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Thailand-based quick service restaurant chain\nFive Star Chicken has shut down 133 outlets in India in the past five\nmonths owing to sluggish growth even as it seeks to push sales. \n
\nThe chain, which recently rebranded itself as Five Star, now has 220\noutlets in Kerala, Tamil Nadu and Karnataka, and an outlet each in\nHyderabad, Goa, Pune and Mumbai, where it is testing the waters.
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\n“We have shut down non-performing stores and slowed down our rate of\nexpansion,” said Sanjeev Pant, senior vice president-food business.\n“While we were opening 10-15 stores in a month before, now it is down\nto three-four stores in a month,” he said.
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\nThe company is now looking at a new strategy to gain growth momentum as\nthe Rs 6,000 crore quick service restaurant or QSR segment has been\nreporting single-digit or negative same-store sales growth for the past\ntwo years.
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\nOther western-style QSR and coffee chains such as Pizza Hut, KFC and\nBarista have either shut down or downsized operations in the past year\nand a half because of consumers scaling back spends and increasing\npressure on their profitability.
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\nOwned by Charoen Pokphand Foods (CP Foods), Five Star Chicken is\nopening shop-in-shop stores in retail outlets, introducing private\nlabel packaged drinks and expanding its menu offerings.
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\nThe company, which entered India in 2012, has tied up with supermarket\nstore Spar, Tata-led Star Bazaar and a few local bakeries to open six\nshop-in-shop stores. These stores will entail lower real estate cost\nthan standalone stores and are expected to have a healthier footfall.
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\nThe Bengaluru-based company has launched two drinks, Masala Nimbu and\nGreen Apple, to attract customers who are drifting away from high sugar\nconcentrated drinks. Known for its non-vegetarian offerings, the\ncompany has also revamped its menu from 100% non-vegetarian to 40%\nvegetarian and 60% non-vegetarian.
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\n“We are aiming to make the menu 50% veg and 50% non-veg to bring in our\nvegetarian customers and loyal consumers who don’t prefer eating\nnon-veg every day,” said Rijoy Prabhakar, assistant vice president.
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\nExperts said\nIndia is a different market than the home markets of such overseas\nchains, which is why often such brands take time to adapt to the local\nrequirements. Besides, the slow growth in this segment is here to stay,\nthey said. <\/span>
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\n“As the\nexpenses are going up, these chains are finding it difficult to pass\nthese on to the customer as Indians are discretionary spenders,” said\nDevangshu Dutta, chief executive of consultancy firm Third Eyesight. <\/span>
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\nAccording to a Goldman Sachs report, titled ‘The India Consumer\nClose-up,’ the QSR segment grew at 16% CAGR in the past decade and is\nestimated to grow over 20% annually over the next few years.<\/p>\n