Indian Fast Food Market

In the Indian food market, there is a growing number of companies taking aim at the rapidly expanding middle income group. Research has shown that Indians are eating out more often. Companies like McDonalds, Pizza Hut, Domino's Pizza, Papa John's, Nirula's and KFC India are all quite popular and successful to some extent. We will be utilizing Porter's five forces, and an environmental analysis in order to compile this situational analysis.

Category Description- Size and Trends

India is the second most densely populated country in the world with more than one billion inhabitants and three quarters of this one billion population lives in the urban corridors of this country. Ahluwalia and Singh (2004) have indicated that there are about half a million restaurants in India in the organized sector. This figure is expected to grow due to demographic and economic factors impacting the industry positively. The organized sector alone is responsible for about 20 billion Rs in sales. Industry research has shown that Indians spend about 2.4% of their food budget eating out but Merril Lynch approximates 16% per annum growth in the short term. In the top 25 cities, higher income streams coupled with a swing towards dining out seem set to ensure growth in the foodservice sector. Indians are making more money and many of the younger population are employed leading to an increased buying power. Other factors like urbanization, more educated employed women in the workforce and a post liberalization generation all contribute to the growing QSR market Ahluwalia and Singh (2004).

Porters Five Forces Model

Competition

In India popular international brands include Subway, McDonalds, Pizza Hut, Domino's Pizza, Papa John's, Nirula's and KFC. Brands like KFC and McDonalds have excellent brand recognition, but they face stiff competition from the substitute market which shows that customer loyalty is not solely brand driven. Competition in this arena is fierce with unorganized outfits providing localized alternatives, but big brands, fear big brands, since they are capable of providing nationwide competition.

Threat of new Entrants

There are no restrictions placed on entry to the Indian fast food market. Due to this foreign companies can easily enter the market through the foreign direct investment (FDI) route. For success though, scale is required as multiple locations may need to be opened up to compete with the larger more recognized brands.

Threat of Substitute Products

In India, customers can use the traditional meals on offer at the smaller shops as opposed to going to fast food restaurants. Brand recognition helps the QSR chain stay competitive, but