As competition in the food industry heats up and more consumers opt for dining out, the trend of premiumization is fueling the expansion of food chains and brands are capitalising on this trend with innovative offerings, according to an ICICI Securities research report.
According to ANI, the report stated, “We believe different brands are now catering to varied price points and target audience.”
Brands are embracing premiumization with innovative offerings such as KFC’s Chizza, a pizza prototype; Domino’s Burger Pizza, featuring a unique combination; and Popeyes’ Cajun flavor, the first of its kind to be introduced.
Brands are tapping premiumization, Chizza by KFC; Oven Baked Pasta in Pizza Hut and Burger Pizza in Dominos (a unique combination) and The Cajun flavour by Popeyes (the first to tap).
According to the report, brands such as Biggies Burger, BurgerMan, and others are engaged in intense competition with national brands in the chicken space. Fried chicken has emerged as a key battleground, with each player, whether organised or unorganised, vying for market share by offering competitive pricing and focusing on taste.
ICICI Securities research report says “We believe organised players (KFC/McDonald’s-McD/ Popeyes/Burger King) are looking for market share gain led by network expansion, increased disposable income from GenZ and working millennials and improved start-up ecosystem.”
Brands are attracting consumers through pricing tactics and the introduction of new products.
For instance, KFC has recently introduced a Lunch Special combo priced at Rs 149, available from 11 AM to 4 PM. This initiative has not only increased foot traffic but also enhanced customer engagement.
Additionally, the report emphasised the success of KFC’s Chizza, priced at Rs 300, which is experiencing robust sales, accounting for 8-10% of its daily portfolio. Particularly, KFC stores are observing increased foot traffic on Wednesdays, Saturdays, and Sundays.
The brand derives 85% of its revenue from non-vegetarian offerings, with the remaining 15% coming from vegetarian options. Pizza Hut has recently introduced Melts, a thin-crust pizza priced from Rs 169, which has been well-received by customers, the report stated.
A 50% discount is available on any medium pizza during the ‘Don’t Cook Wednesday’ deal. Quick Service Restaurant (QSR) brands are growing because they are pushing the idea of dining out during the week as a transition from weekend dine-out.
According to the report, Popeyes had trouble marketing their product in comparison to KFC and McD during its early positioning. The company was a competitor in the fried chicken business, which was
led by KFC.
KFC still sources its chicken locally and marinates it for two hours in-store, but Popeyes set
itself apart with a 12-hour margination process carried out at its Bengaluru commissary. Customers are more drawn to the Cajun flavor than the Indian spices offered by other competitors.
McD‘s success as a topping for french fries can be attributed to its Peri Peri flavour, which indicates premiumization-driven growth. The IPL serves as an additional growth catalyst to enhance sales figures further this quarter, as consumers increasingly opt to order their meals for home delivery, the report mentioned.
In general, appealing combo offers, discounts such as lunch specials and the introduction of
new products featuring distinct flavours are positively impacting brands, leading to increased
consumer trust and growth, it added.
