Leading Quick Service Restaurants (QSR) in the country have resorted to discounts and offers to attract customers and to increase footfall at their retail outlets. With online food delivery platforms gaining momentum, many fast-food restaurants, including international brands such as Pizza Hut, Domino’s and KFC have increased the number of promotional offers and discount rates to grab a share of the increasing revenue generating pie in fast-food sector in India.
Online Overtaking QSRs
Consumers have increasingly turned to online food delivery platforms such as Swiggy, Zomato Order and Foodpanda for their fast food needs. With the added advantage of convenience and ease of service, food tech platforms have overtaken fast-food retail outlets. These startups have invested significant amount of money to bring consumers online with their own variation of discounted rates and offers. Although many QSRs are present on these platforms, consumers have the added benefit of choosing from several restaurants as opposed to sticking with a specific cuisine when visiting a brick and mortar outlet. Speaking to Economic Times, Arvind Singhal, founder of retail consultancy Technopak, said, “These offers by QSRs are like end-of-season sales by fashion retailers. Apart from a wary consumer outlook, the monsoon is a lean time for QSRs because schools and colleges have reopened. They have to resort to discounting for their walk-in customers because online delivery of food has emerged as a large competitor for fast-food chains.”
Discretionary Spending Slowdown
Even with the convenience of online food delivery platforms, consumers have also started to cut down on their discretionary spending. The cutbacks have significantly affected QSRs, leading them to offer ‘one plus one’ offers and discount rates to attract more customers. “The market is very competitive and everybody is trying to grab a piece of that. The spending power of people is not what it seems on paper. Everybody is fighting for the same customer,” added Ravi Jaipuria, owner of RJ Corp which has franchisee rights for KFC, Pizza Hut and Taco Bell. Recently KFC introduced several initiatives to potentially woo customers with its nominal rates. “The QSR industry on the whole is noticing more controlled discretionary spending from consumers,” added S Murugan Narayanswamy, senior VP-marketing at Domino’s Pizza India.
Although disposable income has significantly increased among the working professionals in the metros, spending that incomes has considerably slowed down. With many alternatives such as food-delivery platforms and online-only restaurants serving home cooked meals, QSRs should rethink their strategy on attracting more consumers to their retail outlets.