Global pizza chains vie for local pie

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By JAYATI GHOSE
  • Published 6.12.10
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New Delhi, Dec. 5: The strong debut of Domino’s Pizza in the stock market early this year has fuelled interest among global pizzerias such as US-based Little Caesars and Papa Murphy’s to enter the Rs 470-crore Indian pizza delivery and dine-in industry.

Other global chains, including Sbarro, Pizza Hut, Papa John’s and Chicago Pizza, who already have some presence in the country, are looking to expand in an industry that is growing annually at 40 per cent.

“After the Domino’s initial public offer, which raised over Rs 320 crore, we have seen a greater interest from global food and beverage chains to form associations with a local franchise partner in India,” Gaurav Marya, president of Franchise India Holding Ltd, told The Telegraph.

Jubilant FoodWorks, which runs the Domino’s Pizza brand in India, became the first fast food company to list on the bourses. Industry players said RJ Corp, which runs Pizza Hut, Yum Restaurants and KFC, could also be looking at divesting its equity stake.

Marya said this year there were more participants from food and beverage firms, including companies from the UK, the US and Russia, in Franchise India 2010 — an annual convention for firms looking for potential franchisees or franchisors in the country.

Pizza and pasta contribute barely two per cent to the Rs 32,000-crore eating-out industry in the country. Indians consumed 3.5 million pizzas a month in 2008, said the Food Franchising Report 2009. In 2001, only 1.5 million pizzas were consumed per month.

With evolving customer tastes, increasing purchasing power and the localisation of foreign brands, experts believe it is only a matter of time when Indians will consume pizza on a par with the Americans.

The US, a global leader in pizza consumption, eats at least 350 slices per second, while over 90 per cent of British people eat it at least once a week. About 466 million units were sold in Britain last year. Analysts said sales had gone up as they were convenient to eat and popular with kids.

Moreover, with the overall eating-out-of-home concept growing in India, sales are expected to explode.

The Food Franchising Report 2009 notes that 30 per cent of working singles eat out at least once a month, with a majority spending at least Rs 101-150 per outing. Urban Indians dine out six times a month compared with 2.7 times in 2003.

“Eating out has become increasingly common in India and its growth has been contributed to by several factors: changing consumer profiles, higher disposable incomes, greater exposure to multiple cuisines,” said Prateek Sen, expert in the food retail space.

According to industry projections, the retail food sector in India is likely to grow to $150 billion by 2025 from $70 billion in 2008.