India will be among our largest markets globally: Burger King
Fri, 11/07/2014 - 11:15
Burger King, the world’s second largest burger chain after McDonald’s, is aiming for growth without a “ceiling” in India as it prepares to open its first store in the country here on Sunday.
Burger King India chief executive officer Rajeev Varman told Business Standard the Miami-based chain does not see a limit or a ceiling to the growth potential in India, as the “big numbers reflect”. It has joined hands with private equity major Everstone Capital for India entry. The plan is for 12 stores in the next two to three months.
“As the concept of Burger King comes in, there will be more exposure and the market will grow further. India as a market has no ceiling right now and that’s what the big numbers reflect. There is no ceiling as far as our brand is considered. We just need to be sure that we don’t do just a load of restaurants but profitable restaurants,” Varman said on Thursday.
The company plans to expand in Delhi and Mumbai initially, as it feels these are the key markets to get a firm foothold in the country. This would be the 100th country for the chain. It recently entered China and Pakistan. Pricing in India will be competitive, keeping in mind its major rival, McDonald’s.
The burger quick service restaurant (QSR) market is about two per cent of the overall QSR market. According to trade estimates, the QSR market is expected to double by 2018 to Rs 26,000 crore, through domestic and global entities.
Explaining India’s importance from the global perspective of Burger King, Varman said India would be one of the largest in Asian markets. “In the long run, it is going to be one of the largest globally. In fact, it was mentioned in our recent earnings call as well. So, the company sees India as one of the biggest opportunities.” He said an annual compounded growth rate of 35-40 per cent is expected by the company.
Interestingly, like a majority of its rivals, it has not Indianised the menu but has developed the Indian product from scratch. “We did a complete tour of several cities with a senior team, in places like Chennai, Ahmedabad, Amritsar, Lucknow downstreets. We started the product development process from scratch — we did not carry products from abroad but carried concepts and the cooking platform and ethos that Burger King is known for,” added Varman.
Burger King joins a list of fast-food brands that have made a beeline for India in the past decade and a half. These include McDonald’s, Yum Brands and Subway. Burger King India wishes to innovate further and offer a new experience to consumers, which, according to Varman, is key to success in any market. “I am not worried about head room now. We can put 300 - 400 restaurants here and not even be worried about headroom but I think people worry too much about the size of market. A greater focus needs to be on what we are offering to customers and if that’s resonating.”
- Founded in 1954, headquartered in Miami, Florida (United States)
- Burger King Holdings Inc acquired by 3G Capital in 2010 for $4 billion
- Annual revenue pegged at $1.14 billion as of 2013, against McDonald’s $28 billion
- Operates more than 13,000 outlets globally, against 35,000 plus locations for McDonald’s
- Runs stores across North America, Carribean, Europe, Asia and Africa
- About 50 per cent of its total outlets are in the US
- It has about 100 stores in China
Source: Company, industry estimates