{"id":2209,"date":"2014-11-28T11:04:00","date_gmt":"2014-11-28T11:04:00","guid":{"rendered":"https:\/\/www.thirdeyesight.in\/?p=2209"},"modified":"2022-11-07T10:07:09","modified_gmt":"2022-11-07T10:07:09","slug":"burger-king-eyes-a-big-slice-of-the-indian-market","status":"publish","type":"post","link":"https:\/\/myechoproject.com\/TES\/burger-king-eyes-a-big-slice-of-the-indian-market\/","title":{"rendered":"Burger King eyes a big slice of the Indian market"},"content":{"rendered":"\n<p> <i>Samar Srivastava, Forbes India<br>\n              Mumbai, 28 November 2014<\/i><\/p>\n              <p>When Forbes India first visited Burger King in July this year, \n                its office in Mumbai\u2019s Lower Parel business district was \n                a beehive of activity. Employees were busy scouting for locations, \n                negotiating with suppliers, conducting blind tastings and fine-tuning \n                the international hamburger chain\u2019s India menu. At the time, \n                the $1.1 billion (2013 revenues) global fast food giant was still \n                a quarter away from launching in India, but the countdown had \n                begun.<\/p>\n              <p>A late entrant into the market, Burger King has seen many a competitor \n                trip in its understanding of the Indian consumer. <br>\n                <br>\n                Which is why, 45-year-old Rajeev Varman, chief executive officer \n                of Burger King\u2019s India operations, emphasises that menu will \n                be the differentiator. \u201cWe will have burgers that no one \n                in India has ever had before,\u201d he tells Forbes India.<\/p>\n              <p><\/p>\n\n              <p><img decoding=\"async\" data-src=\"https:\/\/www.thirdeyesight.in\/wp-content\/uploads\/2022\/09\/burger-king-forbes-rajeev-varman.jpg\" width=\"600\" height=\"400\" align=\"left\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/400;margin-right:20px;\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" class=\"lazyload\"> \n              This would sound like a grand claim, one that is easier said \n                than done: Development of the menu and, more importantly, adapting \n                it to appeal to Indian tastes has taken established international \n                players years to implement. Rivals such as McDonald\u2019s and \n                KFC met with success only after they indigenised their offerings \n                as per local taste profiles. It took them a decade to arrive at \n                a winning and money-making formula.<br><br>\n                And therein lies Varman\u2019s biggest challenge. Can he find \n                a shortcut, and give a menu that Indians will love from day one? \n                He is confident of his success.<br><br>\n                At the time of writing this story, Burger King was set to open \n                its first India outlet in Select Citywalk in Saket, Delhi, on \n                November 9; this will be followed by a Mumbai launch the week \n                after, at Phoenix Mills. By December, there will be a dozen Burger \n                King outlets but only in Mumbai and Delhi\u2014for now. Varman \n                does not want to reveal the fast-food chain\u2019s long-term India \n                plans.<\/p>\n              <p>Burger King is entering the hyper-competitive Western quick service \n                restaurant (QSR) space at a time when consumer spending has been \n                under pressure. Competitors such as McDonald\u2019s, which has \n                over 350 outlets across India, KFC, with a chain of 361 stores, \n                Domino\u2019s Pizza (772 outlets) and Subway (472), have all seen \n                consumer spending\u2014hit by high inflation\u2014 slow down in \n                the last year. Still, Crisil Research estimates the market to \n                grow to Rs 7,000 crore by 2018 from the present Rs 3,400 crore; \n                this is an annual growth of 27 percent with average spends of \n                Rs 3,700 per household per year in metro cities.<\/p>\n              <p>It\u2019s very early days, but 3G Capital, the multi-billion \n                dollar Brazilian private equity parent which owns Burger King, \n                has made all the correct moves. \u201cThe only reason we had not \n                entered the Indian market till now was because we couldn\u2019t \n                find the right partner,\u201d says Elias Diaz, president, Asia \n                Pacific, at Burger King. The company was loath to enter the Indian \n                market on its own realising that real estate, sourcing and taxation \n                issues would divert its attention from the task of getting stores \n                up and running.<\/p>\n              <p>In 2013, however, in what could well be a master stroke, Burger \n                King tied up with the Sameer Sain-led Everstone Group (an Indian \n                private equity firm with experience in the QSR space) to help \n                it navigate the already-crowded Indian market. <\/p>\n              <p><b>A Fortuitous Partnership<\/b><br>\n              <\/p>\n              <p>Burger King has been keen on entering India since it was acquired \n                by 3G Capital in 2010 in a $3.8 billion deal. <b>\u201cAny private \n                equity player will be looking for rapid growth, and India would \n                be an obvious market for a brand like Burger King,\u201d says \n                Devangshu Dutta, founder of Third Eyesight, a retail consultancy \n                in Delhi. And the fast-food chain plans to be in India for the \n                long haul. \u201cEveryone has seen spends slow down in the last \n                couple of years, but if you are entering a market with a 20-year \n                time horizon, this slowdown is just a blip,\u201d says Dutta.<\/b><\/p>\n              <p>At the time, Everstone Group had its hands full with the takeover \n                of Blue Foods, now Pan India Food Solutions, which owns Copper \n                Chimney, Noodle Bar and Bombay Blue, among other brands. Before \n                it was acquired by Everstone, the restaurant chain had been burdened \n                with heavy debt and high attrition. But it was in turning it around \n                that Jaspal Singh Sabharwal, a partner at Everstone Group, saw \n                an opening in the QSR arena. \u201cWe realised that there was \n                room for a brand in the space, but what we needed was an iconic \n                name,\u201d he says.<\/p>\n              <p>Everstone was also aware that the Indian market had matured considerably \n                since McDonald\u2019s opened its first outlet in New Delhi\u2019s \n                Basant Lok market in 1996. At the time, most of its machines were \n                imported, and even the fries and meats were flown in. It was only \n                in 1997 that McDonald\u2019s started taking its vendor development \n                programme seriously. Today, all its products are locally sourced \n                and manufactured. <\/p>\n              <p>In 2013, Everstone hired STEER Partners to introduce it to fast \n                food players in Europe and the US, and talks with the parent company, \n                Burger King Holdings Inc, began. That very year, the two firms \n                agreed to enter into a joint venture to enable Burger King\u2019s \n                foray into India.<\/p>\n              <p>It was a win-win situation for both parties. Everstone, with \n                its keen eye on real estate, helped the chain identify prime locations \n                far more easily, and used its relationships with mall developers \n                to get Burger King in. In Mumbai, for instance, the fast food \n                chain will be opening an outlet in Phoenix Mills, a dozen metres \n                from arch-rival McDonald\u2019s. This would not have happened \n                as easily without Everstone; after all, its Blue Foods had already \n                leased the space. <br>\n                <b>Spicy, Crunchy and Juicy<\/b><br>\n              <\/p>\n              <p>Once the joint venture was inked, Rajeev Varman was deemed the \n                best person to head the India operations. He had already made \n                a name for himself as the man behind Burger King\u2019s turnaround \n                in the UK market, and had been with the company for 15 years. \n                His last post was general manager in North-West Europe. However, \n                though he had graduated from Bangalore University, India was an \n                unfamiliar terrain.<\/p>\n              <p>\u201cThe first thing I did after I got to India was to get on \n                a plane again,\u201d says Varman. He\u2019d been away from the \n                country for the last 25 years and realised that he needed to tour \n                the length and breadth of India to understand the palate. Along \n                with Everstone boss Sameer Sain and Sabharwal, he visited local \n                markets across the country and arrived at three key conclusions.<\/p>\n              <p><\/p>\n              <p>First, Indians like their food spicy. Second, it must be crunchy. \n                But it was the last insight that surprised him the most: Customers, \n                especially in the South, liked their food juicy. He also realised \n                that the North has a higher proportion of vegetarians than the \n                South. On some days, the percentage of vegetarian food sold in \n                a restaurant can be as high as 70 percent.<\/p>\n<div class=\"row\">\n<div class=\"col-sm-9\">\n<p>Varman \n                knew that he would have to adapt the menu a fair bit for India. \n                He decided to keep his single-minded focus on that job, and is \n                confident that Burger King has got the right formula, one that \n                will appeal to Indians. The menu promises to be juicy, crunchy \n                and spicy.<\/p>\n              <p>The proof of the pudding, it would follow, was in the eating. \n                But those were early days in July and Burger King was not ready \n                to share its menu. Three months and many phone calls and follow-ups \n                later, Varman offered to take Forbes India through an exclusive \n                tasting session in October, barely a fortnight before the opening \n                of its first outlet in Saket.<\/p>\n              <p>Even before it started designing the India menu, Burger King \n                knew that its USP wouldn\u2019t change. Flame grilling is what \n                the chain is known for worldwide and in India there is no competitor \n                that flame grills its patties. Sure, the Whopper (pronounced \u2018Wau-per\u2019) \n                won\u2019t have a beef patty but chicken and mutton patties will \n                be flame grilled and offered to customers. As it stands, the Whopper \n                will be the largest burger in the Indian market, bigger than the \n                Maharaja Mac by McDonald\u2019s.<\/p>\n              <p>At the tasting session, we experienced what Varman meant by juicy. \n                (The mutton burger was the tastiest I have eaten in the Indian \n                market.) And if Burger King can get the quality and consistency \n                of the supply right, it has little reason to worry.<\/p>\n              <p>In its initial years, McDonald\u2019s had launched a mutton burger, \n                but discontinued it citing supply chain issues. In a March 2011 \n                conversation with Forbes India, Vikram Bakshi, who had led McDonald\u2019s \n                in the North and East before exiting the joint venture, said that \n                the fast-food chain dropped mutton from the menu because of customer \n                preference. Undeterred, Burger King will be offering a mutton \n                option on the menu.<\/p>\n              <p>There\u2019s also no mistaking the fact that Burger King is not \n                a me-too brand. Small, but subtle differences pepper its offerings. \n                For instance, unlike the seven-mm French fries its competitors \n                offer, the chain has a thicker nine-mm variety.<\/p>\n              <p><b>Burger King eyes a big slice of the Indian market<\/b><br>\n                <br>\n                One place where it has left no stone unturned is the vegetarian \n                menu. \u201cIn India, at times, people are vegetarian due to its \n                lower price, and we wanted to make sure we give them enough reasons \n                to come to the store,\u201d says Sudhir Tamne, vice president, \n                new product development, at Burger King India. The Crispy Veg \n                and Paneer King Burgers seem to be a step up from the competition. \n                And of course, they have the juiciness that Indians crave.<\/p>\n              <p>While Burger King has kept its pricing under wraps, it did indicate \n                that there will be four burgers available for Rs 25 each. These \n                are most likely from the crispy series\u2014patties with a hint \n                of spice that is unmistakably Indian.<\/p>\n              <p>Another key learning for Varman during his travels across India \n                was the fact that customers want complete meals and that portion \n                sizes must be large. He\u2019s made sure that Burger King\u2019s \n                buns and patties are larger than those offered by competing brands. \n                With its burgers hitting all the right spots, pricing and efficient \n                service delivery levels are key areas that can make or break Burger \n                King.<\/p>\n<\/div>\n<div class=\"col-sm-3\">\n              <p><img decoding=\"async\" data-src=\"https:\/\/www.thirdeyesight.in\/wp-content\/uploads\/2022\/09\/burger-king-timeline.jpg\" width=\"300\" height=\"998\" vspace=\"5\" hspace=\"10\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" class=\"lazyload\" style=\"--smush-placeholder-width: 300px; --smush-placeholder-aspect-ratio: 300\/998;\"><\/p>\n<\/div><\/div>\n              <p><b>Scaling Up<\/b><br>\n              <\/p>\n              <p>India\u2019s QSR market has tripped up many formidable competitors. \n                Contrast Starbucks and Dunkin\u2019 Donuts: Both entered India \n                two years ago, but while Starbucks has had a successful run to \n                date, Dunkin\u2019 Donuts has been struggling to understand what \n                Indian consumers want.<\/p>\n              <p>Starbucks, which had a clearly differentiated product and an \n                efficient supply chain, has been able to expand across India with \n                58 outlets spread through Delhi, Mumbai, Bangalore, Pune, Hyderabad \n                and Chennai. Dunkin\u2019 Donuts, which has 35 outlets across \n                India, has now added burgers to the menu. This, however, has led \n                to considerable brand dissonance among consumers.<\/p>\n              <p>Burger King, on the other hand, has a differentiated offering \n                and promises a slow and steady ramp-up. Case in point: The company \n                plans to build the brand only through social media and word-of-mouth \n                publicity; it will not be investing in expensive full-page print \n                or TV advertisements. Varman has kept the corporate office as \n                lean as possible with only 27 employees. The Everstone team guides \n                him on real estate locations and other compliance matters. For \n                now, his sole aim is to get a dozen outlets up and running by \n                the end of the calendar year. Being owned by two private equity \n                companies also means that the clock is ticking. \u201cIf we don\u2019t \n                have an outlet that is EBITDA (earnings before interest, taxes, \n                depreciation and amortisation) positive in three to six months, \n                then we know that something is wrong,\u201d says Sabharwal of \n                Everstone. He is unwilling to let this be a slow burn business.<\/p>\n\n              <p><b>Profitability Matters<\/b><br>\n              <\/p>\n              <p>In a conversation with Forbes India last year, Amit Jatia, who \n                runs McDonald\u2019s in West and South India, had mentioned that \n                it took the fast-food chain nearly a decade to become profitable \n                in India. Varman (and Burger King) does not have that luxury.<\/p>\n              <p>Varman, who eats thrice a week at a Burger King outlet, though \n                his tall athletic frame belies this, will spend between Rs 2-2.5 \n                crore in setting up a single outlet. It has to have the cash register \n                do Rs 5 crore of business in a year. He\u2019s unwilling to discuss \n                profitability as the chain will be in investment mode for the \n                first few years. But if an outlet does not make money in the first \n                six months, it will be shut down. He believes there is enough \n                cream in the large metros to skim in the first year. \u201cI will \n                only worry about the ability to grow rapidly once I am past, say, \n                200 outlets. Right now, there is a lot to play with,\u201d he \n                says. As for what the competition thinks of Burger King\u2019s \n                India plans, neither Yum! (which owns brands such as KFC) nor \n                McDonald\u2019s was willing to comment. <\/p>\n              <p>As we sign off on our tasting session, Varman, who is fanatical \n                about service delivery, notices that the fries have less salt. \n                He frowns and immediately checks the salt dispenser to see if \n                the salt has coagulated. It hasn\u2019t. And he smiles again.<br>\n              <\/p>\n              <p><i>(Published in <a href=\"http:\/\/forbesindia.com\/article\/big-bet\/burger-king-eyes-a-big-slice-of-the-indian-market\/39047\/0\" target=\"_blank\" rel=\"noopener\">Forbes \n                India<\/a> in the issue dated 28 November 2014)<\/i> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Samar Srivastava, Forbes India Mumbai, 28 November 2014 When Forbes India first visited Burger King in July this year, its office in Mumbai\u2019s Lower Parel business district was a beehive of activity. Employees were busy scouting for locations, negotiating with suppliers, conducting blind tastings and fine-tuning the international hamburger chain\u2019s India menu. At the time, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2209","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Burger King eyes a big slice of the Indian market - Third Eyesight<\/title>\n<meta name=\"robots\" content=\"index,follow\" \/>\n<link rel=\"canonical\" href=\"https:\/\/myechoproject.com\/TES\/burger-king-eyes-a-big-slice-of-the-indian-market\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Burger King eyes a big slice of the Indian market - Third Eyesight\" \/>\n<meta property=\"og:description\" content=\"Samar Srivastava, Forbes India Mumbai, 28 November 2014 When Forbes India first visited Burger King in July this year, its office in Mumbai\u2019s Lower Parel business district was a beehive of activity. Employees were busy scouting for locations, negotiating with suppliers, conducting blind tastings and fine-tuning the international hamburger chain\u2019s India menu. 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