india qsr report

India - Fast Food 0102 - 2230 - 2011

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MarketLine Industry Profile

Fast Food in India February 2011

Reference Code: 0102-2230

Publication Date: February 2011

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India - Fast Food 0102 - 2230 - 2011


EXECUTIVE SUMMARY

Market value The Indian fast food market grew by 12.8% in 2011 to reach a value of $11,326.8 million.

Market value forecast In 2016, the Indian fast food market is forecast to have a value of $18,567.7 million, an increase of 63.9% since 2011.

Market volume The Indian fast food market grew by 7.5% in 2011 to reach a volume of 58,752.6 million Transactions.

Market volume forecast In 2016, the Indian fast food market is forecast to have a volume of 81,036.6 million Transactions, an increase of 37.9%

since 2011.

Category segmentation Street and mobile vendors is the largest segment of the fast food market in India, accounting for 53.6% of the market's

total value.

Geography segmentation India accounts for 11.5% of the Asia-Pacific fast food market value.

Market rivalry For the fast food market, the main source of buyer power is the lack of switching costs: within a given price range, a

consumer's choice of fast food provider is purely a matter of personal taste, and can vary from one day to the next.

India - Fast Food 0102 - 2230 - 2011


TABLE OF CONTENTS

Executive Summary ................................................................................................................................................ 2

Market value ....................................................................................................................................................... 2

Market value forecast .......................................................................................................................................... 2

Market volume .................................................................................................................................................... 2

Market volume forecast ....................................................................................................................................... 2

Category segmentation ....................................................................................................................................... 2

Geography segmentation .................................................................................................................................... 2

Market rivalry ...................................................................................................................................................... 2

Market Overview .................................................................................................................................................... 7

Market definition ................................................................................................................................................. 7

Market analysis................................................................................................................................................... 7

Market Data ........................................................................................................................................................... 8

Market value ....................................................................................................................................................... 8

Market volume .................................................................................................................................................... 9

Market Segmentation ............................................................................................................................................ 10

Category segmentation ......................................................................................................................................10

Geography segmentation ...................................................................................................................................11

Market Outlook ..................................................................................................................................................... 12

Market value forecast .........................................................................................................................................12

Market volume forecast ......................................................................................................................................13

Five Forces Analysis............................................................................................................................................. 14

Summary ...........................................................................................................................................................14

Buyer power ......................................................................................................................................................15

Supplier power ..................................................................................................................................................16

New entrants .....................................................................................................................................................17

Threat of substitutes ..........................................................................................................................................18

Degree of rivalry ................................................................................................................................................19

Leading Companies .............................................................................................................................................. 20

Domino's Pizza, Inc ...........................................................................................................................................20

McDonald's .......................................................................................................................................................23

Nirulas Corner House Ltd ...................................................................................................................................26

Yum! Brands .....................................................................................................................................................27

India - Fast Food 0102 - 2230 - 2011


Macroeconomic Indicators .................................................................................................................................... 30

Country Data .....................................................................................................................................................30

Appendix .............................................................................................................................................................. 32

Methodology ......................................................................................................................................................32

Industry associations .........................................................................................................................................33

Related MarketLine research .............................................................................................................................33

India - Fast Food 0102 - 2230 - 2011


LIST OF TABLES

Table 1: India fast food market value: $ million, 2007–11(e) ..................................................................................... 8

Table 2: India fast food market volume: million Transactions, 2007–11(e) ................................................................. 9

Table 3: India fast food market category segmentation : $ million, 2011(e).............................................................. 10

Table 4: India fast food market geography segmentation : $ million, 2011(e)........................................................... 11

Table 5: India fast food market value forecast: $ million, 2011–16 .......................................................................... 12

Table 6: India fast food market volume forecast: million Transactions, 2011–16 ...................................................... 13

Table 7: Domino's Pizza, Inc: key facts.................................................................................................................. 20

Table 8: Domino's Pizza, Inc: key financials ($) ..................................................................................................... 21

Table 9: Domino's Pizza, Inc: key financial ratios ................................................................................................... 21

Table 10: McDonald's: key facts ............................................................................................................................ 23

Table 11: McDonald's: key financials ($) ................................................................................................................ 24

Table 12: McDonald's: key financial ratios ............................................................................................................. 24

Table 13: Nirulas Corner House Ltd: key facts ....................................................................................................... 26

Table 14: Yum! Brands: key facts .......................................................................................................................... 27

Table 15: Yum! Brands: key financials ($) .............................................................................................................. 28

Table 16: Yum! Brands: key financial ratios ........................................................................................................... 28

Table 17: India size of population (million), 2007–11 .............................................................................................. 30

Table 18: India gdp (constant 2000 prices, $ billion), 2007–11................................................................................ 30

Table 19: India gdp (current prices, $ billion), 2007–11 .......................................................................................... 30

Table 20: India inflation, 2007–11.......................................................................................................................... 31

Table 21: India consumer price index (absolute), 2007–11 ..................................................................................... 31

Table 22: India exchange rate, 2007–11 ................................................................................................................ 31

India - Fast Food 0102 - 2230 - 2011


LIST OF FIGURES

Figure 1: India fast food market value: $ million, 2007–11(e) .................................................................................... 8

Figure 2: India fast food market volume: million Transactions, 2007–11(e)................................................................ 9

Figure 3: India fast food market category segmentation : % share, by value, 2011(e) .............................................. 10

Figure 4: India fast food market geography segmentation : % share, by value, 2011(e) ........................................... 11

Figure 5: India fast food market value forecast: $ million, 2011–16 ......................................................................... 12

Figure 6: India fast food market volume forecast: million Transactions, 2011–16 ..................................................... 13

Figure 7: Forces driving competition in the fast food market in India, 2011 .............................................................. 14

Figure 8: Drivers of buyer power in the fast food market in India, 2011 ................................................................... 15

Figure 9: Drivers of supplier power in the fast food market in India, 2011 ................................................................ 16

Figure 10: Factors influencing the likelihood of new entrants in the fast food market in India, 2011 .......................... 17

Figure 11: Factors influencing the threat of substitutes in the fast food market in India, 2011 ................................... 18

Figure 12: Drivers of degree of rivalry in the fast food market in India, 2011 ............................................................ 19

Figure 13: Domino's Pizza, Inc: revenues & profitability.......................................................................................... 22

Figure 14: Domino's Pizza, Inc: assets & liabilities ................................................................................................. 22

Figure 15: McDonald's: revenues & profitability ...................................................................................................... 25

Figure 16: McDonald's: assets & liabilities ............................................................................................................. 25

Figure 17: Yum! Brands: revenues & profitability .................................................................................................... 29

Figure 18: Yum! Brands: assets & liabilities ........................................................................................................... 29

India - Fast Food 0102 - 2230 - 2011


MARKET OVERVIEW

Market definition The fast food market is defined as the sale of food and drinks for immediate consumption either on the premises or in

designated eating areas shared with other foodservice operators, or for consumption elsewhere. Datamonitor's definition

excludes sales through vending machines and is restricted to sales in specific foodservice channels (please see channel

definitions below). All market values are given in Operator Buying Prices, that is the amount spent by foodservice

operators on the food and drink that they serve and not the amount the consumers spend on food and drinks (Operator

Selling Prices - OSPs) in these channels. The difference is the mark up the foodservice operator adds in order to cover

their other costs and generate a profit. This therefore values the market in terms of the amount of money for which food

and drinks manufacturers are competing. All currency conversions were performed using constant 2009 average annual

exchange rates. Market volumes are classed as the total number of visits by individuals to foodservice locations that

involve the consumption of either food. Multiple purchases made during the same visit are counted as one transaction.

The purchase of drink with food in the same location in the same visit is also considered as one transaction, not two. The

market is broken down in to four segments: Quick Service Restaurants (QSR), Takeaways, Mobile & Street Vendors and

Leisure Locations. QSR's are defined as: locations where the primary function is to provide full meals but where table

service is not offered. Takeaways are defined as: establishments that provide freshly prepared food for immediate

consumption and where typically 80% or more of revenues come from consumers who take the food off the premises to

consume. Mobile & street vendors are defined as: Either individual mobile stalls or vans that offer a limited range of

freshly prepared food as well as beverages. Leisure locations are defined as: locations serving food and drinks for

immediate consumption on premises within leisure outlets (such as Cinemas, Theatres, Racecourses etc.) that the

Leisure operator owns and operates itself.

For the purposes of this report, Asia-Pacific comprises Australia, China, India, Indonesia, Japan, New Zealand,

Singapore, South Korea, Taiwan, and Thailand.

Market analysis The Indian fast food market has experienced strong, consistent growth in recent years. Strong, though decelerating,

growth is predicted to continue to the end of the forecast period.

The Indian fast food market is expected to generate total revenue of $11.3 billion in 2011, representing a compound

annual growth rate (CAGR) of 12.7% between 2007 and 2011. In comparison, the Chinese and Japanese markets will

grow with CAGRs of 15.5% and 1.3% respectively, over the same period, to reach respective values of $36.2 billion and

$32.5 billion in 2011.

Market consumption volumes are forecast to increase with a CAGR of 8.6% between 2007 and 2011, to reach a total of

58.8 billion transactions in 2011. The market's volume is expected to rise to 81 billion transactions by the end of 2016,

representing a CAGR of 6.6% for the 2011-2016 period.

The Street and Mobile Vendors segment is expected to be the market's most lucrative in 2011, with total revenues of

$6.1 billion, equivalent to 53.6% of the market's overall value. The Restaurants - QSR segment will contribute revenues

of $5.2 billion in 2011, equating to 46.2% of the market's aggregate value.

The performance of the market is forecast to decelerate, with an anticipated CAGR of 10.4% for the five-year period

2011 - 2016, which is expected to drive the market to a value of $18.6 billion by the end of 2016. Comparatively, the

Chinese and Japanese markets will grow with CAGRs of 12.7% and 4.7% respectively, over the same period, to reach

respective values of $65.7 billion and $41 billion in 2016.

India - Fast Food 0102 - 2230 - 2011


MARKET DATA

Market value The Indian fast food market grew by 12.8% in 2011 to reach a value of $11,326.8 million.

The compound annual growth rate of the market in the period 2007–11 was 12.7%.

Table 1: India fast food market value: $ million, 2007–11(e)

Year $ million Rs. million € million % Growth

2007 7,028.2 322,847.2 5,295.1

2008 7,946.8 365,045.9 5,987.2 13.1

2009 9,103.8 418,192.3 6,858.9 14.6

2010 10,041.5 461,266.1 7,565.4 10.3

2011(e) 11,326.8 520,308.2 8,533.7 12.8

CAGR: 2007–11 12.7%

SOURCE: MARKETLINE M A R K E T L I N E

Figure 1: India fast food market value: $ million, 2007–11(e)


India - Fast Food 0102 - 2230 - 2011


Market volume The Indian fast food market grew by 7.5% in 2011 to reach a volume of 58,752.6 million Transactions.

The compound annual growth rate of the market in the period 2007–11 was 8.6%.

Table 2: India fast food market volume: million Transactions, 2007–11(e)

Year million Transactions % Growth

2007 42,171.1

2008 47,099.5 11.7

2009 52,047.5 10.5

2010 54,632.1 5.0

2011(e) 58,752.6 7.5

CAGR: 2007–11 8.6%


Figure 2: India fast food market volume: million Transactions, 2007–11(e)


India - Fast Food 0102 - 2230 - 2011


MARKET SEGMENTATION

Category segmentation Street and mobile vendors is the largest segment of the fast food market in India, accounting for 53.6% of the market's

total value.

The restaurants - qsr segment accounts for a further 46.2% of the market.

Table 3: India fast food market category segmentation : $ million, 2011(e)

Category 2011 %

Street and mobile vendors 6,073.6 53.6%

Restaurants - QSR 5,233.3 46.2%

Takeaways 11.1 0.1%

Leisure 8.8 0.1%

Total 11,326.8 100%


Figure 3: India fast food market category segmentation : % share, by value, 2011(e)


India - Fast Food 0102 - 2230 - 2011


Geography segmentation India accounts for 11.5% of the Asia-Pacific fast food market value.

China accounts for a further 36.7% of the Asia-Pacific market.

Table 4: India fast food market geography segmentation : $ million, 2011(e)

Geography 2011 %

China 36,177.0 36.7

Japan 32,482.9 33.0

India 11,326.8 11.5

South Korea 3,603.8 3.7

Rest of Asia-Pacific 14,983.3 15.2

Total 98,573.8 100%


Figure 4: India fast food market geography segmentation : % share, by value, 2011(e)


India - Fast Food 0102 - 2230 - 2011


MARKET OUTLOOK

Market value forecast In 2016, the Indian fast food market is forecast to have a value of $18,567.7 million, an increase of 63.9% since 2011.

The compound annual growth rate of the market in the period 2011–16 is predicted to be 10.4%.

Table 5: India fast food market value forecast: $ million, 2011–16

Year $ million Rs. million € million % Growth

2011 11,326.8 520,308.2 8,533.7 12.8%

2012 12,732.1 584,862.6 9,592.5 12.4%

2013 14,129.4 649,051.1 10,645.3 11.0%

2014 15,568.8 715,171.6 11,729.7 10.2%

2015 17,031.6 782,363.8 12,831.8 9.4%

2016 18,567.7 852,929.0 13,989.1 9.0%

CAGR: 2011–16 10.4%


Figure 5: India fast food market value forecast: $ million, 2011–16


India - Fast Food 0102 - 2230 - 2011


Market volume forecast In 2016, the Indian fast food market is forecast to have a volume of 81,036.6 million Transactions, an increase of 37.9%

since 2011.

The compound annual growth rate of the market in the period 2011–16 is predicted to be 6.6%.

Table 6: India fast food market volume forecast: million Transactions, 2011–16

Year million Transactions % Growth

2011 58,752.6 7.5%

2012 63,838.0 8.7%

2013 68,258.8 6.9%

2014 72,585.0 6.3%

2015 76,827.4 5.8%

2016 81,036.6 5.5%

CAGR: 2011–16 6.6%


Figure 6: India fast food market volume forecast: million Transactions, 2011–16


India - Fast Food 0102 - 2230 - 2011


FIVE FORCES ANALYSIS

The fast food market will be analyzed taking fast food operators as players. The key buyers will be taken as consumers,

and food ingredients providers and workforce providers as the key suppliers.

Summary

Figure 7: Forces driving competition in the fast food market in India, 2011


For the fast food market, the main source of buyer power is the lack of switching costs: within a given price range, a

consumer's choice of fast food provider is purely a matter of personal taste, and can vary from one day to the next.

It is vital to maintain reliable upstream networks offering food of marketable quality, and in a generally low margin – high

volume business, keeping food costs down is also important. Entry to the global fast food market does not require large

capital outlay; setting up a single, independent fast food outlet is within the means of many individuals. Substitutes for

fast food include other forms of profit foodservice, and also food retail (ready meals or ingredients for home cooking).

Many forms of fast food have attracted criticism for being unhealthy, while food retail offers consumers greater freedom

to control their diet. Particular segments of the fast food market can be concentrated - for example, the burger segment

is dominated by Burger King and McDonalds - the market as a whole is fairly fragmented, with many independents as

well as large chains, thus increasing rivalry.

India - Fast Food 0102 - 2230 - 2011


Buyer power

Figure 8: Drivers of buyer power in the fast food market in India, 2011


Economic malaise resulting from the financial crisis has consequently strengthened buyer power as industry players aim

to both attract and secure price sensitive consumers. However, the main source of buyer power is the lack of switching

costs: within a given price range, a consumer's choice of fast food provider is purely a matter of personal taste, and can

vary from one day to the next. There is also likely to be relatively high price elasticity of demand, because fast food is not

strictly essential to consumers. High transaction volumes, however, means that the impact of any one consumer on

revenues is usually small. Despite a downturn in consumer expenditure and signs of saturation, investment in the fast

food industry remains high, with new stores opening across the sector. Investment in brand building has driven customer

loyalty, while the sheer convenience of fast food makes it more important to the consumer than a simple source of food.

Buyer power is assessed to be moderate overall.

India - Fast Food 0102 - 2230 - 2011


Supplier power

Figure 9: Drivers of supplier power in the fast food market in India, 2011


One key input for players in the fast food market is of course food. It is vital to maintain reliable upstream networks

offering food of marketable quality, and in a generally low margin – high volume business, keeping food costs down is

pivotal. Suppliers may also have customers in the cost foodservice sector, or other segments of the profit foodservice

sector. This decreases their dependence on fast food companies, strengthening supplier power. Many of the foodservice

suppliers are large companies, and the high number of businesses they serve means that they themselves are under

less pressure to keep their prices down, and therefore exert significant negotiating power, thus enhancing at the same

time supplier power. The fast food business is labor intensive, and wages form a significant proportion of operating costs:

around 25-30%. Thus, as a whole minimum wage legislation in China goes some way towards strengthening employees,

considered here as suppliers of labor. Overall, supplier power is assessed as moderate.

India - Fast Food 0102 - 2230 - 2011


New entrants

Figure 10: Factors influencing the likelihood of new entrants in the fast food market in India, 2011


Entry to the Indian fast food market does not require large capital outlay; setting up a single, independent fast food outlet

is within the means of many individuals in India. Larger companies can reduce the cost of expanding into India by

running some or all of their outlets as franchises. Franchisees run the majority of McDonald's outlets in India. They bear

the costs of equipping outlets at sites owned or leased by the franchiser, and pay a fee for the franchise itself, as well as

rents and service charges. (The franchisee enjoys something of the advantages of running their own business, while

benefiting from the franchiser's brand strength, expertise, and scale economies.) Negligible switching costs for

consumers mean that they are free to transfer their custom to a new player. However, market entrants face several other

barriers. Retaliation by existing players, such as the launch of a price war, is a possibility, especially where a new entrant

moves into a more concentrated segment. The brand strength of the major chains is considerable, which may negate

much of the effect of low switching costs. Overall, there is a strong likelihood of new entrants.

India - Fast Food 0102 - 2230 - 2011


Threat of substitutes

Figure 11: Factors influencing the threat of substitutes in the fast food market in India, 2011


Substitutes for fast food include other forms of profit foodservice, and also food retail (ready meals or ingredients for

home cooking). The generic product of fast food is mainly considered as convenience. Convenience and availability are

the main drivers for choosing fast food coupled with a focus on value. As the market consists of many differentiated fast

food companies, customers have the option of choosing the best value products. Frozen re-heatable prepared food

offers strong competition against fast food. This substitute product is convenient and cheap and offers quality meals on a

scale which matches the fast food industry. Many forms of fast food have attracted criticism for being unhealthy, while

food retail offers consumers greater freedom to control their diet. For the calorie conscious consumer, the main

substitute is preparing a home cooked meal where the switching cost is the opportunity cost of time spent in the kitchen.

Overall, the threat of substitutes is assessed as moderate.

India - Fast Food 0102 - 2230 - 2011


Degree of rivalry

Figure 12: Drivers of degree of rivalry in the fast food market in India, 2011


While particular segments of the fast food market can be concentrated - for example, the burger segment is dominated

by Burger King and McDonalds - the market as a whole is fairly fragmented, with many independents as well as large

chains. Rivalry is somewhat mitigated with the absence of high exit costs coupled with the ease with which capacity can

be increased; chains can increase the number of outlets (the prevalence of franchising is a factor here) whilst

independents can take on more staff or extend opening hours. As players of all sizes in this market are highly focused on

fast food, profitability relies on low margin-high turnover operations. Price competition is thus prevalent amongst industry

players, especially between value meals. In particular, the value meals range are a reaction to shifting consumer trends

and a larger focus on competition amongst industry players. This form of price dumping has become particularly

prevalent as a result of a fragile wider economic environment. Brand power, however, forms the greatest competition in

the fast food market, for example McDonalds spends hundreds of millions of dollars on global advertising. Overall, rivalry

is assessed as moderate.

India - Fast Food 0102 - 2230 - 2011


LEADING COMPANIES

Domino's Pizza, Inc

Table 7: Domino's Pizza, Inc: key facts

Head office: 30 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106, USA

Telephone: 1 734 930 3030

Fax: 1 734 930 4346

Local office:

Domino's pizza India Limited West Regional Office Office No 6 & 7, Ground Floor Timmy Arcade, Makwana Road Marol Naka, Andheri (East) Mumbai - 400059 IND

Website: www.dominos.com

Financial year-end: December

Ticker: DPZ

Stock exchange: New York

SOURCE: COMPANY WEBSITE M A R K E T L I N E

Domino's is one of the world's leading pizza delivery companies. The company operates through a network of 8,999

company-owned and franchise stores, located in all 50 states of the US and across 60 countries worldwide. The

company operates 16 regional dough manufacturing and supply chain centers, one thin crust manufacturing center and

one vegetable processing supply chain center in the US and six dough manufacturing and supply chain centers outside

the US.

Domino's operates in three business segments: domestic stores, domestic supply chain, and international.

The domestic stores segment is comprised of 4,461 franchise stores and 466 company-owned stores. The domestic

franchises are operated by entrepreneurs who own and operate an average of three to four stores. Six of the company's

domestic franchisees operate more than 50 stores, including its largest domestic franchisee, which operates 143 stores.

The principal sources of revenues from domestic store operations are company-owned store sales and royalty payments

based on retail sales by its franchisees. The domestic company-owned store operations are divided into 11 geographic

areas located throughout the US, while its domestic franchise operations are divided into four regions.

The domestic supply chain segment is comprised of dough manufacturing and supply chain centers that manufacture

fresh dough on a daily basis and purchase, receive, store and deliver quality pizza-related food products and

complementary side items to all of the company-owned stores and over 99% of its domestic franchise stores. This

segment operates 16 regional dough manufacturing and supply chain centers. Each regional dough manufacturing and

supply chain center serves approximately 300 stores.

The international segment oversees the company's network of 4,072 international franchise stores in more than 60

countries. It also manufactures dough and distributes food and supplies in a limited number of international markets. The

company has 589 franchise stores in Mexico, 562 franchise stores in the UK, 411 franchise stores in Australia, 329

franchise stores in South Korea, 319 franchise stores in Canada, 296 franchise stores in India and over 100 franchise

stores in each of Japan, Turkey, Taiwan and France. The principal sources of revenues from its international operations

are royalty payments generated by retail sales from franchise stores and sales of food and supplies to franchisees in

certain markets.

India - Fast Food 0102 - 2230 - 2011


Key Metrics

The company recorded revenues of $1,570 million in the fiscal year ending December 2010, an increase of 11.8%

compared to fiscal 2009. Its net income was $88 million in fiscal 2010, compared to a net income of $80 million in the

preceding year.

Table 8: Domino's Pizza, Inc: key financials ($)

$ million 2006 2007 2008 2009 2010

Revenues 1,437.3 1,462.9 1,425.1 1,404.1 1,570.0

Net income (loss) 106.2 37.9 54.0 79.7 87.9

Total assets 380.2 473.2 463.8 453.8 460.0

Total liabilities 945.1 1,923.3 1,888.4 1,774.8 1,671.6

Employees 13,300 12,500 10,500 10,200 10,900

SOURCE: COMPANY FILINGS M A R K E T L I N E

Table 9: Domino's Pizza, Inc: key financial ratios

Ratio 2006 2007 2008 2009 2010

Profit margin 7.4% 2.6% 3.8% 5.7% 5.6%

Revenue growth (4.9%) 1.8% (2.6%) (1.5%) 11.8%

Asset growth (17.5%) 24.5% (2.0%) (2.2%) 1.4%

Liabilities growth (2.8%) 103.5% (1.8%) (6.0%) (5.8%)

Debt/asset ratio 248.6% 406.4% 407.2% 391.1% 363.4%

Return on assets 25.3% 8.9% 11.5% 17.4% 19.2%

Revenue per employee $108,069 $117,032 $135,724 $137,657 $144,037

Profit per employee $7,987 $3,032 $5,143 $7,814 $8,064


India - Fast Food 0102 - 2230 - 2011


Figure 13: Domino's Pizza, Inc: revenues & profitability


Figure 14: Domino's Pizza, Inc: assets & liabilities


India - Fast Food 0102 - 2230 - 2011


McDonald's

Table 10: McDonald's: key facts

Head office: One McDonald's Plaza , Oak Brook , Illinois 60523 , USA

Telephone: 1 630 623 3000

Fax: 1 630 623 5700

Website: www.mcdonalds.com


Ticker: MCD



McDonald's Corporation (McDonald's or 'the company') franchises and operates McDonald's branded fast food

restaurants all over the world. The company is one of the world's largest food service retailing chain, preparing and

serving a range of food products and beverages. As of 2010, the company operated 32,737 restaurants in 117 countries;

out of which 6,399 were company-operated and 26,338 were franchised. The franchise agreements include conventional

franchise arrangements as well as developmental license agreements and foreign affiliates. Of the total franchises, the

company manages 19,279 conventional franchisees, 3,485 developmental licensees and 3,574 affiliates.

Under the conventional franchise arrangement, McDonald's owns or secure leases for the land and building while

franchisees provide a portion of initial capital outlay in the form of equipment, signs, seating, decor and maintenance.

These franchisees, in turn, contribute to the company's revenue through the payment of rent and royalties based upon

the percentage of sales. On an average, the conventional franchise arrangements extend for a period of 20 years and

represents 70% of total franchised restaurants of the company.

Under the developmental license arrangement, licensees provide capital for the entire business, including the real estate

interest. For this type of franchises, McDonald's receives an initial fees as well as the royalty based on a percent of

sales. The company's largest developmental license arrangement operates more than 1,750 restaurants across 18

countries in Latin American and the Caribbean region.

Also, the company owns equity investments in some of the foreign affiliated markets, referred to as affiliates. The

company receives a royalty based on a percent of sales in these markets. As of 2010, Japan remains the largest

affiliates market with more than 3,300 McDonald's restaurants.

The company reports its revenues based on four geographic segments: Europe, the US, APMEA (Asia/Pacific, Middle

East and Africa), and other countries and corporate. Other countries and corporate includes Canada and Latin America,

as well as corporate activities and certain investments.

McDonald's restaurants offer a standardized menu, although there may be geographic variations. McDonald's key

product offerings includes hamburgers and cheeseburgers, chicken sandwiches, French fries, wraps, chicken nuggets,

salads, desserts, sundaes, soft serve cones, pies, and cookies. It also offers beverages such as milk shakes, soft drinks,

coffee, and flavored tea. McDonald's restaurants in the US and many international markets also offer a wide range of

breakfast menu. The company's breakfast offerings include muffins, biscuits, hotcakes, and bagel sandwiches.

McDonald's markets its products under a wide range of brand names that include Big Mac, Big N' Tasty, Filet-O-Fish,

Chicken McNuggets, Mac Snack Wrap, McChicken, McMuffin, McGriddles, and McCafe among others.

India - Fast Food 0102 - 2230 - 2011


Key Metrics


compared to fiscal 2009. Its net income was $4,946 million in fiscal 2010, compared to a net income of $4,551 million in

the preceding year.

Table 11: McDonald's: key financials ($)

$ million 2006 2007 2008 2009 2010

Revenues 20,895.2 22,786.6 23,522.0 22,744.7 24,075.0

Net income (loss) 3,544.2 2,395.1 4,313.0 4,551.0 4,946.0

Total assets 28,974.5 29,391.7 28,462.0 30,224.9 31,975.0

Total liabilities 13,516.2 14,111.9 15,079.0 16,191.0 17,341.0

Employees 465,000 390,000 400,000 400,000 400,000


Table 12: McDonald's: key financial ratios

Ratio 2006 2007 2008 2009 2010

Profit margin 17.0% 10.5% 18.3% 20.0% 20.5%

Revenue growth 9.3% 9.1% 3.2% (3.3%) 5.8%

Asset growth (3.4%) 1.4% (3.2%) 6.2% 5.8%

Liabilities growth (8.9%) 4.4% 6.9% 7.4% 7.1%

Debt/asset ratio 46.6% 48.0% 53.0% 53.6% 54.2%

Return on assets 12.0% 8.2% 14.9% 15.5% 15.9%




India - Fast Food 0102 - 2230 - 2011


Figure 15: McDonald's: revenues & profitability


Figure 16: McDonald's: assets & liabilities


India - Fast Food 0102 - 2230 - 2011


Nirulas Corner House Ltd

Table 13: Nirulas Corner House Ltd: key facts

Head office: Nirulas Corner House Limited, C-135, Sector – 2, Noida201 301 (U.P.) India

Telephone: 91 120 2445260 67

Fax: 91 11 2551069

Website: www.nirula.com


Nirulas Corner House Ltd is a diversified group whose operations include business hotels, waiter service restaurants,

family style restaurants, ice-cream parlors, pastry shops and food processing plants in India. The group is present in over

75 locations across Delhi and NCR, Uttar Pradesh, Uttarakhand, Haryana, Rajasthan, Madhya Pradesh and Punjab.

The company was established as "HOTELINDIA" in 1934, at Connaught Place in New Delhi, with 12 rooms, a restaurant

and a bar license. In the 1950's, “Chinese Room” restaurant was started and espresso coffee introduced for the first time

in India.

In the 60's, two new specialty restaurants were open: La Boheme - a modern restaurant serving Hungarian food, and

Gufa an Indian specialty restaurant. In the 70s the company ventured into the fast food business with the Pastry Shop,

Snack Bar, Hot Shoppe and Ice Cream Parlour. The Potpourri restaurant with the first salad bar in India was also opened

at this time. Other locations, namely Central Kitchen and Family Style Restaurants at Vasant Vihar, Chanakya, Defence

Colony, Noida were further open in 1980s and 1990s.

Today, the Noida production facilities include the bakery, bonfectionery plant, cheese plant, ice cream plant, food

processing unit and hot kitchen.

In June 2006, Navis Capital Partners and Managing Director, Samir Kuckreja acquired the Nirula's Group of Companies.

While retaining the brand name and logo of "Nirula's", new sub-brand logos were created for Nirula's ice-creams, pastry

shop, delivery business and others.

Besides family style and casual dining restaurants, Nirula's has also more compact formats which range from between

100 to 400 sq. feet and are tailored to fit high traffic locations. These formats include express outlets, food court units

and ice cream kiosks.

The menu includes quick bites, value meals, snacks, savories, beverages and the famous Nirula's Ice Cream range, with

a focus on quick service and convenience. Nirula's new retail formats are located primarily in malls, movie multiplexes,

hypermarkets and large commercial complexes making the brand more accessible for consumers.

Key Metrics

Nirulas is a subsidiary and does release separate financial information.

India - Fast Food 0102 - 2230 - 2011


Yum! Brands

Table 14: Yum! Brands: key facts

Head office: 1441 Gardiner Lane, Louisville, Kentucky 40213, USA

Telephone: 1 502 874 8300

Website: www.yum.com


Ticker: YUM



Yum! Brand develops, operates, franchises and licenses a system of restaurants. These restaurants prepare, package,

and sell various food items. The company operates five branded restaurant concepts KFC, Pizza Hut, Taco Bell, LJS

and A&W. It operates more than 37,000 restaurants in more than 110 countries.

The company operates through six operating segments: KFC-US, Pizza Hut-US, Taco Bell-US, LJS/A&W-US, Yum

Restaurants International (YRI) and Yum Restaurants China (China). However, for financial reporting purposes, it

combined the four US operating segments into a single reporting segment (the US). The China segment includes China,

Thailand and Taiwan, and the international segment includes the remainder of its international operations.

KFC operates in 110 countries throughout the world. As of 2010, KFC had 5,055 units in the US, and 11,798 units

outside the US, including 3,244 units in China. Approximately 15% of the US units and 29% of the non-US units are

concept-owned. KFC restaurants in the US offer fried and non-fried chicken-on-the-bone products, under the names

Original Recipe, Extra Tasty Crispy and Kentucky Grilled Chicken. The restaurant's other principal items include chicken

sandwiches (including the Snacker and the Twister), KFC Famous Bowls, Colonel's Crispy Strips, chicken wings,

Popcorn Chicken and, seasonally, Chunky Chicken Pot Pies. KFC restaurants in the US also offer a variety of side

items, such as biscuits, mashed potatoes and gravy, coleslaw, corn and potato wedges, as well as desserts. While many

of these products are offered outside of the US, international menus are more focused on chicken sandwiches and

Colonel's Crispy Strips, and include side items that are suited to local preferences and tastes. Restaurant decor

throughout the world is characterized by the image of Colonel Saunders.

Pizza Hut operates in 95 countries throughout the world. As of 2010, Pizza Hut had 7,542 units in the US, and 5,890

units outside of the US. Approximately 6% of the US units and 22% of the non-US units are concept-owned. The Pizza

Hut restaurant chain specializes in the sale of ready-to-eat pizza products. The chain features sells a variety of pizzas,

which include Pan Pizza, Thin 'n Crispy, Hand Tossed, Sicilian, Stuffed Crust, Twisted Crust, Sicilian Lasagna Pizza,

Cheesy Bites Pizza, The Big New Yorker, The Insider, The Chicago Dish and 4forALL. Each type of pizza is offered with

a variety of toppings. In some restaurants, Pizza Hut also offers breadsticks, pasta, salads and sandwiches. Menu items

outside of the US are generally similar to those offered in the US, although pizza toppings are often matched to local

preferences and tastes.

Taco Bell operates in 21 countries and territories throughout the world. As of 2010, there were 5,634 Taco Bell units in

the US, and 262 units outside of the US. Approximately 22% of the US units and 1% of the non-US units are concept-

owned. Taco Bell specializes in Mexican-style food products, including various types of tacos, burritos, gorditas,

chalupas, quesadillas, salads, nachos and related items. Additionally, it offers proprietary items such as Grilled Stuft

Burritos and Border Bowls.

India - Fast Food 0102 - 2230 - 2011


LJS operates in four countries throughout the world. As of 2010, there were 964 LJS units in the US, and 31 units

outside the US. All single-brand units inside and outside of the US are operated by franchisees or licensees. As of year-

end 2010, there were 86 concept-owned multi-brand units that included the LJS concept. LJS features a variety of

seafood and chicken items, including meals featuring batter-dipped fish, chicken, shrimp, hushpuppies and portable

snack items. LJS restaurants basically feature a distinctive seaside/nautical theme.

A&W operates in nine countries throughout the world. As of 2010, there were 322 A&W units in the US, and 317 units

outside the US. As of year-end 2010, all units were operated by franchisees. A&W serves A&W draft Root Beer and its

signature A&W Root Beer floats, besides hot dogs and hamburgers.

Key Metrics


compared to fiscal 2009. Its net income was $1,158 million in fiscal 2010, compared to a net income of $1,071 million in

the preceding year.

Table 15: Yum! Brands: key financials ($)

$ million 2006 2007 2008 2009 2010

Revenues 9,561.0 10,416.0 11,304.0 10,836.0 11,343.0

Net income (loss) 824.0 909.0 964.0 1,071.0 1,158.0

Total assets 6,353.0 7,242.0 6,527.0 7,148.0 8,316.0

Total liabilities 4,916.0 6,103.0 6,635.0 6,123.0 6,647.0

Employees 53,200 48,160 49,000 50,400 52,920


Table 16: Yum! Brands: key financial ratios

Ratio 2006 2007 2008 2009 2010

Profit margin 8.6% 8.7% 8.5% 9.9% 10.2%

Revenue growth 2.3% 8.9% 8.5% (4.1%) 4.7%

Asset growth 9.6% 14.0% (9.9%) 9.5% 16.3%

Liabilities growth 13.1% 24.1% 8.7% (7.7%) 8.6%

Debt/asset ratio 77.4% 84.3% 101.7% 85.7% 79.9%

Return on assets 13.6% 13.4% 14.0% 15.7% 15.0%




India - Fast Food 0102 - 2230 - 2011


Figure 17: Yum! Brands: revenues & profitability


Figure 18: Yum! Brands: assets & liabilities


India - Fast Food 0102 - 2230 - 2011


MACROECONOMIC INDICATORS

Country Data

Table 17: India size of population (million), 2007–11

Year Population (million) % Growth

2007 1,136.6 1.5%

2008 1,153.1 1.5%

2009 1,160.8 0.7%

2010 1,176.7 1.4%

2011(e) 1,192.5 1.3%


Table 18: India gdp (constant 2000 prices, $ billion), 2007–11

Year Constant 2000 Prices, $ billion % Growth

2007 727.5 10.0%

2008 772.5 6.2%

2009 824.9 6.8%

2010 908.6 10.2%

2011(e) 980.3 7.9%


Table 19: India gdp (current prices, $ billion), 2007–11

Year Current Prices, $ billion % Growth

2007 1,083.8 28.1%

2008 1,184.7 9.3%

2009 1,260.5 6.4%

2010 1,554.5 23.3%

2011(e) 1,854.1 19.3%


India - Fast Food 0102 - 2230 - 2011


Table 20: India inflation, 2007–11

Year Inflation Rate (%)

2007 6.4%

2008 8.3%

2009 10.9%

2010 12.0%

2011(e) 10.6%


Table 21: India consumer price index (absolute), 2007–11

Year Consumer Price Index (2000 = 100)

2007 137.1

2008 148.5

2009 164.7

2010 184.4

2011(e) 203.9


Table 22: India exchange rate, 2007–11

Year Exchange rate ($/Rs.) Exchange rate (€/Rs.)

2007 41.3570 56.5898

2008 43.8145 64.1115

2009 48.8500 67.9264

2010 45.9361 60.9708

2011 45.9361 60.9708


India - Fast Food 0102 - 2230 - 2011


APPENDIX

Methodology MarketLine Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross-

checked and presented in a consistent and accessible style.

Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys and supported by

analysis from industry experts using highly complex modeling & forecasting tools, MarketLine’s in-house databases

provide the foundation for all related industry profiles

Preparatory research – We also maintain extensive in-house databases of news, analyst commentary, company

profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market

overview

Definitions – Market definitions are standardized to allow comparison from country to country. The parameters of each

definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the

market and our clients

Extensive secondary research activities ensure we are always fully up-to-date with the latest industry events and

trends

MarketLine aggregates and analyzes a number of secondary information sources, including:

- National/Governmental statistics

- International data (official international sources)

- National and International trade associations

- Broker and analyst reports

- Company Annual Reports

- Business information libraries and databases

Modeling & forecasting tools – MarketLine has developed powerful tools that allow quantitative and qualitative data to

be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can

then be refined according to specific competitive, regulatory and demand-related factors

Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date

India - Fast Food 0102 - 2230 - 2011


Industry associations

Federation of Hotel & Restaurant Associations of India

B-82, 8th Floor, Himalaya House, 23,Kasturba Gandhi Marg, New Delhi-110001, India

Tel.: 91 11 2331 8781

Fax: 91 11 2332 2645

www.fhrai.com

Related MarketLine research

Industry Profile

Fast Food in China

Fast Food in Asia-Pacific

Fast Food in the United States

Fast Food in China

Fast Food in Australia

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