King Worldwide, Inc. had revenues for the full year 2013 of $1.1B USD. This was -

41.7% below the previous year's results. Adjusted EBITDA increased 10.0% on an organic

basis to $665.6 million. With 670 new restaurants added globally Burger King is the second

largest chain of hamburger fast food restaurants in terms of global locations, behind industry

bellwether McDonald's (32,400 locations); it is the fourth largest fast food restaurant chain

overall after Yum! Brands (parent of KFC, Taco Bell and Pizza Hut totalling 37,000

locations), McDonald's and Subway (32,000 locations).

In November 2013, Burger King Worldwide, Inc. and Everstone Group, a leading private

equity and real estate firm in India and South East Asia, announced the establishment of a

joint venture to develop the BURGER KING brand presence in India.  Under the terms of the

partnership, the joint venture has signed a long-term master franchise and development

agreement which includes sub-franchise rights for all of India.

Papa John’s

Papa John’s pizza, founded in 1983, is the fourth largest take-out and delivery pizza

restaurant based out of United States. As of December 29, 2013, it operated 4,428 Papa

John’s restaurants consisting of 723 company-owned and 3,705 franchised restaurants in 50

states of the United States and 35 countries.

In FY 2013, Papa John's International Inc. earned a consolidated revenue of $1.4 billion a

7.2% increase from 2012 revenues of $1.3 billion. The Company opened 132 net global

restaurants for the fourth quarter and 265 for the full year, of which 183 were International

and 82 were in North America.

Om Pizzas and Eats is the Indian franchisee of Papa John’s products. According to latest

development as of December 2013, the family of Vinod Mittal, the former managing director

of the erstwhile Ispat Industries, is poised to enter India's food and beverages industry by

buying a majority holding in the franchisee Om Pizzas and Eats from TVS Capital which

controls more than 80% share in Om Pizzas.

McDonalds International

Established in the year 1948 by Dick and Mac McDonald it is now the leading global

foodservice retailer with more than 32,000 local restaurants which serve more than 58 million

people in more than 130 countries everyday.it employs a total global force of around 1.9

million people. 70 percent of restaurants worldwide are owned and operated independently.

Offerings

Burgers (chicken,ham,veg) ,French fries ,drinks(nonalcoholic) ,shakes ,desserts

McDonald India

McDonald's entered India in 1996.India became the 95th country to host a McDonald.It is

managed jointly by two entities in India .One being Connaught Plaza Restaurants Pvt. Ltd

manages the Northern and Eastern Region .it is owned by Vikram Bakshi. Smita Jatia under

Hardcastle Restaurants Pvt. Ltd. in the Western and Southern Region.

Network

McDonald’s has 300 restaurants operating in India serving over 5,00,000 customers’

everyday and has completed more than 10 years of unparalleled in the country.There are

around 10,000 employees currently employed directly with McDonald's restaurants across

India.

Yum Foods

It has a total revenue of 13,084 million dollars. It employs a global workforce of around 1.5

million people.

1. Pizza hut

Founded in 1958 Pizza Hut is an American restaurant chain and international franchise, it is

headquartered in Wichita, Kansas and also a subsidiary of Yum! Brands, Inc.

In India Pizza Hut has 367 numbers of outlets.

Products : Pizza and side dishes

2.KFC

Founded in 1938. KFC or Kentucky Fried Chicken) is a fast food restaurant chain and is

headquartered in Kentucky, in the United States. It is the world's second largest restaurant

chain (as measured by sales) after McDonald's, with 18,875 outlets in 118 countries.In

India ,KFC has 361 outlets.

Products: Fried chicken and side items

2. Taco Bell

It is an American chain of fast-food restaurants headquartered in California.They serve a

variety of foods including tacos, burritos, nachos, other specialty items, and a variety of value

items. Taco Bell serves more than 2 billion customers each year in more than 6,500

restaurants. In India Taco Bell has just 5 outlets.

Subway

Founded in 1965 , Subway is an American fast food restaurant franchise that is owned and

operated by Doctor's Associates, Inc. Subway is one of the fastest growing franchises in the

world, with 42,252 restaurants in 107 countries . Subway entered India in 2001 in New Delhi

and has swiftly grown its operations to 403 operating restaurants in 68 cities across India.

Products

Submarine sandwiches (subs) and salads.

Starbucks

Founded in 1971 by Jerry Baldwin ,Gordon Bowker and Zev Siegl Starbucks Corporation,

was founded by is an American global coffee company and coffeehouse chain based in

Washington. Starbucks is the largest coffeehouse company in the world, with 23,305 stores in

65 countries.it has a total revenue of US$ 14.89 billion.

Products

Coffee , tea ,pastries ,Frappuccino beverages.