According to the CEO of the franchisee of Domino's pizza in India, the 49-rupee ($0.60) pizza in the coutnry, Domino's No. 1 market outside of America, represents the tip of the spear in its battle against rapid inflation that is pinching profitability and pricing out many customers.
According to Sameer Khetarpal, the company aims to "own that price point," and the bare-bones, seven-inch cheese pizza with a "sprinkle" of basil and parsley is Domino's cheapest offering everywhere.
"You are coming to the store or open the app, because there is a 49-rupee callout," he said, adding that Domino's global team supported the plans. "Customers are going to eat out less because prices are higher everywhere - our existing consumers should not go out to some competition."
According to internet menu prices, Domino's cheapest savoury pizza costs roughly $3.80 in Shanghai and $12 in San Francisco. To contact a local franchisee in India, contact Domino's worldwide headquarters.
Six CEOs and 12 shop managers were interviewed by Reuters to see how Domino's and other international fast-food juggernauts like Pizza Hut and Burger King are being compelled to alter their business strategies in order to combat excessive inflation in the market of 1.4 billion people.
The businesses are vying for market share in a country that is crucial to their futures, where sizzling samosas can be had for as cheap as 10 rupees, and where it is challenging to compete with a street food culture.
Domino's 1,816 locations are managed by Khetarpal's Jubilant FoodWorks, and he says he has a staff meeting the first thing on Mondays to come up with new cost-control measures and combat the "historic high inflation" that caused the company's profits to decline 70% in the first three months of 2023.
He provided updated information on Domino's India pivot and its financial achievements, including the removal of lids from all pizza boxes sold in stores starting in December in order to save 0.6 cents each time. Given that 37% of Domino's Indian business is dine-in, he claimed that this translates into a sizable reduction in packing costs.
Jubilant, whose Domino's company generated the majority of its $635 million in revenues last year, also hopes to obtain rent rebates from some store landlords by making upfront payments, according to Khetarpal, who declined to provide more information on the advantages.
Domino's is not the only company focusing on India's prices, a market with a high sensitivity to price and one that is now experiencing higher inflation than many other markets, including the United States. According to the CEOs, reduced prices are intended to entice customers to shops and mobile applications where they might upgrade or acquire further add-ons.
Pizza Hut is actively pushing the 79 rupee ($0.96) pizzas it introduced last year, claiming that they are the brand's lowest-priced items worldwide.
The business is creating items that "make the brand relevant and easy to access" for budget-conscious Indian consumers, according to Merrill Pereyra, managing director of Pizza Hut in the Indian subcontinent, who also noted that its low-cost pizzas are popular with young people.
In June, McDonald's introduced half-price meals. According to Akshay Jatia, executive director at Westlife Foodworld, which operates 357 locations throughout western and southern India, they would be the focus of promotion activities in the upcoming weeks. He claimed that the lunches will increase traffic, sales, and profit margins.
According to Reuters trips to retailers across four Indian states, the low-cost products are indeed being backed by a digital and physical marketing blitz across the country, with outlets, and even a fancy New Delhi mall, plastered with banners.
The 49-rupee pizza, which was introduced in February, is Domino's primary inflation-fighter. According to Khetarpal, it was "re-engineered" by lowering the price and tomato offerings from its previous lowest offering of 59 rupees.
Franchisee Jubilant reported in May that during 2022–2023, cheese prices increased by 40% and chicken and paper box prices increased by 30%. According to government data, there have been further shocks in recent weeks, with tomato prices increasing by over 400% to record highs and households struggling with soaring prices for everything from milk to cereals and spices.
The industry participants told a story of two consumers living in a nation with vast wealth and poverty divides.
While those with higher incomes continue to spend money on items like more expensive cellphones and SUV cars, whose sales are reaching record highs, many low- and middle-income earners who considered dining at foreign chains as a lifestyle upgrade while the economy was booming are tightening their belts as inflation bites.
Khetarpal claimed to have observed consumers emptying their pockets and coming up with just 49 rupees when he visited Domino's locations in Chennai and other cities. He noted that sales of Domino's new gourmet pizzas, which have a price tag of up to $14, have increased in some affluent neighbourhoods.
Domino's, the industry leader in Indian fast food restaurants with a market share of roughly 12.5%, as well as other businesses, have had a bad year.
In the three months ending in March, Pizza Hut's Sapphire Foods' pre-tax profit more than halved. Restaurant Brands Asia, the Burger King franchisee in India, saw its net loss increase by 9%.
There are some bright spots, though. According to Euromonitor International, India's market for quick-service restaurants that provide fast food is only worth about $5 billion, compared to $137 billion and $341 billion in the United States and China, respectively.
The more restricted pizza, burger, and chicken restaurant business in India, which is controlled by Western chains and is worth $2.1 billion, will expand but more slowly. According to Euromonitor, it will expand at an expected 15% annual pace through 2027. Comparatively, growth rates of 21% in 2022 and 43% in 2021 were primarily attributed to a jump in post-COVID consumption.
Yum Brands, the company that owns Pizza Hut, struck a confident tone in June by contrasting its 17,000 U.S. locations with its over 2,000 in India, where it sees "a tremendous growth opportunity."
In the short term, there are still enormous obstacles to overcome.
"For a population eating roadside, in the current environment where inflation is hurting their pockets, (the new offers) are still on the higher side," said Devanshu Bansal, a consumer analyst at India's Emkay Global Financial Services.
And many pizza enthusiasts, like Kiran Raj, will never choose low-cost options. As he consumed slices at the neighbourhood restaurant Pizza Lounge in Chennai, the 26-year-old bank employee claimed he was willing to pay a little bit more for a product that was cheese-loaded.
"I avoid buying the sub-100-rupee pizzas at stores operated by big chains as they generally contain less toppings and a small layer of cheese," he added. "It's just a rough crust."
(Source:www.wionnews.com)
According to Sameer Khetarpal, the company aims to "own that price point," and the bare-bones, seven-inch cheese pizza with a "sprinkle" of basil and parsley is Domino's cheapest offering everywhere.
"You are coming to the store or open the app, because there is a 49-rupee callout," he said, adding that Domino's global team supported the plans. "Customers are going to eat out less because prices are higher everywhere - our existing consumers should not go out to some competition."
According to internet menu prices, Domino's cheapest savoury pizza costs roughly $3.80 in Shanghai and $12 in San Francisco. To contact a local franchisee in India, contact Domino's worldwide headquarters.
Six CEOs and 12 shop managers were interviewed by Reuters to see how Domino's and other international fast-food juggernauts like Pizza Hut and Burger King are being compelled to alter their business strategies in order to combat excessive inflation in the market of 1.4 billion people.
The businesses are vying for market share in a country that is crucial to their futures, where sizzling samosas can be had for as cheap as 10 rupees, and where it is challenging to compete with a street food culture.
Domino's 1,816 locations are managed by Khetarpal's Jubilant FoodWorks, and he says he has a staff meeting the first thing on Mondays to come up with new cost-control measures and combat the "historic high inflation" that caused the company's profits to decline 70% in the first three months of 2023.
He provided updated information on Domino's India pivot and its financial achievements, including the removal of lids from all pizza boxes sold in stores starting in December in order to save 0.6 cents each time. Given that 37% of Domino's Indian business is dine-in, he claimed that this translates into a sizable reduction in packing costs.
Jubilant, whose Domino's company generated the majority of its $635 million in revenues last year, also hopes to obtain rent rebates from some store landlords by making upfront payments, according to Khetarpal, who declined to provide more information on the advantages.
Domino's is not the only company focusing on India's prices, a market with a high sensitivity to price and one that is now experiencing higher inflation than many other markets, including the United States. According to the CEOs, reduced prices are intended to entice customers to shops and mobile applications where they might upgrade or acquire further add-ons.
Pizza Hut is actively pushing the 79 rupee ($0.96) pizzas it introduced last year, claiming that they are the brand's lowest-priced items worldwide.
The business is creating items that "make the brand relevant and easy to access" for budget-conscious Indian consumers, according to Merrill Pereyra, managing director of Pizza Hut in the Indian subcontinent, who also noted that its low-cost pizzas are popular with young people.
In June, McDonald's introduced half-price meals. According to Akshay Jatia, executive director at Westlife Foodworld, which operates 357 locations throughout western and southern India, they would be the focus of promotion activities in the upcoming weeks. He claimed that the lunches will increase traffic, sales, and profit margins.
According to Reuters trips to retailers across four Indian states, the low-cost products are indeed being backed by a digital and physical marketing blitz across the country, with outlets, and even a fancy New Delhi mall, plastered with banners.
The 49-rupee pizza, which was introduced in February, is Domino's primary inflation-fighter. According to Khetarpal, it was "re-engineered" by lowering the price and tomato offerings from its previous lowest offering of 59 rupees.
Franchisee Jubilant reported in May that during 2022–2023, cheese prices increased by 40% and chicken and paper box prices increased by 30%. According to government data, there have been further shocks in recent weeks, with tomato prices increasing by over 400% to record highs and households struggling with soaring prices for everything from milk to cereals and spices.
The industry participants told a story of two consumers living in a nation with vast wealth and poverty divides.
While those with higher incomes continue to spend money on items like more expensive cellphones and SUV cars, whose sales are reaching record highs, many low- and middle-income earners who considered dining at foreign chains as a lifestyle upgrade while the economy was booming are tightening their belts as inflation bites.
Khetarpal claimed to have observed consumers emptying their pockets and coming up with just 49 rupees when he visited Domino's locations in Chennai and other cities. He noted that sales of Domino's new gourmet pizzas, which have a price tag of up to $14, have increased in some affluent neighbourhoods.
Domino's, the industry leader in Indian fast food restaurants with a market share of roughly 12.5%, as well as other businesses, have had a bad year.
In the three months ending in March, Pizza Hut's Sapphire Foods' pre-tax profit more than halved. Restaurant Brands Asia, the Burger King franchisee in India, saw its net loss increase by 9%.
There are some bright spots, though. According to Euromonitor International, India's market for quick-service restaurants that provide fast food is only worth about $5 billion, compared to $137 billion and $341 billion in the United States and China, respectively.
The more restricted pizza, burger, and chicken restaurant business in India, which is controlled by Western chains and is worth $2.1 billion, will expand but more slowly. According to Euromonitor, it will expand at an expected 15% annual pace through 2027. Comparatively, growth rates of 21% in 2022 and 43% in 2021 were primarily attributed to a jump in post-COVID consumption.
Yum Brands, the company that owns Pizza Hut, struck a confident tone in June by contrasting its 17,000 U.S. locations with its over 2,000 in India, where it sees "a tremendous growth opportunity."
In the short term, there are still enormous obstacles to overcome.
"For a population eating roadside, in the current environment where inflation is hurting their pockets, (the new offers) are still on the higher side," said Devanshu Bansal, a consumer analyst at India's Emkay Global Financial Services.
And many pizza enthusiasts, like Kiran Raj, will never choose low-cost options. As he consumed slices at the neighbourhood restaurant Pizza Lounge in Chennai, the 26-year-old bank employee claimed he was willing to pay a little bit more for a product that was cheese-loaded.
"I avoid buying the sub-100-rupee pizzas at stores operated by big chains as they generally contain less toppings and a small layer of cheese," he added. "It's just a rough crust."
(Source:www.wionnews.com)
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