The Hindu Business Line : Yum!'s the word

With Pizza Hut becoming synonymous with a `pizza treat' and KFC becoming the epitome of every chicken lover's delight, Yum! Restaurants, has finally arrived. In a freewheeling chat withBrandline, Niren Chaudhary, Managing Director (Indian Subcontinent), Yum! Restaurants India, spoke about the lessons that Yum! learnt ever since it entered the country, the strategies for its two brands, Pizza Hut and KFC in India, and the company's plans to double its business in India in the next three years.

What were the market conditions when Yum! first entered the country and what lessons did it learn?

Yum! entered India sometime in 1994-1995. At that time we were looking at bringing in both Pizza Hut and KFC together. The market conditions were more or less the same at a macro level. The country had a population of over a billion people and there was the phenomenon of rising consumerism due to an economy that was opening up. In fact, the context was very much the same. We wanted to move in, then get the first mover's advantage, and as a result, we learnt several valuable lessons down the line. In fact, while Pizza Hut did well, KFC fell behind.

We learnt several lessons from our initial foray with KFC. What we realised then was that with KFC we were slightly ahead of the curve for the readiness and the willingness of the consumers to consume foreign brands. It was a totally new concept. Then there was the question of price. We had initially approached the brand from the cost plus perspective. This meant that we first saw what it cost us to make the product and then what to price it at, which in turn led us to become overpriced for that time. In fact, the price point became a barrier for the consumers to try out our products.

On hindsight, the idea should have been to go price backwards to excite the consumers and then build a viable business model around it. However, with Pizza Hut, the concept of pizza was familiar, and the raw ingredients were locally and easily available, which in turn allowed us to price the products competitively.

What has been the strategy that the company has been following in India to build the brands, keeping in mind the ever-growing competition?

Well, as far as market leadership is concerned, it comes with its challenges. Consumer expectations keep changing rapidly. In such a scenario, one has to keep reinventing oneself. As a brand, our focus for Pizza Hut this year is going to be on innovation to stay ahead. Pizza Hut as a brand has been all about sharing great times, so we will put greater focus on our dine-in restaurant formats, to upgrade the whole experience right from the ambience to every possible touch-and-feel point including the menu and the cutlery. Our second greater focus will be on giving the consumers some more food news than in the past, in the form of festivals, special chef's recipes, crust innovations. The effort will be to make sure that there are at least four to five different food news for the consumers.

As for KFC, this is the brand's second coming and so far it has been doing well. The environment from the time of its entry to now has changed dramatically. Today consumers want more choices, better brands and better quality as well. The middle-class consumer boom is driven by aspirations that fuel many brands. What we realise today is that the country has a very youthful population. So when aspiration is coupled with a youthful population, it creates a strong platform for brands such as this. Through tie-ups with local players for supply of raw ingredients, we have also been able to implement the price-backward strategy for KFC.

Our focus for the brand in the coming year will be on its `mealness' quotient rather than on just building it as a snacking option. We will build the brand as a valid meal replacement. Second, the focus will be on `sharing'.

We will concentrate on the menu as well. As compared to our first entry, we have understood the importance of localising our offerings and we will continuously be focusing on more indigenous products. We are working on adding items such as tortillas, sandwiches and other snackables from our global portfolio.

What about marketing and promotion of the brands? What will your strategy be?

We will market KFC as we have been doing so far, as `Finger licking good'. And for Pizza Hut, we will be marketing it as a reason to share great moments with friends and families. In the past we have also used Bollywood icons as well to propagate these theories. Our commitment, in the future, will be more towards building the `sharing' potential for both the brands. There will be a lot more focus on dine-in formats for Pizza Hut and for KFC. We will be focusing on the quality of the chicken we use, besides its taste.

What about the health and nutrition factor? Most of the food offered is in the fast food category, which is generally high in calories?

We are in the business of tasty food. People from time to time want to treat themselves. We want to promote a balanced lifestyle. We are also taking many steps to make our food better. We have already started using oil that is trans fat-free. Also, we continuously evaluate the right levels of sodium in the food. As we expand our menu further we will be in a better position to offer health- and nutrition-based items, though that will never be the majority of our offering. It is important for KFC to become a brand that is broad in its outlook.

There has been talk about your plans to introduce Taco Bell to the Indian market. What is the status?

There are no firm plans right now. Our vision for the company currently is to double our business from India in the next three years, in terms of revenues, number of outlets as well as manpower. At the end of 2007, we had a total outlet count of 171 stores across India. We also have an employee strength of 6,000 and hope to double that in three years. India most definitely is a market for the future.

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