NEW DELHI/BANGALORE: Pizza
makers seem to be doing a McDonald's as they go all out to woo Indian
consumers with rock bottom prices in order to drive volumes and higher
sales in an inflationary economic environment.
Last week, Yum Restaurants India-owned Pizza Hut rolled out 4-5 inch pizzas in select markets such as Gurgaon-NCR at entry-level prices of Rs 29 each - that's the lowest in the Indian market by any player and the lowest for any of 117 countries where Louisville-based $12 billion Yum Brands operates.
While category leader Jubilant FoodWorks' promoted Domino's Pizza is aggressively pushing its 'pizza mania' umbrella priced at Rs 39, home-grown Pizza Corner has launched a pilot 'my pizza' range in Bangalore with prices starting at Rs 38 for a 7-inch pizza each. And US chain Papa John is not ruling out dropping entry-level prices.
"Access to a wider base of consumers and driving volumes further is what led us to launch the new range," says Sandeep Kataria, chief marketing officer at Yum! Restaurants India. Pizza Hut has positioned its latest offering as a 'snacking option' rather than a full-meal.
It piloted the project in Chennai about a month back and is now in the process of taking the product national now across 30 cities Pizza Hut Delivery ( PHD) outlets have a presence in.
Yum Restaurants India, which plans to invest $100 million (Rs 522 crore) in India by 2015 and double its stores to at least 1,000, was made only the third country after the US and China with a standalone reporting division, starting November last year.
Last fortnight, Yum Brands, which runs the KFC, Pizza Hut and Taco Bell chain, for the first time announced stand-alone results for India - 8% same store sales for its 400-plus stores.
For US chain Domino's too, India is its fastest growing country outside its home market, with a market capitalisation only second to its American parent. Without divulging specific details of forthcoming plans, category leader Jubilant FoodWorks' CEO Ajay Kaul says its 'pizza mania' platform is a 'runaway success and an industry benchmark'.
The listed Jubilant FoodWorks, with a network of 439 stores across 100 cities as of December 2011, posted 49% increase in system sales and 30% same store sales growth in the last-reported October-December 2011 quarter. Adds Kaul: "Domino's Pizza, over the last several years, has become synonymous with affordability and value-for-money propositions."
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The Rs 1,800-crore organised pizza market is growing at 20-25%, Technopak Adivisors says.
"These prices are required to cater to a larger segment of the masses and to increase transactions among those families for whom price is a limitation and for college students," says Joseph Cherian, global CEO of Global Franchise Architects (GFA), which operates 88 outlets across formats such as Pizza Corner, Coffee World, Donut Baker and Cream & Fudge Factory. Pizza Corner operates 58 outlets across India.
"It is a conscious business call by companies and is a good strategy given the economic conditions in India. The market is not as rosy, given high inflation and liquidity crunch. Companies would want to get consumers to try products and move them to higher price points," Sanjay Coutinho, CEO of Om Pizzas & Eats, says.
The company, which raised Rs 50 crore from TVS Shriram Growth fund in late 2010, runs 35 Papa John's Pizza outlets. It has not tweaked its entry level price point yet but does not rule it out in the future. Coutinho says the company is first focused on increasing scale and visibility in India.
Says Raghav Gupta, principal at management consulting firm Booz & Company, "So far, these chains have been able to attract consumers who have the income and the willingness to eat pizza. By lowering prices, they are trying to take it to the next level."
For multinational firms, India and China, the last bastions of growth, are critical markets which need to deliver to make up for sluggish sales in mature markets. Yum Brands' restaurant sales in China, which accounts for 40% of Yum's total profits, missed analyst expectations for the January-March 2012 quarter, triggering speculation about a likely slowdown in the country and turning the spotlight on India.
Gupta of Booz adds that since Domino's Pizza is increasing market share, "some chains are probably, in a small way, trying to counter their success."
These brands also compete with other players for share of wallet. Nearly 70% of consumers who eat out are below 35 years, Booz & Company's Food Services Retail in India report says. They patronise the Rs 7, 000-crore organised India food services industry.
Last week, Yum Restaurants India-owned Pizza Hut rolled out 4-5 inch pizzas in select markets such as Gurgaon-NCR at entry-level prices of Rs 29 each - that's the lowest in the Indian market by any player and the lowest for any of 117 countries where Louisville-based $12 billion Yum Brands operates.
While category leader Jubilant FoodWorks' promoted Domino's Pizza is aggressively pushing its 'pizza mania' umbrella priced at Rs 39, home-grown Pizza Corner has launched a pilot 'my pizza' range in Bangalore with prices starting at Rs 38 for a 7-inch pizza each. And US chain Papa John is not ruling out dropping entry-level prices.
"Access to a wider base of consumers and driving volumes further is what led us to launch the new range," says Sandeep Kataria, chief marketing officer at Yum! Restaurants India. Pizza Hut has positioned its latest offering as a 'snacking option' rather than a full-meal.
It piloted the project in Chennai about a month back and is now in the process of taking the product national now across 30 cities Pizza Hut Delivery ( PHD) outlets have a presence in.
Yum Restaurants India, which plans to invest $100 million (Rs 522 crore) in India by 2015 and double its stores to at least 1,000, was made only the third country after the US and China with a standalone reporting division, starting November last year.
Last fortnight, Yum Brands, which runs the KFC, Pizza Hut and Taco Bell chain, for the first time announced stand-alone results for India - 8% same store sales for its 400-plus stores.
For US chain Domino's too, India is its fastest growing country outside its home market, with a market capitalisation only second to its American parent. Without divulging specific details of forthcoming plans, category leader Jubilant FoodWorks' CEO Ajay Kaul says its 'pizza mania' platform is a 'runaway success and an industry benchmark'.
The listed Jubilant FoodWorks, with a network of 439 stores across 100 cities as of December 2011, posted 49% increase in system sales and 30% same store sales growth in the last-reported October-December 2011 quarter. Adds Kaul: "Domino's Pizza, over the last several years, has become synonymous with affordability and value-for-money propositions."
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The Rs 1,800-crore organised pizza market is growing at 20-25%, Technopak Adivisors says.
"These prices are required to cater to a larger segment of the masses and to increase transactions among those families for whom price is a limitation and for college students," says Joseph Cherian, global CEO of Global Franchise Architects (GFA), which operates 88 outlets across formats such as Pizza Corner, Coffee World, Donut Baker and Cream & Fudge Factory. Pizza Corner operates 58 outlets across India.
"It is a conscious business call by companies and is a good strategy given the economic conditions in India. The market is not as rosy, given high inflation and liquidity crunch. Companies would want to get consumers to try products and move them to higher price points," Sanjay Coutinho, CEO of Om Pizzas & Eats, says.
The company, which raised Rs 50 crore from TVS Shriram Growth fund in late 2010, runs 35 Papa John's Pizza outlets. It has not tweaked its entry level price point yet but does not rule it out in the future. Coutinho says the company is first focused on increasing scale and visibility in India.
Says Raghav Gupta, principal at management consulting firm Booz & Company, "So far, these chains have been able to attract consumers who have the income and the willingness to eat pizza. By lowering prices, they are trying to take it to the next level."
For multinational firms, India and China, the last bastions of growth, are critical markets which need to deliver to make up for sluggish sales in mature markets. Yum Brands' restaurant sales in China, which accounts for 40% of Yum's total profits, missed analyst expectations for the January-March 2012 quarter, triggering speculation about a likely slowdown in the country and turning the spotlight on India.
Gupta of Booz adds that since Domino's Pizza is increasing market share, "some chains are probably, in a small way, trying to counter their success."
These brands also compete with other players for share of wallet. Nearly 70% of consumers who eat out are below 35 years, Booz & Company's Food Services Retail in India report says. They patronise the Rs 7, 000-crore organised India food services industry.
Saket Kumar
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