Coming soon: Burger King in Mumbai, NCRWed, 07/30/2014 - 22:15
MUMBAI: American fast-food giant Burger King will open its first few outlets in the country by year-end as it aims to make India, along with China, its biggest market in Asia-Pacific. The outlets will come up in Mumbai and Delhi.
Coming at a time when rivals like McDonald's, Domino's Pizza and Yum! Brands have established a long lead here, Burger King will look to penetrate the untapped smaller towns to gain a toehold in the market, said a senior executive from the Miami-based chain.
"China and India will be the two growth engines for us," said Elias Diaz Sese, president, APAC, Burger King, in a chat with TOI.
Burger King has a joint venture with the Everstone Group, an India-focused, Singapore-based private equity and real estate group, to open a few hundred stores here over the next ten years. Having stepped up its international expansion, particularly in Asia, and post the entry of its new owner 3G Capital in 2010, the hamburger chain is banking on the new growth wave in the continent propelled by favourable demographics and consumers' increased eating-out occasions.
Burger King formed a joint venture in 2012 to open 1,000 restaurants in China by 2015. It recently started selling burgers in Pakistan and Brunei.
India has been untouched by the maker of the WHOPPER® burger in stark contrast to many other western fast-food chains who spotted the opportunity in the 1990s post the economic liberalization. "Deciding on a partner in India was tedious. We met most of the large corporations and players in the F&B space," said Sese, justifying the chain's delayed entry.
Burger King has been expanding in newer countries amid a tough fast-food market in the US, mainly through a franchised model, which also has been a cause of concern among the investor community despite the business growing steadily. With its 33-year-old CEO Daniel Schwartz at the helm, who spearheaded major spending cuts at the company, Burger King now owns just 52 stores. In 2010, when 3G Capital bought the chain, Burger King owned 11% of the total stores, according to a recent Bloomberg Businessweek story.
The Asia-Pacific region, where Australia and South Korea have been major growth drivers, accounted for 5% of Burger King's $1.14-billion revenue last year. "It (Asia-Pacific) is the smallest contributor but with the largest potential," said Raj Varman, CEO, Burger King India. The 60-year-old burger chain is currently putting together building blocks to roll out stores in India by the last quarter of this year, Varman said.
Currently, almost 40% of the western fast-food market by value sales lies between Delhi NCR and Greater Mumbai, which means there is a much bigger potential outside these two cities, said Jaspal Singh Sabharwal of Everstone Capital. Burger King and Everstone may look to sub-franchise the brand for airport and railway retailing at a later stage, Sabharwal said.
While Burger King offers vegetarian burgers and spicy bean burgers in Canada and UK, it will unveil a segregated vegetarian menu here in India, a common practice for most Western fast-food brands. Nearly two-thirds of Indians now eat out at least once a week, boosting the growth of the restaurant industry, which is expected to touch $26 billion in 2015, according to industry data.