Yum! eyes $1 billion revenues in India by 2015

Niren Chaudhary, managing director, Yum! Restaurants India, a wholly owned subsidiary of US-based fast food restaurant company Yum! Brands Inc that owns food chains KFC, Pizza Hut, A&W, Long John Silver and Taco Bell, says by 2015 the Indian unit will make an impact at the global level by opening 1,000 outlets and $1 billion in revenues. Chaudhary who has been at Yum! for over a decade, working across markets like Netherlands and Germany, spoke to DNA on the sidelines of India Retail Forum held in Mumbai on Wednesday. Excerpts:

How are you battling heightened food costs? Consumer wallets are pressurised by high food prices too. Do you see them cutting on consumption or spending?
In India, even though you have commodity inflation, wages too are rising. Wage inflation is higher than commodity inflation which in turn helps the consumers earn more as the prices go up. Thus, we don’t see any impact on our sales. Whenever there is high inflation, we try and cover the impact as much as we can by productivity improvement. If it is not possible, we pass on some cost to consumers, but even that price increase is of insignificant nature.

You have recently been trying to recruit consumers through popular price points..
Yes, we launched Streetwise range that is targeted at the college students, where they can access KFC products at college canteen prices. And every year we will bring in new products in that range that will be priced between Rs25 and Rs100.

What expectations does the parent company have from the Indian unit?
They (parent) are very bullish on India; they think India can be the next China in terms of the number of outlets that we have in China. In China we have 10 times the number of outlets that we have in India. India’s contribution to our global business today is miniscule, but it is growing very fast. India is still about four years away from being a meaningful contributor.
Any plans to go in for an IPO?
No, because we want to stay as an American company as we are listed on the American Stock Exchange. And as we are very well capatalised, we have access to a lot of funds.

When do you plan to introduce newer restaurant formats like Long John Silver in India?
We are actually very busy with Pizza Hut, KFC, and delivery service Pizza Hut Delivery. We want this business to become 1,000 restaurants first and $1 billion in sales by 2015, which is a gigantic task. We will invest $150 million during this period. We currently serve 20,000 people and want to reach to 50,000 people in another four years. We are targeting to have a total of approximately 400 restaurants across Pizza Hut and KFC brands by the end of this year (the company reports its financial year from December-November).

If you are compared with the scale of competitor McDonald’s in India, where do you view yourself?
We are the fastest growing food brand in India. This year alone we will add another 100 restaurants across our brands KFC, Pizza Hut and Pizza Hut Delivery. And we are growing much faster than the competition now.

What have been your investments this year for opening these 100 outlets?
The company Yum! will be investing around $25 million by November 2011. This is separate from the investments made by our franchisees. We have already opened 50 food chains and the remaining 50 will be opened in the next two months. Next year we will launch another 150 outlets.

How much of a focus is on R&D for developing products specific to Indian palette?
We have a dedicated innovation centre in India based in Gurgaon. And there we have own our R&D kitchens for Pizza Hut, KFC and Taco Bell, where we keep making and trying different types of food.

And what have you understood of the Indian consumers’ taste preference?
I think the Indian consumers like good flavour. And they like their food spicy and hot. Health is another important aspect and we are going to be launching in KFC in a few months, non-fried, grilled chicken.

You have several franchisees. Any plans to consolidate to fewer but larger partners?
We have a total of 15 franchisees in India of which three are very big — Devyani International (for North and East), Dodasan Enterprise (for West) and KFC Malaysia; and we are very happy with the arrangement. We are not looking for new partners.