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With 2,000 store plan, Yum! eyes top QSR spot

Wednesday, 23 April 2014 - 9:05am IST | Place: Mumbai | Agency: dna
Lovin' it I The operator of KFC, Pizza Hut and Taco Bell fast closing gap with McDonald's

The Big McBurger is in for some serious competition.

Yum! Restaurants India, operator of brands like KFC, Pizza Hut and Taco Bell, has lined up an aggressive expansion plan to bridge the gap with market leader McDonald's in the quick-service restaurant (QSR) space.

In a recent investor interaction, Niren Chaudhary, India president, Yum! Restaurants, outlined his company's strategy in India to become a leader in the three QSR categories it operates in.

While Chaudhary could not be reached immediately, an analyst note by Edelweiss Securities said the company is on an expansion spree and has entered new cities through a mix of owned and franchise-operated stores.

In a report post interaction with Yum! Restaurants's management, Abneesh Roy, associate director - institutional equities - research, Edelweiss Securities, said, "Store additions have tripled in the past three years and the company aspires to triple again to over 2,000 stores till 2020."

The company has 626 stores (across three brands) in India and the number is set to cross 1,000 stores by 2015.

According to analysts, its fastest growing QSR brand in India, KFC, has significantly bridged the gap with its nearest competitor McDonald's and is likely to top it in the QSR segment.

"From 155 stores in 2011 compared with 240 for McDonald's, KFC has reduced the gap in two years and now operates 305 KFC stores as compared with 350 for McDonald's. Also, Yum!'s initiatives could potentially lead to loss of market share for McDonald's India," Roy said in the report, adding that a KFC store in India achieves cash payback in 3-4 years.

The Yum! website, however, claims to have tripled the number of KFC outlets in the last five years to more than 360 stores by year-end 2013.

Under Pizza Hut, the company has 191 affordable casual dining restaurants and 176 home delivery locations in the country. Under Taco Bell, its Mexican food brand, Yum! runs five restaurants in India, according to the website.

With 367 Pizza Hut outlets, the company has narrowed the gap with its next competitor Jubilant Foodworks that operates 700 Domino's Pizza outlets in the country.

Officials from Jubilant Foodworks could not be reached for a comment.

Also, Yum! has launched new products in addition to 30 minute or free guarantee by Pizza Hut home delivery, in select cities.

"Around 40% Indians are vegetarians, and even non-vegetarians turn vegetarians for about 60 days in a year. Hence, Yum! is aggressively tapping this space by launching new products. In Pizza Hut, the non-pizza menu comprises about 50% of total menu and the company plans to increase this contribution by introducing new products," said Roy.

Yum! management said the eating-out market in India is highly under-penetrated and is currently less than 10% China's. While China has four restaurants per million, India has less than one per million.




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