The restaurant business in India is growing by between 5 percent and 6 percent annually, with no sign of slowing down, according to the National Restaurant Association of India.
The quick-service segment alone is growing by more than 20 percent in the country, said NRAI president Samir Kuckreja.
With the U.S. restaurant business projected to grow only about 1 percent per year for the next 10 years, according to The NPD Group, India’s market clearly has appeal for American franchisors.
A group of representatives from such chains as Carl’s Jr., Wendy’s and Applebee’s traveled to India last week in search of franchisees as part of a trade mission organized by the U.S. Department of Commerce’s Commercial Service.
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The chain officials on the trip shared their observations with NRN’s Bret Thorn, who traveled with them, about the opportunities that India holds for their brands, and what changes they would have to make to appeal to Indian consumers. For many that includes possibly offering more vegetarian options while cutting out beef and pork.
See what else they learned from the trip:
Wing Zone targets the youth market
Hair Parra, vice president of international development for the 60-unit Wing Zone chain based in Atlanta, said he was encouraged by India’s large population of young people.
That country’s census figures indicate that the majority of the 1.2 billion population is 25 years old or younger.
“And that age group is one of our main targets,” Parra said.
He added that Wing Zone’s chicken-heavy and highly adaptable menu should be easy to adjust to local tastes. For example, Parra said he expected that they would swap out some of their 15 sauces to make room for condiments with Indian flavor profiles.
He said he also would like to find uses for Indian flatbreads on the menu.
“We need to make some adjustments, so the customers feel that it’s not just Wing Zone, but part of India,” he added.
Pollo Tropical turning beans into dahl
J. Marc Mushkin, senior vice president of international development for the 120-unit Pollo Tropical, which is owned by Carrols Restaurant Group, said “India is everything that everybody says about it: Huge, great potential, fascinating but also full of challenges.”
Since Pollo Tropical’s main platform is marinated, grilled chicken served with beans and rice, the restaurant should be easily adaptable to Indian tastes, he said.
The chain already uses different sauces at its 12-item salsa bar, depending on the location in the U.S. and Latin America. They would use the same strategy in India, and might also add basmati rice and dahl — an Indian staple of lentils or other beans.
He said they would also expand their vegetarian options in India.
Mushkin said a number of the people he met with in India had told him that Latin concepts, from entertainers to music to cuisine from Argentina and Mexico, resonate well with the burgeoning Indian middle class.
“It doesn’t approach the popularity of Italian and Chinese, but it’s gaining in popularity,” he said.
As in the United States, India’s favorite foreign cuisines are Chinese and Italian, according to the NRAI.
Moe’s sees untapped burrito market
Scott Chorna, director of international business development for Focus Brands Inc., which franchises Cinnabon, Carvel Ice Cream, Schlotzky’s Deli, Moe’s Southwest Grill and Auntie Anne’s Pretzels, got similar feedback. Apart from Cinnabon, which already has a master franchisee in India operating seven units, he said he sees Moe’s as being the most promising Focus Brands concept for India.
He said locals told him that the flavorful, spicy taste profile of the food was appealing. In addition, India doesn’t yet have many competitors in the burrito category.
Rita’s looks to appeal to India’s growing middle class
Bill Edwards, chief executive of EGS, a company that represents 15 U.S. franchises with regard to their international development, was in India looking for franchisees for Denny’s and Rita’s Italian Ice.
With Rita’s and Denny’s, Edwards said he was trying to appeal to India’s “aspirational middle class” that has discretionary income for the first time.
“Their discretionary income is hard-earned and they want brand, convenience and quality,” he said.
Both brands also appeal to a variety of demographics, including young people, families and seniors.
Middle-class Indians remain extremely price-conscious, according to many locals who met with the delegates, and Edwards said Rita’s ices, which cost less than ice cream, would appeal to them.
He said that Rita’s did a market-entry study that found that most of the chain’s existing flavors appeal to Indians, and that others would be developed for the market.
Re-engineering underway at Denny’s
Denny’s had been working with suppliers for about a year on developing an Indian menu. Edwards of EGS said he expected the chain would change about 30 percent of its regular menu, doing away with pork and beef and replacing those items with vegetarian dishes, chicken or fish.
Edwards said he also had been consulting with Indian distributors, who had provided helpful advice on spices, types of protein and portion size.
Which Wich: Sandwiches have global appeal
Jeff Sinelli, chief executive of 133-unit Which Wich fast-casual chain, said his visit to India “reinforced my belief that the world eats sandwiches.”
However, he added: “Indianization of the menu will be critical.”
More than 20 percent of the chain’s sales in the U.S. are from vegetarian menu items, and he expects that that number would be between 50 percent and 70 percent in India.
“Our culinary team’s going to have to work on research and development of vegetarian-related products, and also amplify our chicken selections,” he said.
Which Wich currently operates only in the United States, but Sinelli said he expected the chain’s Indian office would open within a year.
Wendy’s to target Indian palate
Larry Kruguer, vice president for development of Wendy’s/Arby’s International, who was in India scouting franchisees for Wendy’s, said recent franchise agreements signed in developing countries over the past two years had resulted in restaurants opening as soon as nine months after the ink dried. However, he said an opening in India would likely take three months to six months longer than that because of the necessity to rework the menu, to get rid of beef among other things, and understand the Indian palate better.
“We like to do some level of consumer panels and tests,” he said. “We’re not going to roll something out based on just what we think internally.”
Applebee’s to offer different menus in India
Phil Crimmins, president of Applebee’s Grill & Bar’s international division, said he was “pretty confident” that the company would sign an agreement with someone they had met during the trade mission, possibly by the end of the year.
John Peddar, executive director of international franchise business development for the more than 2,000-unit chain, said Applebee’s menu would likely vary within India. For example, restaurants in Gujarat state would be all vegetarian and alcohol-free, while southern restaurants would have more rice, northern ones would more wheat, and beef may be served in Rajasthan.
Carl’s Jr. glad McDonald’s came first
Infrastructure, including reliable electricity, is often cited as a major challenge in India, but Ian Letele, vice president of franchise development and operations for Carl’s Jr. USA, said early arrivers in India, such as McDonald’s, Domino’s Pizza and KFC, have laid much of the groundwork for other concepts to follow.
He said he was impressed by Indians’ hunger for Western chain restaurants.
“I’ve not come across a market like India in terms of its interest in foreign QSR brands. And money’s not an obstacle with these guys,” he said of potential franchisees. “They’ve all come to the table with adequate means to invest.”
The challenge, he said, was that few of those investors had much experience with foodservice.
Johnny Rockets selling Americana, not necessarily beef
Steven Devine, senior vice president of international development for Johnny Rockets, said the trip to India underscored for him the need to fit into the market.
“I think I always knew it would be a good potential market,” he said, noting that Johnny Rockets had seen considerable success marketing Americana in the Middle East.
He predicted similar success in India, but probably without beef.
“Our currency of trade is Americana,” he said, not necessarily burgers.
BannaStrow’s on real estate challenges
Real estate is also an issue in India, with prime spaces in shopping malls coming at a premium.
Mauricio Acevedo thinks that’s an advantage for BannaStrow’s, his four-unit concept based in Miami that features crêpes, coffee and smoothies.
“The nature of our product is very flexible, and we’re able to adapt it to any market,” he said, noting that it can operate out of a kiosk or truck as well as in a mall or freestanding space.
And crêpes can be stuffed with just about anything, he added.
“If I thought before coming that there was potential here, I was blown away by how much potential there is,” he said.
Contact Bret Thorn at [email protected].