America goes vegetarian in India

By Sreerupa Mitra & Jayashree Maji 

Leading American fast food chains, which globally are known for their non-vegetarian offerings, are
raking in more moolah from their veggie delights in India following the lead of organized retail supermarkets which tend to avoid stocking non-vegetarian fresh produce items.

Cashing in on the rising fitness awareness among Indian consumers, players such as McDonald’s, KFC, Pizza Hut and Domino’s are seeing over 50 per cent of their sales coming from their vegetarian spread. In contrast, the global average of sales split for Domino’s is 95 per cent from non-veg offerings, while the non-veg contribution to Pizza Hut’s sales globally is 70 per cent of overall revenue.

“Consumers are making smarter and healthier choices these days and are looking for leaner food, trying to avoid red meats and fats as much as possible. This is a growing trend not only in India but also globally,” said Anup Jain, marketing director of Pizza Hut. The company positions itself as an affordable casual dining restaurant as opposed to quick service restaurant formats chains such as KFC, McDonald’s and Domino’s.

For Pizza Hut, which at present operates a total of 120 restaurants across India, the vegetarian menu contributes about 70 per cent to its overall sales. The company is famous for its classic margherita and its signature ‘kadai paneer’ pizzas as well as its creamy stroganoff pastas. An analyst said, “It helps that the vegetarian options typically are the entry-level products and these therefore represent the bridge to indulgence for many aspirational consumers.”

“Our vegetarian pizza menu contributes close to 60-65 per cent to our overall pizza sales,” said Harneet Singh Rajpal, general manager, marketing, Jubilant Foodworks, the India master franchisee of Domino’s Pizza. “Even in the pasta offerings, 70 per cent of sales come from the vegetarian offerings,” said Dev Amritesh, head-marketing at Domino’s India.

Vikram Bakshi, managing director (north & east) of McDonald’s India, said that if menu across the company’s stores are taken into consideration, vegetarian offerings account for 45 per cent of total sales. “The vegetarian menu has always done very well since we started in the domestic market. Our Indian innovation such as McAloo Tikki burger has also taken off in markets outside India since the last four years,” he said.

Chicken specialist KFC is seeing 20 per cent increase in footfall following the introduction of its vegetarian offerings. The Veg-Zinger burger is also a big contributor to the company’s same-store sales revenue growth which means customer conversions too are high, said experts.

“The vegetarian zinger has beaten our expectations and since its introduction we are seeing a lot of demand as well as a marked increase in our consumer base,” said Unnat Varma, director-marketing at KFC.

On same-store level, sales per month at KFC have grown around 20 per cent driven by new product introductions, especially the new vegetarian menu. “Earlier vegetarian products used to contribute 5 per cent to monthly sales, but post the introduction of the Veg-Zinger, it has doubled to over 10 per cent,” he said.

During the first half (April-September) of 2010, Domino’s India has clocked revenue of Rs 298.9 crore.

Now, like many organized retail chains, which have gone completely vegetarian in many stores reflecting the largely Hindu-dominated vegetarian populace of India, the American restaurant chains too are contemplating vegetarian only outlets.

Domino’s already has seven restaurants, which offer completely vegetarian menu. Four of these are in Gujarat, one in Haridwar, one in Amritsar and one in Shirdi. This is similar to Café Coffee Day, which has some outlets which only stock vegetarian food options.

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