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Fast food chains hungry for China, India

April 28, 2011

With Chinese and Indians wolfing down pizza’s and burgers by the box-load, the fast food industry is seeing run away profits. Marking a striking increase in fast food consumption, from instant noodles to vada pav on the go, the Chinese market has begun consolidation, while the Indian market, still a few years behind is seeing a rush to drive-in and set-up.

In China, Yum Brands Inc, parent of the KFC, Taco Bell and Pizza Hut fast-food chains has made a preliminary offer to buy most of the shares of China’s Little Sheep restaurants of which it already owns 27.2 percent. The move to consolidate will make it China’s largest fast food chain, and give it enough ammunition to grow its international markets. Yum Brands Inc, has about 300 stores in India. KFC, Yum Restaurants’ biggest brand, is growing rapidly and has a presence in 21 cities with close to 107 restaurants.

India’s quick-service restaurant market is worth US$13 billion and growing roughly 25-30 percent a year, according to Euromonitor and market research firm RNCOS. India’s entire food-service market is estimated at US$64 billion.

While both markets are traditionally raised on home-cooked, healthy food, a change in the working habits of citizens, increased working hours and the induction of working women into mainstream industries  in the last few years has caused a rapid rise in fast food consumption, which albeit unhealthy is a convenient way to eat.

Indians and Chinese however are also finicky about their eating habits, making the two enormous markets a little trickier to enter, it’s also why local brands such as Little Sheep, Ajisen Ramen, Jumbo King, and Kamats are doing well in their local markets. As a result of trying to fit in and increase revenues, fast food chains are localizing their dishes. So KFC has a dragon roll and dumplings on their menus and Pizza Hut India serves a masala Pizza. An added disadvantage in India is that a majority of the people don’t eat beef, a vital ingredient in hamburgers, which Burger King learnt the hard way when it entered India in 2007-08. Both Burger King and McDonalds now serve vegetarian burgers to their Indian patrons.

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