Going hybrid: Why QSRs are tapping the frozen food segment

Short Description
Above all, it becomes easier for a QSR brand to enter into the frozen food segment when compared to a fast casual or a fine dine brand. QSR chains have standardised processes and recipes which they follow for quick turnover of orders. This help in finalising a perfect concoction of packed food.
  • Sakshi Singh

Ready to eat (RTE) meals in India are a far cry from the dismal frozen TV dinners of the West. Using innovative technology and a smart selection of recipes, these are meals that can bring the restaurant home as well as conjure up home breakfasts.

This growth is linked to the changing demographics of urban India. Young working couples and single people looked for easy dinners that would satisfy cravings for Indian food and be a valid alternative to pizza, pasta or 2 minute noodles. The Indian ready-to-eat food market was valued at 261 million dollars in 2017 and is projected to grow at a CAGR of over 16 percent from 2018 to 2023 to reach 647 million dollars by 2023.

The pandemic and the lockdowns have brought a surprising new impetus to the business. With restaurants shut, mounting concerns about food hygiene, a store bought RTE meal seems like a safer and easier bet for most. Especially for all those who haven't sharpened their culinary prowess and live off instant foods, these heat and eat meals are fast becoming the new essential.  

Companies operating in this category have reported a 30 to 45 percent spike in demand and believe that this trend is here to stay. While the market is seen being saturated by many new brands, an interesting shift has come into notice. Many restaurants based QSR chains have either entered into the ready-to-eat frozen food category or have aggressively expanded their existing offerings during the pandemic period.

Pandemic accelerated the growth

According to Prasuk Jain, Owner of Pink Wasabi and Game Palacio, product segment and geographical landscape along with user friendly apps, tech enabled driver networks and the growing demand of consumer expectations has paved the way for ready to eat meals. Multiple lockdowns and physical distancing also gave an enormous boost to delivery becoming important for the restaurant industry.

The biggest announcement from the QSR segment was when QSR giant, WOW! Momo looked at capitalising on their brand ‘Made for Home’. The venture claimed that its momos have no MSG and no preservatives and have a shelf life of nine months. The product is available in five flavours, Veg Darjeeling momos, Chicken Darjeeling momos, Masala Chicken momos, Corn and Cheese momos and Chicken Cheese momos.

The frozen momos are exclusively available online on Bigbasket in cities such as Delhi, Gurugram, Noida, Kolkata, Mumbai, Pune, Bengaluru, Chennai, Hyderabad and Ahmedabad. Sagar Daryani, Co founder and CEO at WOW! Momo had said in a statement, "Our success in Quick Service Restaurant business has taught us to be close to our consumer; and our foray into FMCG is to take this bond one step ahead. We want to be a part of every grocery order in the country - we want to be the food for all times; that's with you all the time."

As the company aims to expand to multiple categories such as sauces, snacks and much more, Daryani also confirmed that the company’s decision of foraying into the FMCG and frozen food category was to make the business model more hybrid taking cues from the unprecedented times. In 2020, the QSR chain also teamed up with Café Coffee Day (CCD) to set up kiosks in CCD stores all over India.

Entering the lesser saturated market

When it comes to the frozen momo category, Prasuma Momos have been the market leader for a while. When asked does QSR chains venturing into the frozen food segment can be of any threat to such companies, Lisa Suwal, Founder of Prasuma Momos believed that when it comes to Momos, the more, the merrier. 

“Zomato's annual survey said that it sold Momos to over one crore people in 2021, and it's safe to assume that Swiggy would have sold just as many. Considering that we are a country of 1.2 billion people, these two platforms account for sales to less than one percent of our population at the very most. Consumers are happy to try new brands since switching cost and trial cost is low, so customers will switch to brands that offer better, yummier products. This is to say that we believe the market is large enough for many players to co-exist and satisfy customer cravings as best we can,” she pointed. 

There are many other examples as well. Bikanervala has recently launched its ready-to-eat range of curries and would soon be foraying into the frozen food category with products such as frozen samosas and vegetarian kebabs, under its INR 1,100 crore FMCG brand, Bikano.  The brand has 110 restaurants across the globe, and it will be soon taking online orders, which would later be followed by the launch of its own app. Through the lockdown, it's only the delivery business that has worked for them. Earlier, delivery used to contribute around five percent to the revenue and going forward it's going to be as high as 20 to 25 percent, the company added.

Going hybrid is the future

“The inhibition of customers to go out and eat but still wanting the same fresh flavour and taste at the comfort of their own home. Ready to Eat Meals are easy to prepare. It's a great option for people working from home. Many QSR brands have entered this domain recently, Pack A Pav has been doing a great job. We at Veer Ji also provide Fresh Marinated Chaap, Ready to fry. It is prepared fresh and remains good for 10 days if refrigerated,” Vijeta Khilnani; Founder of VEERJI informed.

The change can be witnessed from the other side of the business too. In order to go hybrid and tap all the possible potentials, FMCG companies too are entering into the QSR domain. Packaged consumer goods and services company CavinKare announced its foray into the quick service restaurant segment selling fried chicken, pizzas, and burgers under the Jango’z brand. It has already launched an outlet in Chennai, with plans to set up over 100 outlets across the country by 2026. Entry into the QSR space is in line with the company's refreshed CavinKare 2.0 strategy.

Above all, it becomes easier for a QSR brand to enter into the frozen food segment when compared to a fast casual or a fine dine brand. QSR chains have standardised processes and recipes which they follow for quick turnover of orders. This help in finalising a perfect concoction of packed food.

But, among all, one company that has mastered the art of both, restaurant as well as frozen food format is Haldirams. The Delhi based company has come a long way, with a large number of restaurants and an extensive network of C&F and distributors across India. The brand has a global reach too, with its presence in more than 100 countries across the globe.

Launched in International Market between 2012 to 2013 Haldiram's Frozen Food range is already one of the most popular product categories, with delectable offerings such as Breads, Parathas, curries, snacks, chutneys, combo meals, sweets, Mom's Special, Dakshin Express, and Jhatpat Meals. The brand learned about diversity much before the pandemic made the other players aware.

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