With over 1,500 stores, Domino's sells more pizza in India than anywhere else in the world, barring the US. Domino's growth is just one example of how the demand for quick service restaurants (QSR) is peaking in India. In the next three years, the QSR market is pegged to reach Rs 827.63 billion because the model has shifted from an affordable format to comfort food. And this transition in consumer perception has enhanced the addressable market in the industry.
Creating a Delicious Journey: The average Indian eats out 6 to 8 times a month. In other countries, it is 30 to 45 times. The numbers are evidence that there is a lot of headroom for growth for a QSR brand in India. Yet, the segment is dominated by established international brands, which contribute about 53 percent of the total revenue and make up 44 percent of the market in outlet counts. The pie’s remaining portion is a mixed bag of home-grown fast-food restaurants, takeaways, and cloud kitchens. To say the heterogeneous market is competitive and faces a litany of challenges is an understatement. That aside, one can build a successful QSR brand in India with a deep understanding of a few key requirements.
Localized Menu: The main ingredient of any QSR is the menu. While the recipe for QSR success beyond the borders of India has been standardization, here, the menu must be tailored to hyperlocal tastes. A brand can scale up only when they bet on the right products that suit the consumer’s palate. Food habits, cultural nuances, and religious beliefs must be taken into account while curating product offerings. It is why even well-known QSRs like McDonald's customize their menu to Indian tastes. It pays to localize. For example, they have widened the number of vegetarian dishes offered. Although it is crucial to tailor to tastes, there is sufficient scope to experiment with combinations. A good practice is to run a battery of taste tests with a group of customers, take feedback, and fine-tune the dishes before launch.
Reasonable Rates: More than 50 percent of QSR outlets in the country are concentrated in mega and mini-metros. This gives a new QSR brand a lot of leeway to capitalize on smaller cities. However, Indian consumers, especially in tier II and III cities and beyond, are predominantly cost-conscious. Therefore, the next essential ingredient to building a successful QSR is price. Product rates need to be as per the demographics. Moreover, the prices have to be more competitive than an established brand to attract footfall. Adding combos and value meals is a good rule of thumb. To consumers, they offer a discounted price. For businesses, they increase the average ticket size.
Digital First: The success of a QSR brand hinged on real estate for a long time. The location made a material difference in footfall. Today, Indians are more digitally savvy. Add in the aftermath of COVID, and they have a deeper preference for deliveries and takeaways. So, for a QSR brand to succeed in the current era, investing in technology is pivotal. A business that does not will find itself lagging. From integrating with third-party delivery aggregators to activating voice ordering, from mobile payments to social media presence, any technology that improves customer experience and streamlines operations is beneficial. When considering which technology to invest in, think within the golden triangle: value, speed, and convenience for the customer.
Skilled Staff: One of the moving parts of building a QSR brand is having great staff in the kitchen and behind the counter. The industry is labor-intensive, has a dearth of trained manpower, and comes with an extremely high attrition rate of 35-40 percent. The staffing problem can create havoc for an otherwise profitable QSR. So, to thrive, a brand must have a training program that prepares workers to be courteous and fast and ensures a high level of service quality to consumers. In addition, to retain manpower, offer competitive salaries along with perks and benefits.
Legal Licenses: Between localized menus and trained manpower, there is a vast land filled with QSR equipment, marketing, and more. Even so, there is just one more key requirement – the five licenses. The GST registration, FSSAI food license, and health license have to be ready before the launch of the first outlet. The Police Eating House license and fire license can be acquired later, but it is recommended to have them in place to stave off any violations.
Taking a Bite of the Massive QSR Pie: The quick-service restaurant industry is a tempting prospect. The market is evolving rapidly at a 12.1 percent CAGR thanks to the consumer’s strong appetite. Suffice it to say, any business considering taking a bite of the pie will succeed as long as the sine qua non (menu, price, and staff) is in place.