The frequency of eating out has increased in proportion t the widening heterogeneity of the India consumer with evolving tastes and demand for more varied flavors. This difficulty in identifying consumer preferences has triggered the emergence of new themes in the market in terms of formats, cuisines, menu, ingredients and technology in the bid to attain and retain consumers and to stand out to competition.
Hybrid & Theme –based Concepts
Traditionally, a fixed set of characteristics have been associated with various food formats. For instance, QSR with their fast food offerings and minimal table service and Fine Dine outlets with their exotic and multicourse meals/buffets with full table service and upscale seating options represent formats targeting diverse consumer group. But, over the years, the market has evolved beyond these defined boundaries. Hybrid concepts are being introduced by players primarily to attract consumers and create a niche for themselves. These include:
Over the past five years, beverages have gained increased prominence in the food services market. In parallel with the growth of the Café culture, tea lounges, as a concept, have also gained momentum. The large populace of tea lovers is open to experimenting with variants of tea, even at a premium price. Needless to say, this opportunity has been readily tapped by both Indian and international players. Even regional brands like Tapri Chai, Chai Garam and Chai Point, and business house like the Tata’s (Chai Unchai) and Waghbakri (Waghbakri tea lounges) have forayed into the space. These tea-based chains offer a wide choice of Indian and international tea flavors, beside blended teas like honey, herbal, and fruit tea.
This growing significance of ‘tea’ is best showcased by the fact that global coffee company Starbucks with recently entered India, also offers tea-based products in its offerings, e.g. Tea Latte.
Also gaining in popularity are alcoholic beverages, thanks to changing consumer lifestyles and the increased incidence of social drinking. This has fostered the spread of retail formats which serve an assortment of both domestic and international brands under the same roof, e.g. Aura- The Vodka Bar, Bombay High, etc.
These are a new concept in the food services market wherein the main theme takes precedence over all other factors, including food, service and the overall ambience. The format aims to enhance the culinary experience of the consumer by blending in art, music, culture, fine décor and much more. Some of the more innovative theme-based concepts are detailed below.
Microbreweries: The emergence of microbreweries is a recent market phenomenon. They are limited to a few geographical locations, mainly metro cities. As the name suggests, these outlets brew fresh beer in-house and offer variants across different price points, vis-à-vis conventional outlets that only serve draught or bottled beer. The format’s setup is open-the brewing machines are encased in glass making the process visible from the seating area. To add to the experience, the staff takes customers for a tour around the premises.
Most of these breweries draw inspiration from the American and British pub culture, Right from the ambience to interior design, with table made of beer barrels, leather couches wooden bar counters, neon displays, low lighting and smaller food offerings. Players in this space include Toilts in Bangalore, Lemp Brewpub & Kitchen, Rochman’s Beer Island, Strikers and Howzatt in Gurgaon.
Entertainment Cafés: With the change in consumer behavior and the increase in competitivencess across formats, consumer retention is a challenge for every player in the market creating increased importance for consumer engagement. Consequentially, exclusive entertainment zones with entertainment options as board game, pool tables, foosball, live performances etc. are being offered by food services players to differentiate themselves and establish a unique brand proposition in the consumers’ mind. Players like comedy Night, Open Mic, and 5 Minutes of Fame are attempting to create consumer pull through varied entertainment offerings. Another example is the JSM Corporation, which has launched two ‘Polynesian theme’ restaurant – Mai Tai and Trader Vic, with a décor and ambience drawn on the overall experience of the Tiki culture. The set-up has large wooden statues, Tiki-inspried traditional music, and a menu that offers a mix of ethnic and regular cuisines.
Other players such as Howzatt and IIFA Buzz café in the space are based on the entertainment concept closer to cricket and Bollywood, respectively.
Some of the more popular concepts can also be seen around region-centric themes have also become popular; and include the likes of Punjabi by Nature, Oh! Calcutta, and Rajdhani, together with international cultural themes like Teppan Japanese Grill and Sushi Bar, Benjarong(Thai Cuisine), etc.
IN today’s market, it is important for players to balance offerings with changing consumer demand. This makes it vital for players to build relationship and through a strong consumer connect, establish a loyal customer base. The consequence is the adoption of diverse approaches as menu engineering models (a structured approach to designing menus) and menu strategies(concepts that are creative, unique, and in line with the player’s business objectives)
Indianization & Rlocalization
‘Indianization’ is the current buzzword in the food services market, with players modifying their core offering to suit the consumer’s palate. A good example is that of international player McDonald’s which has succeeded in India with a menu sharply contrasting its menu in the international markets. Chifly, pork and beef-based products are excluded; instead, more than half the menu is made up by vegetarian items, and there is also product customization for tempting the Indian plate. Another example is Pizza Hut which has introduced a customized range of pizzas like the ‘Great Indian Treat’ with Indian tastes as Tandoori, Achari, etc.
In tanderm with this, the ‘Rlocal’ concept has alo picked up with players tweaking meanus specifically for certain regional markets. Here again McDonald’s India is exemplary-it has established a purely vegetarian outlets in the holy destination of Vaishno Devi and also in a few cities in Gujarat that have a high vegetarian population.
Market players are adding combos and value meals to their menu in a bid to turn a prospective customer into a consumer. Some examples of value meals include the Happy Price Menu from McDonald’s, KFA’s Bucket and Box Meals, and Subway’s combos in the QSR segment; Pizza Hut’s meal for 2, Yo China’s lunch combo, and IndiJoe’s celebration combo in casual dine; and TGIF’s combo meal in the PBCL segment.
Ingredients are central to food offering and crucial in maintaining food quality, consistency, taste, aroma, texture, etc. Today’s experiment-friendly consumer is increasingly exploring new ingredients such as asparagus and black bean sauce, even in food preparations, and opting for them at various outlets.
Organic Foods: Organically-produced food components are fast becoming a more promising alterntive for the health conscious consumer as mass-produced ones may contain high amounts of chemicals. Kiosks such as Daddy’s Deli(Bangalore), cafés such as Seva Café (Ahmedabad), and Tattva Kitchen (Delhi) are some early adopters of this tread.
Gluten-free Foods; The heightened global exposure has even led to Indian consumers becoming more knowledgeable about the usage of gluten as an additive for flavorings, stabilizing or thickening food products. There is also greater awareness of the allergies and diseases associated with the excessive intake of gluten. The result is a shift towards gluten-fee foods by players, who have started introducing foods such as fresh salads, tandoori chicken, fish, etc. in their menus. Subway is a good example of a player offering gluten-free foods.
The trend greater technology usage by consumers has led food services players to adopt new and diverse technologies as a means of enhancing their customers’ experience and thereby establishing a unique brand identity. Prominent among these are the following.
Interactive menu screens and online restaurant reservations: Some players have introduced touchscreen devices (iPads/tablets) to enable convenient viewing of and selection from the product menu. Touche Diner(Bangalore) is India’s first touch-table diner offering interactive menus which also display images of the actual plating and presentation of food to be served.
Another innovation is the introduction of online restaurant reservation services by players like Table Grabber, Book Your Table and eat2eat. Apart from the ease of confirming reservations at no cost, these providers also make discount deals available online across various restaurants.
Social Media/Mobile Applications: With the growth of the social media phenomenon empowering consumers and informing their choices, various players have established a presence on social media platform as facebook and twitter. They have also developed exclusive mobile applications to connect with customers and adopted tools as Radian 6 and Meltwater Buzz, which allow for social media monitoring, engagement with existing customers, and promotion of the brand among target consumers.
For players like Café Coffee Day, Hard Rock Café, Mocha, Beer Café, and Channel V Sport Café, social networks like Facebook and Twitter, and also blogging platform, have become a core marketing medium to engage customers with interesting content, useful information (event, shows and latest offers), etc. Players like McDonald’s, KFC, and Pizza Hut have adopted a mix of social media and traditional media, but make use of the online media to offer schemes and discounts to consumers.
Brands like Domino’s Pizza have gone a step further and developed a mobile application enabling placement of food orders simply by pressing a mobile phone’s keys. Many players are also using social media platforms to encourage open consumer communication by addressing customer reviews, complaints, and grievances.
Emergence of Food Review Websites: Also a part of the Internet-triggered transformation, food review websites are now a key source of information about restaurants across various location. They host such details as product menus, restaurant pictures, location maps, review, rating, and even contact details of various outlets. For instance, Burrp, Time City and Zomato are food only sites with several listed restaurants across various cities enabling consumers to explore the best food options.
New Revenue – Sharing /Turnover Rental Models
The growing impact of high rentals on the overall cost structure of players has fuelled the evolution and widespread adoption of revenue-sharing models. These provide a cushion for players to manage costs in the event the location fails to attract the requisite number of customers and generate the anticipated revenues.
Malls like Nirmal Lifestyle in Mumbai, Select Citywalk in New Delhi, and Prestige Forum and sigma in Bangalore facilitate this option for players. The revenue sharing ranges between 7-10% for a QSR with a small carpet area and low average per cover (APC), and 15-18% for a fine dine or casual dine restaurant which are relatively larger formats with a high APC.
Indian Brands Foraying Into International Markets
Having established a strong and successful base in India, many food service players have started making inroads into international markets. They have received a good response, driven by the growing number of Indians abroad, expatriates traveling to India and experimenting with Indian cuisines, and also the increasing acceptance of newer cuisines by international consumers.
The more famous of these include specialty restaurant like Bukhara, Rajdhani, Moti Mahal, Bikanervala, and saravana Bhavan which offer authentic Indian cuisines. Amoung the countries of expansion are the UAE, the US, the UK, Canada, and Singapore. Even restaurants operated by well-knows Indian chefs, like Sanjeev Kapoor’s Khanazna, Yellow Chilli and Options are present in international markets like Dubai and Bahrain.
Also of note is the expansion of some popular Indian brands offering non-Indian cuisines into the global market. These include the like of Mainland China (Chinese), Shiro (Pan Asian), Café coffee Day, etc.
Sustainability Gaining Critical Importance in F&B
Sustainability, which encompasses health, environmental and societal trends, is slowly getting incorporated into the Indian psyche Both consumers and business are increasingly conscious about their carbon footprint, with businesses charting the complete route of all their products and services as a controlling measure. A desire to reduce operational costs changing investor attitudes, emergence of corporate social responsibility, or CSR, programs, and increased regulatory focus on facility operations and development is also driving the Sustainability trend.
While there is still need for more awareness regarding sustainability, certain initiative like use of organic and locally sourced food and adoption of healthier food options are gaining momentum. However, the lack of understanding and appreciation prevents “green” restaurants both from charging premium prices to compensate for their environmental efforts and from reaping any benefits to their brand image. Wider adoption of sustainability practices that such exercises should be financially viable and have a positive impact on the restaurant’s operations.
Focus Areas in Sustainability
The use and conservation of energy is one area where restaurants can contribute to Sustainability and also save on costs. Attempts to cut down on energy costs have however been limited to the front-end, whereas the food preparation area accounts for 60%-80% of energy usage in the form of heating, lighting, refrigeration and air conditioning Also, kitchen equipment is often neither efficient nor environment-friendly, and there are limited governmental regulations in this respect. Even existing norms like the BEE guidelines are not mandatory for the restaurant business.
While such environment –friendly equipment as computer-controlled fryers, ovens and refrigeration are available in the international markets, their cost, especially with the addition of import duties, is too step for smaller and unorganized players. Construction of restaurant buildings can also contribute to energy savings. “Green” residential and commercial electricity costs. Another option in terms of lighting is the use of compact fluorescent lights as a way of lowering electricity costs. Another option in terms of lighting is the use of compact fluorescent lights, or CFLs, and Light Emitting Diodes, or LEDs, which can be expensice, but are increasing in popularity.
Recycling and Waste Management is another concern for restaurants, which are required to “clean” their wastes before releasing them into the environment, usually using air scrubbers and effluent treatment plants. People are also worried about the dangers associated with landfills. In malls and shops, plastic bage are being replaced by paper bags. Some government policies help further such practices, but there is need for stricter regulations relating to recycling practices to be observed by F&B business. Restaurants need to switch to using recyclable paper and packaging and cut down on usage of plastic crockery and cutlery.
Also rising in prevalence is the use of fresh, organic food and ingredients, with India among the top ten counties in terms of demand for such food. Though organic food is not a part of consumers’ daily diet due to its higher cost, restaurants are however focusing on developing backend terms to access organic and non-ingredients. The bottleneck, again, is awareness, with customers not knowing the difference between organic and non-organic food. But with more education, organic and locally-grown food could find emphasis with restaurants seeking to create a premium aura and differentiate themselves from rivals.
Corporate social Responsibility, or CSR, is another emerging trend among F&B brands as CSR initiatives help in enhancing brand image and have value in international markets. In India, restaurants have hired specially-abled and improverished people, e.g., RJ Corp employs over 450 specially – abled people across India at Costa Coffee and KFC. Café Coffee Day also employs about 90 people with hearing impairments. Encouraging government policies can give a further boost to such efforts.
Going forward, intensive and far-reaching educational programs can be useful in promoting Sustainability initiatives. Governmental measures, including grading restaurants on their “Green” efforts and providing tax benefits/subsidies, can also be helpful. Further, F&B brands need to implement sustainable systems at both the front-and back-end, in pioneering ways if needed.