As Indians lean towards quick gourmet, Domino’s, Wendy’s, Burger King, McDonald’s rejig menus
They are now increasingly turning to premium bases and toppings as competition from high-end gourmet pizza and burger brands shows that there are better profits to be made.
The move also aims to expand its customer base by bringing in new, more discerning consumers and offering premium offers to regulars who come for affordable fares.
In September, Jubilant FoodWorks Ltd, which operates Domino’s outlets in India, launched sourdough pizzas from 7 p.m. ₹349 — this is at a chain that offers pizza at very low prices ₹49. Sourdough is dough that is naturally fermented without the use of yeast, which gives pizzas and breads a crunchy texture and nutty taste.
Speaking on Jubilant’s September quarter earnings call last Thursday, Chief Executive and Managing Director Sameer Khetarpal said, “There is a growing opportunity at the premium end of pizzas – more gourmet, wood-fired, sourdough – and I believe the team has done a great job bringing sourdough pizza into the mix.” he said.
Sourdough pizza has quickly become the fastest-growing subcategory in the broader pizza market and is driving margins. “We were actually surprised at the uptake of such a product in tier 2 and 3 cities. We thought it would be more metro oriented,” Khetarpal added.
Sourdough pizza is pushing up margins that are being pulled down by aggressively priced products that come with higher margins. The Jubilant CEO said that while it was previously about driving volume growth, there is now a move “towards higher ticket sizes”.
The company is looking for cost efficiencies, mix changes, adjusted price increases, etc. It forecasts an EBITDA margin increase of 200 basis points over the next three years. (EBITDA, short for earnings before interest, taxes, depreciation, and amortization, is a measure of the profitability of a business’s core operations.)
Profits: fat and juicy
Now, here’s the sweet truth for Jubilant and other pizza chains: Even though sourdough takes more time to prepare, the cost of making sourdough pizza isn’t much different than regular pizza, one expert said. “Authentic sourdough uses only flour, water, salt and a starter; no oil or commercial yeast – so the ingredient cost is not high,” said Geetha Krishnan, founder of tfk Kitchen, a bespoke baker that serves many restaurants and airport lounges in Bangalore.
Long fermentation and associated labor costs increase, but even that won’t happen on a very large scale, Krishnan said. With greater production volume, the price impact will be even lower.
In other words, most of the increase in prices of sourdough pizza goes directly to profits.
One analyst said the same. “Jubilant sees strong growth opportunities in the premium and gourmet pizza segment… product innovation and headroom for premiumization are drivers of growth, which will support margin expansion through operating leverage and price increases,” Karan Taurani of brokerage firm Elara Capital said in a Nov. 13 report.
Taurani said gourmet offerings helped with the initial spike in demand and better fueled same-store sales growth; This is a commonly used metric in the restaurant industry to measure the performance of existing outlets. He said that this move also helps elevate the consumer experience. Mint.
However, he noted that the increasing intensity of competition in the market for such foods could challenge the long-term success of these launches.
Foodie shift
Consumers love it too, like Pooja Jain, a Mumbai-based HR executive. “I’m always looking for food that feels more authentic. I’m happy to pay a little more,” he said. His latest dream is Si Nonna’s, a chain founded in 2022 that specializes in sourdough pizzas.
Foodie cues like Jain and Si Nonna’s were not picked up by Domino’s. Other colleagues are also turning to premium options on the menu.
Last month, when American fast food chain Papa John’s re-entered the Indian market after eight years, it brought with it a positioning based on both product and marketing: Pizza bases and sides used dough that had been fermented for 72 hours. This dough is left to ferment naturally at controlled temperature for three days. The result: pizzas that differ in structure, texture and taste.
Margherita pizza, chicken fry or Hawaiian varieties attract your attention with prices starting from below ₹up to 400 ₹800 before taxes.
Papa John’s plans to open 650 stores over the next decade. According to Reuters, the company left the market due to the poor performance of its brand.
The premium trend at fast food chains comes as the proliferation of food ordering apps expands the range of food options available to consumers. Restaurant customers are no longer limited to ordering from well-established brands.
India’s dining out and ordering market will nearly double by the end of the decade ₹9 trillion more than the current figure ₹Food aggregator Swiggy and consultancy Bain & Co. 5.5 trillion according to the 2024 report prepared by.
The report also stated that the addressable customer base for the Indian food services market is expected to grow by a third from the current 320-340 million (about the size of the US population) to reach approximately 430-450 million by 2030.
fast gourmet
In fact, new restaurant chains offering gourmet-style food at affordable prices are springing up across the country. For example, new pizza brands have scaled quickly; For example, La Pinoz Pizza, which started in 2011, currently has 700 restaurants in its chain.
On food ordering apps, it’s not uncommon to see brands like Aku’s and Good Flippin Burgers in the national capital Delhi, or Enso by Nomad Pizzas and Burger Seigneur in India’s tech city Bengaluru, or Tossin Pizza and Louis Burger in Mumbai.
India’s food ordering platforms Zomato and Swiggy did not respond to queries sent by Mint.
While such brands attract customers in droves, established companies are also under pressure to innovate.
Nishant Kedia, India marketing manager, Rebel Foods, which operates the Wendy’s burger chain in India along with Faasos and Behrouz Biryani, said demand for premium food has started to increase since the Covid outbreak “when there has been a clear increase in demand for premium and gourmet-style offerings”.
“This has evolved further over the past year, with consumers now looking for affordable premium options. They want different tastes and upgraded experiences at accessible price points. We’ve seen strong growth in this ‘value-premium’ space,” he said.
Wendy’s has added new spice profiles, launching flavors like chimichurri and Korean-inspired burgers. Many new premium products already contribute 10-20% of category sales in the first six months, Kedia said.
“They have helped increase average order value, improve unit economics and generate strong customer love and repeat orders. This shows that premium tips work well when delivered at the right value,” he added, without giving further details.
Mass up to premium
The move comes as fast-food chains are experiencing some contraction in the market due to increased competition and the reluctance of mass-market consumers to spend freely.
But consumers at the upper end of the consumption basket continue to spend.
Earlier this year, burger chain Burger King launched its Korean range as part of its premium offerings. Additionally, Kings Collection has enhanced its burger menu with a brioche bun.
Of course, for most companies, value and mass-market meals are priced at approx. ₹100 of them continue to form the basis of business. Burger King, for example, continues to offer valuable offers, including two burgers, to increase the number of visitors to its stores. ₹79 and ₹99.
Burger King’s senior executive said market research and research are behind the new products in the Kings Collection. “We launched a limited time Korean burger series… ₹Rajeev Varman, group CEO of Restaurant Brands Asia, which operates Burger King in India and Indonesia, said during the company’s June quarter earnings call in July.
Burger chain operator Westlife Foodworld, which operates market-leading McDonald’s restaurants in southern and western India, said it sees a clear section of consumers looking for more variety and larger bites.
“Consumers today don’t just eat, they explore. They are much more willing to try new formats, new textures and fuller flavor combinations, and this is where our premium offerings help us stay in tune with their curiosity while maintaining the convenience of McDonald’s India,” a company spokesperson said.
Many customers are looking for heartier, layered burgers. “…our recently launched Big Yummy Burger range ( ₹349) brings a premium experience for those who enjoy richer, more satisfying meals,” the spokesperson added.
The contrast to the cheaper side of McDonald’s menu couldn’t be better: Here’s how much the McAloo Tikki burger, a simple patty and condiment mix, costs: ₹58 or at Chicken McGrill ₹106. ₹Big Yummy Burger, No. 349, comes with two flame-grilled patties, lettuce, jalapenos and double-spread chipotle sauce, resulting in a generous helping of burgers.
(HT Media Ltd, which publishes Mint, and the promoters of Jubilant Bhartia Group are closely related. However, neither promoter has cross-holdings.)
