Quick service eateries in India change with the times
KFC and Pizza Hut are shrinking their store sizes to almost half as they go deep into neighbourhoods and the “tighter” outlets are designed to cater to and boost deliveries to consumers in the high-rise buildings around them.
The pandemic is prompting quick service restaurants (QSRs) to undergo major changes to their operations and strategies – from stores closer to the consumers to delivery-centric outlets.
Amit Jatia, vice-chairman of Westlife Development that operates McDonald’s business in western and southern India, said customers have taken to digital commerce in a big way during the pandemic and are looking for convenience everywhere.
“Have you heard of any QSR business that does table service? No. That is something we are redefining. The idea in the next two years is to get pretty much 100% of our restaurants converted into an experience of the future restaurant,” Jatia said. “The reason is evolution. The world is going digital. It is all driven around convenience. So, the consumer is looking for better and more convenient ways to use everything – better payment systems, more seamless, one touch ordering. Everything has to be at the drop of the hat – quick, seamless and simple.”
Last year and earlier this year, when consumers generally avoided restaurants and malls amid rising coronavirus cases, most QSR stores survived by delivering fast foods from their outlets. For example, Sapphire Foods, that operates about 500 KFC, Pizza Hut and Taco Bell chain stores in India, said its delivery business doubled to 42% in the last 18 months.
Sapphire said its overall strategy has been to drive sales through dine-in, takeaway and deliveries.
“A big positive change has happened as we have started to optimise and reduce the store size. With our focus on omni-channel, all three channels (dine-in, takeaway and delivery) come into play and we can drive the same revenue from a much tighter format of stores,” said Sanjay Purohit, group CEO of Sapphire Foods.
Purohit said three years ago KFC’s average store sizes were 2,700 sq ft but today Sapphire Foods is opening stores of 1,400-1,500 sq ft. Similarly, the company is currently reducing the sizes of many of the new Pizza Hut outlets by half to about 1,200 sq ft.
Sources said KFC and Pizza Hut plan to roll out stores every three kilometres. Purohit declined to comment on expansion plans citing a regulatory filing for an initial public offering.
Domino’s Pizza has a similar strategy. “Domino’s has already opened 1,450 stores and mostly in prime locations,” said a source.
“So, they are now opening stores in locations that are not really prime. They are going closer to the customers in neighbourhoods.” Domino’s did not respond to an email seeking comment.
In the catchment area of Noida’s Sectors 74, 75 and 76, Domino’s has opened four outlets within a few kilometres of each other.