Shopping Centers Today International

FEB 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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of them under age 35, and which boasts a growing middle class. The proliferation of U.S. burger chains in India may appear to be an odd phenomenon given the fact that beef is generally taboo there. India's Hindu majority considers cows sa- cred, and an estimated 40 percent of the population is vegetarian for religious and cultural reasons. Not surprisingly, there is little demand for the traditional American beef burger. But burgers made from vegetables, chicken, lamb or mutton have be- come highly popular, partly because they can be eaten on the go and are relatively affordable, according to Shabori Das, a senior research analyst at Euromonitor International. Among the Western-style foods sold in India, burgers and pizza are the most-popular choices. Burgers tend to be priced lower than pizza, which has contributed to their appeal, according to Euromonitor. McDonald's menu in India in- cludes the classic McVeggie, a breaded patty made of vegetables, onions, po- tatoes, rice and spices, topped with eggless mayonnaise and lettuce, and served on a bun. Other menu items in- clude the towering Chicken Maharaja sandwich, which resembles a Big Mac, but is made up of two grilled chicken patties, topped with onion, lettuce, tomato and melted cheese and served on a three-piece bun. In 2013 McDon- ald's opened a unit in Gujarat — a state in western India where almost all the residents are vegetarian — that has an entirely vegetar- ian menu, according to Euromonitor. Two years earlier, Kentucky Fried Chicken — which, like McDonald's, was a first mover in the Indian market — opened a res- taurant in Gujarat with vegetarian options on the menu. KFC's menu in India does include nonbeef burgers. Most of the international fast- food brands operating in India do so through franchisees. "With more brands opening, the burger market is expanding and providing consumers with different price points and qual- ity," said Rajneesh Mahajan, execu- tive director of InOrbit Malls, whose fast-food tenants include Burger King, Kentucky Fried Chicken and McDonald's. InOrbit Malls is a sub- sidiary of the K. Raheja Corp. "If you compare the international burger chains with Indian fast-food chains, or with Indian restaurants in general, their productivity is higher in terms of top-line revenues. In most markets in India, they perform better." The compound annual growth rate in sales for fast-food burger chains ex- ceeded 13 percent (excluding the impact of inflation) between 2009 and 2014, ac- cording to Euromonitor. For the six-year period to end in 2019, fast-food burger chains are expected to see their sales grow at a compound yearly rate of nearly 10 percent, excluding inflation. Still, India remains a challenging market for international brands try- ing to make their mark there. Like many other emerging markets, it has suffered setbacks on the road to greater economic prosperity. In ad- dition, many international fast-food brands have had to navigate supply- chain issues and contend with a relative shortage of high-quality mall space and steep operating costs for some items, like rents in major cities and electricity, says Jasper Reid, CEO of International Market Manage- ment, a London-based advisory and investment firm. The firm's invest- ment division is the national franchi- see in India for Wendy's and for two brands founded by British celebrity chef Jamie Oliver: casual-dining chain Jamie's Italian and Jamie's Pizzeria. When McDonald's made its foray into the market, it essentially had to create its own supply chain and work to overcome the fact that the burger was still a foreign concept to many lo- cal consumers, Reid says. "The burger, like other Western foods, isn't a staple in India," he said. "Guys like McDon- ald's went through the formative work of helping people to understand it and get used to it as an alternative to the local cuisine." India's fast-food market (also called quick-service restaurant, or QSR) has developed more slowly than many people anticipated back in the 1990s, observes Reid, because of the country's b u m p y e c o n o m i c progress and other challenges. "Even though there are 1.3 billion peo- ple in the coun- try, the market for QSR chains is still a fraction of that, and it is concentrated in the cities," he said. "The big picture is that your consumers F e b r u a r y 2 0 1 6 / S C T 49 W e n d y ' s s p i c y a l o o c r u n c h

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