New Delhi: Pizza Hut, the world’s largest pizza chain, is set to add 100 outlets in India over the next 12 months as it seeks to counter competition from nimbler rivals.
Of the 100 outlets that Pizza Hut plans to add, 75% will be small-format delivery and dine-in outlets, as it seeks to compete with Domino’s, the country’s largest pizza chain, and more recent entrants such as PizzaExpress and California Pizza Kitchen.
“The way it’s seen internally right now, Pizza Hut will be the fastest growing brand for Yum!,” said Unnat Varma, general manager, Pizza Hut and Taco Bell (India), part of Kentucky-based Yum! Brands. “Clearly, pizza is getting popular,” said Varma, who has spent two months managing the brand after the former head at the pizza chain Sanjiv Razdan quit the company in November last year. “We are scaling up because we the see opportunity.”
The move comes more than a year after parent Yum! Brands Inc. promised to invest $100 million in India, to scale fast food brands such as KFC and Taco Bell. Yum! manages 733 restaurants across India, with close to 400 Pizza Hut outlets in 80 cities. Pizza Hut will open outlets in smaller cities through its franchise partners. Pizza consumption in India is pegged at Rs.700 crore annually across 1,300 outlets. Domino’s triumphed in India by popularizing the 30-minute doorstep delivery assurance. In December, India became Domino’s largest market outside the US, with close to 806 outlets across 170 cities.
“They have (Domino’s) obviously set the reference point for smaller outlets, plus these outlets are more commercially viable,” said Varma, suggesting that Pizza Hut is trying to shrug off the image of a fine-dining restaurant in India as it seeks to service densely populated neighbourhoods through smaller format stores. “We’ve come to realize that the delivery format is what will work for us in this market,” he said.
The firm will scale the model through its franchise partners as it invests in marketing and new menu creation. To strengthen its operations, the chain recently outsourced delivery of food items to Delhi-based franchise partner RJ Corp. in December.
The change is part of Yum! Brands’ broader Asia strategy, said Gaurav Marya, chairman of Franchise India Holdings, which helps foreign companies set up operations in India. Pizza Hut is trying a hybrid model to service more markets, he said.
“They are trying to a be combination of delivery and fine dine, so we are seeing some changes on the menu as well as the store space,” added Marya.
The fast-food sector has remained sluggish in India over the past 12-18 months, with most food chains struggling with fewer footfalls and reduced expenditure on eating out even as costs have spiralled. “Consumers are very price- sensitive at this point in time,” said Varma. Consumption, he said, “won’t recover over a quarter, it will take longer than that”, but “we are confident of a turnaround”.
