NEW DELHI, July 27
Domino's Pizza India Ltd. (DPIL) plans to double its turnover and the number of outlets in the country by the end of this financial year. Currently, it has 55 outlets in 16 cities. This will go up to a total of 98 outlets in 23 cities by the year-end.
Having set up shop in India in 1996, DPIL has grown to become the largest international food chain in the country.
Though it operates only in a handful of cities, it has already notched up a commanding 51 per cent market share in the organised Indian pizza market which is valued at Rs 200 crore currently.
The company brass subscribes its success vis-a-vis its competitors to, among other things, the fact that none of its outlets are franchised. As Pavan Bhatia, CEO, DPIL, puts it, "We believe that though franchising is a fast way to make money, it's not the best way in the long run. Any company which is dependent for growth, service and efficiency on a third party and delegates it without proper inputs and training, is bound to flounder. At DPIL, we opted for the more difficult route. All the Domino's outlets in India are company owned; this way we have a better control over our resources, our investments, training of our people and above all, quality of the end product. In short, we want to have total control over the business."
In fact, Bhatia was very clear about DPIL's positioning from the very beginning. "We see ourselves in the pizza delivery business and not in the restaurant business," he elaborates. "This strategy has its own benefits. Our overheads are minimum as we spend much less on the cosmetic aspects of the business, say, in sprucing up of the outlets, or generally on the ambience bit."
Prophetic words from the man with over 15 years of hoteliering experience, considering that over 1,700 outlets of Domino's 6,000 outlets worldwide are franchisees. So, what is it about the Indian market that prompted the company to rule out the franchisee option altogether?
Answers Bhatia, "As I see it, in a country like India, where the concept of F&B (foods & beverages) franchising is yet to evolve and mature, the franchisee route does not seem to work well. I can give you the example of a certain fried chicken company which took the franchisee route and went belly up." Point taken.
Meanwhile, in the opinion of industry-watchers, Domino's recent surge has more to do with its indigenisation efforts than anything else. When Domino's came to India four years back, their menu-card not only had imported recipes but also imported prices. Volumes were not picking up, and the company realised its mistakes on two fronts. First, that the Indians were highly price sensitive, and second, their eating habits and their tastes and preferences were vastly different from any other market.
Understandably, when the company slashed prices by 30 per cent this April, volumes surged by 55 per cent. On the question of tastes, Bhatia elaborates, "Domino's recognises the fact that in this country people have different tastes. What appeals to the people in the North may not appeal to the people in the South. Consequently, extensive research on consumer choices has led us to introduce different toppings for different regions, in addition to, of course, what we already offer."
With an aggressive expansion plan in the pipeline and a similar marketing strategy to boot, the company plans to go public within two years or when it reaches the target of 250 outlets, whichever is earlier. What remains to be seen, however, is how long DPIL can resist the temptation of authorising franchisees to run at least part of the Indian chain.
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