Who moved my cheese burger?
India is a land of contradictions and whatever one says about the country, the opposite is also true. But there are two things that unite Indians from North to South and East to West. Any guesses? Let me do the honors, it is none other than Cricket and Burger. Cricket should have been an easy pick here but Burger! Ah, at the end of our discussion it would be pretty evident why no list can be prepared without its mention. We’ll also analyze the scorecards of Sachin and Bradman of the Indian Burger Industry- McDonald’s and Burger King. As we have enough paan-shops and news channels to discuss cricket let's keep our discussion limited to Burger.
Size of Indian Food market:
Indian food services market is roughly Rs 4000 crore in size with 60% of the share occupied by the unorganized sector. The organized food chain market is Rs 400 crore to which Rs 200 crore is contributed by Quick Service Restaurants. Dominos, Burger King, McDonald's, and Subway are a few of the big-shot players in this market.
Padharo mhare Des:
Burger King was a late entrant in India planning its arrival in 2014. On the contrary, McDonald’s is spreading its leg Y-o-Y since 1993 while Domino’s entered in 1995. While playing the game of catch-up, Burger king went on a spree of opening new outlets and went on to become the fastest-growing QSR brand in India in the last 6 years. During this period it multiplied its store count from 12 to 270 which is phenomenal. As per its agreement with its US counterpart, it will open at least 700 stores in India by 2026.
Economics of a Burger:
The average revenue per store for Dominos is roughly 3 crore while it is around 4 crore for Burger King and McDonald’s. 20–25% is the average margin for such stores.
The cost of ingredients in a burger is roughly 30% of its listed value. Real estate costs vary from location to location. Over 90% of the 270 Burger King outlets are company-owned rather than franchised which is in contrast with McDonald’s model. The king takes the land on lease rather than buying it. Roughly 10% of the revenues are spent on advertisement costs to make up for the lost decades. Additionally, it pays around 3–5% of its sales in the form of royalty to Burger King US.
Burger King’s forte:
- Second-mover advantage: Burger king learned from McDonald’s mistakes and opted for a centralized franchise rather than regional to manage conflicts.
- Differentiator: Although a late entrant, Burger King did not involve in a price war with McDonald’s. While the cheapest McD veg and non-veg burgers are available for Rs 30 and Rs 50, Burger King offers them at Rs 45 and Rs 69. Its products such as Whopper works as a differentiator rather than just another McDonald’s store.
- Experimentation: The R&D team in India works day and night to offer a menu that serves the local palates.
- Open to feedback: Burger king was quick to roll back its rice meal in India based on the feedback from its various outlets. It learned that Indians generally expect crispy and spicy fast food at a QSR.
Challenges: Fall in sales during Covid, high advertisement cost and rising online delivery startups spoiling customer buying behavior are a few of the challenging fights that the king will have to fight to expand the boundaries of its kingdom.
