In 1995, when KFC opened its first outlet in India, a few curious customers would walk in and look puzzled at what they had ordered: a couple of pieces of colorless, fried chicken. That this was a meal was rather incomprehensible to a population that ate carbohydrate heavy meals three times a day. If at all chicken was consumed by itself, it had to be a fiery, red piece of tandoori. Not anymore. In the last six years, Indian plates and palates have welcomed whole hosts of new dishes and flavors—prime among them is that classic American favorite: fried chicken.
KFC is now a prominent presence in Indian cities and towns. In the next couple of years, the red and white signboard will be even more visible. Yum! Brands, the parent company that owns the KFC brand, has set in motion an expansion plan to open 500 stores by 2015. It isn’t being over-ambitious. About 1,800 people visit each of the 190 existing restaurants every day. In December alone, there will be 40 new KFCs popping up all over the country. Despite the fact that there are less than 200 outlets now, India is expected to be such an important market that Yum! Brands India reports directly to the headquarters in Louisville, Kentucky. China is the only other country that also has a division.
To further push the union, India and KFC decided to meet each other halfway. While, staying true to the core product, fried chicken, KFC has introduced dozens of variants that appeal to the Indian palate. At the Yum! Brands office in Gurgaon, where I am surprised by the presence of a Dominoes delivery boy, Tarun Lal, Chief Operating Officer, explains the concept of Indians’ love of duality. “We like two flavors together. Which is why when people order fresh lime soda in restaurants, they often ask for it with salt and sugar. What we do with our products in KFC India is offer them this duality. Chilly and lime, for example, is a favorite combination,” he says. Lal, who is focused, yet affable, has worked in KFC for 18 years in markets including South Africa and other Asian countries.
KFC has significantly spiced up its recipes in India. The hot and spicy wings it serves here are the spiciest in the world, among KFC restaurants. Late last year, it introduced Fiery Grill, which took the battle against the tandoori chicken right up its oven door. While it isn’t as red as tandoori, it tastes quite similar., as if the tandoori went abroad to live for a few years and then returned to India. Next week, it will launch curry chicken, a variant of the fried chicken which has the aroma and punch of curry. It also has a large variety of vegetarian food in order to appeal to the roughly 20% of the population that does not eat meat. “Even though we love fried chicken now, we still want a lot of choice. Fiery grill gives them the choice to eat something familiar, but one that is approached in a different way,” says Lal.
The other key to KFC’s success in India is in pricing. In order to appeal to the young customer, one who is more likely to crave fried chicken than a tandoori, KFC has significantly dropped prices. This year, it introduced a Street Wise menu—burgers, drinks, chicken wings etc which sell for Rs 25 (50 cents). This is targeted directly at college students and the advertisements are entirely in youth lingo. The idea is to lure the customer away from the college cafeteria and offer products at a similar price point. “What we kept hearing from young people was that they love KFC and go there when they have to celebrate something, because the average ticket size is higher. We love that they see KFC as a place where special events are celebrated, but would also like them to come hang around every day. Street Wise has been tremendously successful, and there is a lot more we will do there,” says Lal.
This is in fact, KFC’s second attempt at cracking the Indian market. Though it was an early entrant, its fare was way ahead of its time. Slowly, as more and more Indians began travelling abroad, they began to experiment a little with what they ate by 2004. Indian restaurants, up until then, mostly served Indian or a very Indian-ised version of Chinese food. By 2005, it became clear that India was ready for fried chicken when. This was evident from customer feedback received at the three restaurants and further confirmed by market research. KFC had three outlets in India for its first 10 years, and opened two more in 2005. They became runaway successes and set the pattern for the company’s expansion. “We noticed that Pizza Hut was an easier concept to establish in India, probably because it wasn’t really alien. It is a flat bread with some sauce and toppings. So for about 10 years, we focused on Pizza Hut and let KFC be. But we never doubted the fact that KFCs time would come,” Lal says. Last year, KFC overtook Pizza Hut and became the company’s biggest brand in India.
In 2015, KFC is looking to target revenues of $600 million. It is now at a third of that. In 2010, a report on the poultry industry in India pegged the consumption of chicken at 3 kg (6.6 lbs) a person. This is expected to double to six by 2015, as average incomes grow in the country. But KFC is beginning to see competition from non-tandoori directions now. South African chicken chain, Nandos, opened its second outlet in the country this month and their plan is to have 35 outlets by the end of 2013. UK based Dixy Chicken has a partnership that runs two outlets in India. They are also seeking to expand aggressively.
While finding quality real estate where a clean deal can be struck is a problem, the bigger challenge is dealing with the limping infrastructure in the country. Sourcing poultry is also difficult; KFC is actively encouraging its suppliers from other parts of the world to set up shop in India. Last month, a customer claimed to find live worms in his fried chicken. The story played on national media and the department of food, health and sanitation shut the outlet down for over three weeks. Just after, a bird flu scare in the southern Indian state of Karnataka put punters off their chicken for a while. “These are the environmental challenges of doing business in India. We have to learn to be nimble and open,” Lal says.
With nearly 300 outlets, McDonalds is still the most successful quick service chain in India. Domino’s also has a sound customer base, in fact, India is the only country where 60% of Domino’s clientele dine at the restaurant. But as Indian wallets grow, so do the stomachs.
KFC had demonstrated the quickest rate of growth in the last give years. And as more Indians grow up in a globally aligned India, fried chicken will be as familiar a food as burgers or the more traditional Indian cuisine. KFC’s story in India will be one where the chicken didn’t come first but stayed on for a profitable future.
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