Global & Local Fast Food Chains Are Feeding On India’s Insatiable Appetite

It is true that India is home to millions of hungry stomachs and often witnesses deaths due to starvation (the main driver behind the recently passed National Food Security Act). But there is another side to the Indian food story. Even as the country is trying to sort out its food issues through various government schemes and breakthroughs in agricultural & farming technology, it is also playing host to hundreds of international fast food chains who are now settling down nicely and gaining ground in the country’s cultural and food landscape.

While rapid urbanisation across the country has witnessed a burst of sorts in terms of floating and migrant population, urban spaces are also turning into impersonal pockets and succumbing to the side effects of a globalised economy. With changing lifestyle, the nouveau riche, the well-heeled and the well-travelled people are rapidly taking to the global brands that rule the fast food culture worldwide. On the other hand, the international fast food brands are also experimenting with local flavours to add more zing to their cuisine and cater better to the multi-cultured Indian society.

Consequently, taste buds at home are changing fast and India has more appetite for pizzas, burgers, fries and subs, made to suit its spice-loving palate. But the foodies here also make sure that they don’t miss out on local delicacies – be it vada pav, idli or dosa.

This strange brew of local and global is the new food reality in India, fuelling a new boom for both brands of fast food, satiating the hunger of millions and satisfying their penchant for taste. Just as Burger King, Starbucks, KFC, McDonald’s, Dominos, Au Bo Pain, US Pizza and Pizza Hut are setting up shops across major cities, their desi counterparts such as Vada Pav, Shanti Sagar, KC Das, Adiga’s, Nirula’s and the likes also remain a quintessential part of the ever- expanding food courts and eat-on-the-go chains and hotels.

In a survey conducted a couple of years ago, PricewaterhouseCoopers indicated that China and India’s economies were expanding more rapidly than the rest of the world. Even though India has developed a taste for the western food a bit late in the day (the early 1990s witnessed some resistance towards western brands), the country is now surely rolling out the red carpet. The upsurge in malls in every major Indian city has further triggered the growth as they essentially host all international fast food brands looking to expand in India.

Bolstering the PwC study, the Credit Rating Information Services of India Ltd or CRISIL – the India unit of Standard & Poor’s – has recently said that the fast food business will be worth a whopping $1.1 billion in the next three years and it is bound to grow rapidly in the near future. Interestingly, global brands hold an aggregate market share of 63% market in India.

The quantum jump in urban development, coupled with the rise in number of women professionals (mostly from nuclear families) who are working as many hours as their male counterparts or even more, has led to a significant increase in disposable income. That means fast food brands have become even more appealing to urbanites because of their snob value and convenience.

However, global brands are not the only hot items among this growing segment. Unless the brands make some considerable changes in their cuisine, they are soon expected to face tough competition from local brands, which have now branched out into franchises.

As the fast food market in countries like the US is becoming increasingly crowded, many brands have decided to expand rapidly in India. But the game has not been an easy one, despite the fact that pizzas, burgers and sandwiches account for about 80% of the domestic fast food sales. Currently, Domino’s is the fastest expanding western brand in India.

Still, the proof of the pudding is in its eating and the global fast food chains have, over a period of time, realised that ‘global’ flavours alone cannot win the Indian palette. Hence, the local flavours subtly blended with the core ones to co-exist harmoniously. In came the paneer and the masala versions, in order to attract more customers who seemed to be moving away for a while.

With inflation in India hitting about 8% over the past few months, multinational fast food outlets are finding that the customers are backing out from spending too much on a pizza or sandwich meal. As a result, the global brands are forced to come out with innovative methods to retain the customers – offering free goodies either in the form of a smaller meal for lesser price or value-added services such as ‘buy one, get one free’ that will amount to ‘greater value for money.’

During such difficult times when the economy is not forecasting too many bright days ahead, stores are out with offers that may cause a slight dent in their earnings, but that should not affect their operations overall. In a way, these are indirect benefits as cutting down on product prices does not make sense in the current scenario. But with these measures in place, the brands hope to get a breather before entering the competition with full force and hopefully, on expansion mode!