By Karan Tanna, Co-Founder & CEO, Yellow Tie Hospitality Management
Headquartered in Mumbai, Yellow Tie Hospitality Management is a progressive Food & Beverages Franchise Management entity which owns exclusive Master Franchise Rights for India, of world's renowned F&B Brands.
Quick Service Restaurant (QSR) or fast food restaurants refer to those restaurants that typically serve fast food cuisine, and include a fixed menu with minimal table service. In India, the QSR segment is poised to grow exponentially owing to various factors like significantly large youth demography, shortage of time, demand for quick & economical meals, and a growing trend of experimenting with world fast foods. Furthermore, with an increase in disposable income and a fast-paced lifestyle led by most individuals, it seems that QSR outlets are not just a trend, but a necessity.
There are multi-billion dollar valued QSR chains across the world; however, India is yet to have its own global QSR chain. While still at a very nascent stage, the Indian QSR industry has shown immense potential for growth in the past couple of years. As an emerging economic superpower, it is gradually becoming the hottest market in the world in terms of QSR, and has already witnessed disruption within this segment from several established international players. Additionally, this sector has seen a gradual rise in number of domestic QSR chains that are making their presence felt across India. The immense potential within this sector has compelled many to consider the fact that Indian QSR chains may well be on the path to be renowned globally.
The Indian QSR Food Industry – A potential Market for Growth
India is a nation of diversity, thousands of cultures, millions of beliefs, and home to countless variation in cuisines and ingredients. It is only in India that food lovers will find that the palate preference changes every 100 miles. This poses a great challenge and a greater opportunity for an Indian QSR chain that can serve both staple and international cuisine.
As previously mentioned, India is home to a large youth demography, with up to 60 percent of our population being under 30 years of age. Even our Prime Minister has boasted about the power of the Indian youth on several occasions. They are on the go, time-crunched, adore western culture & food habits, and consequently, want quick & quirky food at a pocket friendly price.
When compared to megacities like Singapore, the Indian fast food segment’s share is just 10 percent. While that is a small share, it shows that this segment has immense opportunity for growth, with over 90 percent of the market untouched and ready for disruption. Several reasons like low capital investment, faster turnaround times of projects, low operational expenses, and quicker ROI are just some of the reasons why the Indian QSR market has become the fastest growing segment in the past couple of years.
Moreover, with better access to basic internet facilities, and more people migrating to urban cities, there is no question that the QSR industry is on verge of explosion in India.
Challenges Faced by Domestic Players in the Indian QSR Industry
Just like any new market, the Indian QSR segment faces some significant challenges, like having good back-end infrastructure.
For scalability, it is very important for a brand to rely on quality vendors, be it for ingredients or for well-organized logistics & supply chain partners. In the past 2 decades, entry of global QSR players in India has enabled the growth of some companies that are engaged in delivering good quality frozen and retort (packaged) food products. These ventures have also enabled a necessity of efficient supply chain management companies; however, the infrastructure is still at a very nascent stage.
For a new QSR company, it is very difficult to look for partners that consistently provide them with good quality products that could match their initial operational volume. Also, it is almost impossible for them to plan a scattered growth across the country due to non competitive logistics and warehousing rates. This not only discourages the expansion of good brands, but also kills lot of potential brands during the ideation stage.
Growing competition in market, high food costs, real estate cost, lack of skilled staff, and limited capability of establishing process driven operations are other reasons that can restrict the growth of QSRs.
How to Crack a Successful QSR Brand:
(1) Winner product: Historically, all successful QSR brands across the globe started with a winner product, something that gave them a differentiator in market. A product that is staple to palates of Indians can become a stable product in Indian market. Indian brands like ‘Wow momos’ have set a bench mark of offering a product that is convenient, and have identified how it can be staple to people of India by tweaking recipes smartly. Through such meticulous efforts, they are bound to see immense growth.
(2) Quirky and abreast of: Today’s youth get attracted to brands that have a cool quotient attached to them. They should be trendy and should speak the language of the new-age client who stays up-to-date about latest happenings in the world. We have seen many cool brands focusing on products like waffles, popcorn, etc. that have been successful in getting initial traction. Lots of Indian brands are now tying up with celebrity chefs to bring the cool quotient to their brands.
(3) Keep it simple: The Natural ice cream franchise in India has demonstrated how one can keep the recipes simple, natural, and traditional, and establish expectation of consistency that no other brand can offer. Keeping the brand focused on a consistent quality product will pay off for a brand in the long run and make it scalable and sustainable.
(4) Smart menu engineering: In a pocket-sensitive market like India, it is very important to create an eye-catching menu that is enough to attract footfalls, but comprehensive enough to push higher value products when the guest comes to your outlet. Entry level product strategy is very popular among global QSR brands as it has helped them earn significant success in consistently attracting footfall.
(5) Efficient outlet level operations: Outlet level operations should be Fool-proof, i.e. designed in a way that brands can give its guest a standardized last mile experience, with optimized efficiencies to achieve substantial scalability in the market.
(6) Be Global: Lastly, to create a successful QSR brand, the key is to have global modernized packaging of a specific cuisine that has an Indian taste. Most global QSR brands have highly shifted to this strategy to survive and scale in several markets.
Therefore, it is evident that domestic QSR brands can adopt practices akin to those followed by their international competitors in order to achieve significant growth in both national and international markets, creating an ecosystem that welcomes cultural fusion without misappropriation.