From Happy Meals at Gwalior to Zinger Burgers at Vizag, baby corn pizzas at Haridwar and Broccoli pasta in Kota, multinational restaurant chains are increasingly targeting the small-town India. For world’s leading fast food chains such as McDonald’s, KFC and Domino’s Pizza up to one-fourth of their sales come from tier-two and tier-three towns and cities. They expect this share to grow.
As reported in an article in leading business newspaper, Vikram Bakshi, MD and joint venture partner at McDonald’s India (north and east) said, “There is an immediate requirement to reach out to consumers in small towns. But you need to create consistent pull and not the occasional visit; that’s the real challenge and that’s where a lot of work is still to be done,” he adds.
So, the marketers of these multinationals are now developing strategies for consumers in Kota, Shirdi, Allahabad and Kochi, rather than Delhi and Mumbai. Domino’s plans to open 70 new stores over the next 10-12 months and almost half of them will be in tier-2 and tier-3 cities.
There’s a very high pent-up demand in these markets and potential consumers walk in at these stores out of curiosity. Domino’s is doing road shows on the banks of the Ganges at Haridwar and putting up billboards at Shirdi, while KFC is undertaking specific localized promotions for its chicken buckets at Amritsar and Kochi.
McDonald’s went a step further by launching social initiatives to connect with local customers. It ran a water awareness campaign in Gwalior, which faces a huge water scarcity. The exercise involved giving simple tips to people to use water efficiently and its mascot Ronald McDonald hosted shows and slogan contests. In Agra, it organised an anti-plastic bag campaign that involved McDonald’s officials cleaning up the city along with school students.
The Indian quick service chain is the fastest growing restaurant segment in the Asia Pacific region with annual growth of about 20%, according to a report by the National Restaurant Association of India (NRAI).
Smaller towns are growing in size as well as aspirations. While a resurgent rural consumer rescued the FMCG industry, the small-town growth story is all set to explode organized restaurant business to new highs. KFC, an American chain owned by the $16-billion Yum! Brands, says consumers in small towns don’t want to be treated differently than urban ones.
These multinationals use mass media advertising to create aspirational value, but localize promotional and marketing activity to maximise impact. While in most cases, the entry-level menus are similar as those offered in the metros, marketers are bundling their goodies to make them more cost-effective. Also, menus are being tweaked to local relevance. For example, Domino’s promotes more entry-level pizzas at Rs 39 in Pune to reach out to the large student population and offers more vegetarian fare at its stores in Haridwar and Shirdi.