Small Town India On Fast Food Express

This might just be the time for hospitality operators in the Indian hinterland to catch the global speed train as fast food majors expand from megacities into small towns in search of more customers and profits writes Manika Gupta

Who would imagine that Kanpur was the city where Domino’s Pizza received its most overwhelming response in India after the megacities like Mumbai, Delhi, Chennai or Kolkata. “There was tremendous crowd pressure for the first couple of months. So much so that it even led to breaking of window panes,” beams Arvind Nair, managing director, Domino’s Pizza India Ltd.

Similarly, Pizza Hut, claims to have received exceptional response to its recently opened outlets in Ludhiana and Amritsar. McDonald’s, too, is very enthused by the response it is getting in Ludhiana where the guests have to queue for 45 minutes every Sunday to taste Ronald McDonald’s burgers. This is one outlet where even traditional Sikh women with their heads covered with dupattas throng to eat burgers.

The message for the high-end global fast food merchants is loud and clear. You need to move beyond megacities. Today, these companies are counting mega bucks away from megacities and they are not alone. Beer majors, for instance, are also seeing the class-1 towns (with a population below 10 lakh) guzzling the spirit.

Call it an inflection point in non-metro marketing, but from global fast food chains to premium beer companies, all are turning to this segment. Domino’s Pizza was the first global fast food chain to open outlets away from megacties. Little did it realise that for a fast food chain to do this was to start a movement. They had to first create product awareness before a brand awareness which included a lot of product tasting trials. Domino’s Nair says that they had to take an arduous route to make the brand accepted. “One had to define the product to those people before creating brand awareness.” Domino’s did it by inviting people to taste its pizzas. “Most of the time we did trial runs in the schools as children are the greatest influencers and adapt to tastes easily,” he says letting in on his secret. Since Domino’s is a delivery chain, it chose those areas where there were enough houses with disposable income and matching lifestyle. However, the difference is that in these places, a fast food chain like Domino’s is still a destination point where compared to the megacities where it has become synonymous with convenience.

Similarly, Pizza Hut which has so far only been in the metros is planning an aggressive drive to go to smaller towns for which it expects a growth of 20 per cent by being there. It plans to expand from the existing 48 restaurants in 15 cities to 100 by 2004. For this, Pizza Hut will work with hospitality operators mostly in places like Jalandhar, Meerut, Kochi, Mysore, Nashik, Coimbatore, etc.

McDonald’s, which is essentially a fast food chain based in megacities, is now expanding to North Punjab, Haryana, Uttrachal and Himachal Pradesh. Says Vikram Bakshi, managing director, McDonald’s India (North), “Three months down the line we will open a restaurant in Chandigarh, then Shimla and Kasauli. The response in Ludhiana has convinced us that there is a huge potential in the smaller metros and cities. There are many towns where people have a global exposure, these are the towns where McDonald’s is going to get vast acceptability.” Reasons for this are not difficult to guess. “The global exposure, particularly fuelled by satellite TV, is creating a demand. The Indian customer is very awakened,” stresses Bakshi.

Rich country cousin

A study by A C Nielson-ORG Marg has shown that there are small pockets of big spenders even in smaller towns. In fact, the surprise finding of this research agency is the level of ownership of certain high-priced consumer durables such as laser discs, home theatres and MP3 Players is higher in small towns than in larger metros. There are other factors too, which are leading these companies to expand away from megacities. These companies are confident that in these cities there is a dramatic shift in lifestyle trends, a substantial increase in the disposable incomes, a burgeoning of Indian middle class, mushrooming of consolidated entertainment complexes, exposure to newer cuisines, etc. In fact, with an increase in the disposable income and the propensity to spend, a similar surge is evident in semi-urban areas. Cable television and frequent visits to bigger cities have made the customer in these smaller cities aware of the big brands creating a latent demand waiting to be fulfiled. Says Nair, “In smaller towns, the aspiratioal levels are very high. People adopt new international brands very fast.”

And selling their products in markets that are dramatically different has brought forth marketing acumen of the these companies. For Pizza Hut’s director, marketing, Pankaj Batra, the best way to reach these new customers is by way of localising the product. “There should be an extensive and distinct range offering a differentiating trademark dining experience. Even though Pizza Hut has brought to India its pizza expertise, internationally standardised operations, procedures and best practices, we have also successfully developed and introduced a range of products that suit the Indian customer who traditionally prefers hot and spicy food,” he says. Pizza Hut apparently the first pizza chain to open a 100 per cent vegetarian restaurant in Surat,

Gujarat, where they offer Jain menus.

Beer companies too see a huge possibility away from megacities. In fact, all leading beer makers say that the smaller cities have a sales potential of 50 to 55 per cent of their total production. “Strong beer brands are sold the most in semi-urban areas as consumers want larger alcoholic returns on the money spent, whereas an urban consumer focuses on lifestyle and holistic imagery of the brand rather than alcohol content,” says Ramesh Vishwanathan, general manager, marketing, United Breweries. So obviously, strong beer makers such as Haywards 5000, Kingfisher and Knock Out have a definite advantage in the smaller cities. And they have different strategies while marketing their brands.

Vishwanathan says, “Our activities as far as promotion of the brand goes are through cable TV, campaigns in the local press, roadside and highway graffiti and posters inside the shops.” Agrees Aman Dhall, executive director, Brindco Ltd, “Marketing of strong beers in India requires deep understanding of the consumer attributes and the needs, so we have to go beyond the traditional tools of product communication.” Besides, placing posters and graffiti, the company also markets the beer in dedicated kiosks.

Of course, it is a two-way ticket. While fast food chains are discovering markets away from megacities, the inhabitants in these places themselves are discovering a newer and faster lifestyle.