Impact of Taco Bell Franchise on Indian Fast Food Industry

After having KFC and Pizza Hut as successful brands in India, Yum! Brands, Inc. (YUM) is now focusing on developing Taco Bell as the third brand in India. As a part of its strategy, the fast food restaurant operator opened the first Taco Bell restaurant in Bangalore, India.

The sluggish sales in the U.S. have prompted Yum! and other international food chains, to focus more on emerging markets, such as India, which still remains untapped fully. The company remains confident about the success of Mexican-inspired quick-service restaurant brand, whose menu features tacos, burritos, nachos, quesadillas and Crunchwraps with menu pricing starting as low as 35 cents. 

Taco Bell faces competition in USA from Baja Fresh, Chipotle,Taco Johns,Taco Bell,Taco Cabana,Taco time, Del Taco. India is a virgin market for Mexican Food. With the saturation of the U.S. market and the recession taking its toll on restaurants, the industry is concentrating more on the overseas market. Apart from India, Yum! operates Taco Bell restaurants in Canada, Puerto Rico, Guatemala, Costa Rica, Panama, Dominican Republic, Guam, Iceland, Philippines, Dubai, Spain and Cyprus. As of fiscal 2009, the company operated over 250 Taco Bell restaurants outside the U.S. 

Louisville, Kentucky-based company, Yum!, plans to accelerate its expansion in India. The company, which currently operates about 158 Pizza Hut restaurants in 34 cities and 72 KFC outlets in 13 cities in India, plans to increase its total restaurant count to 1,000 by 2015.

The Indian market has been virtually recession-proof providing ample growth opportunities. Yum! plans to tap India's organized food and beverage market, which is growing rapidly. Yum!’s restaurants in India, which are managed by Niren Chaudhary, faces stiff competition from other fast-food chains such as McDonald’s Corp. (MCD) and Domino’s Pizza Inc. (DPZ).

Taco Bell India Strategy

- 100 Taco Bells by 2015

- Price Range between Rs. 18 and Rs. 79

- Unlimited Pepsi Refills at Rs. 35. 

- 22 Mexican Food Varieties, 11 Vegetarian and 11 Non Vegetarian

- Will offer Mexican fast food like tacos, burritos and quesdillos, apart from Nachos

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Al Futtaim to open Carrefour Franchise Hypermarket in Iraq

19th February 2010: The UAE company with the licence to operate the Carrefour SA franchise in the Middle East is looking to open its first store in Iraq as part of a wider expansion plan in the region. Majid Al Futtaim (MAF) Retail manages a joint venture in the Middle East with France's Carrefour, the world's second-biggest retailer by revenue after Wal-Mart Stores.

In the past three years, the joint venture opened 14 hypermarkets, bringing its total to 37 in the Middle East. MAF is now turning to countries such as Iraq, Yemen, Oman, Egypt, Iran, Saudi Arabia, Libya and Lebanon to open new Carrefour stores in a bid to tap growing consumer appetite in the Middle East and North Africa. MAF will open the store in Arbil, one of Iraq's largest cities, probably towards the end of 2010. "The north of Iraq is a very promising market and a stable area," Muhammad Naeem, an executive at MAF Retail, told Reuters on the sidelines of a treasurers conference.

"We studied the economy, the infrastructure, we see no uncertainty and no security issues in that part of the country," he said. Northern, predominantly Kurdish, Iraq has emerged relatively unscathed from the violence that affected the rest of the country. MAF, owned by billionaire UAE businessman Majid Al-Futtaim, traditionally enters markets with Carrefour as anchor tenant of its malls and recently opened a local version, under a different brand name, of the hypermarket in Iran's capital Tehran. 

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Hamleys To Expand Further Into Middle East

Hamleys, the world-famous toy retailer, intends to broaden its reach into the Middle Eastern markets to sustain a record year-end festive-season performance which saw the company increase its like-for-like (LFL) sales by 11.6 per cent over 2008 within the six-week period leading to January 2, 2010. From the second quarter leading up to the last quarter of 2009, Hamleys’ LFL sales were up 7.2 per cent on 2008. The buoyant performance and cost benefits derived from a restructuring programme completed in 2009 combined to significantly boost company profits, with Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) advancing 42.8 per cent over the same period last year. 

Hamleys’ productive run extended to the Middle East, where its franchise store in Dubai (at The Dubai Mall) run by partner Retail Arabia International reported a festive-season LFL sales increase of 54 per cent – boosted in part due to the fact that Hamleys at The Dubai Mall was the exclusive regional retailer of Ben 10 Alien Force merchandise.

Commenting on the performance, Gudjon Reynisson, CEO of Hamleys, said: We are delighted with the performance of the business during this important trading period and for the whole financial year. The festive-season sales figures were very strong with our flagship store in Regent Street having its best season on record and we are also very pleased with the strong performance in our new flagship store in the St.Enoch Centre in Glasgow where sales significantly exceeded our expectations.”

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Destination Maternity India Franchisee Announces Opening of Two More Maternity Shop-In-Shops in India

2nd February 2010: Destination Maternity Corporation (Nasdaq: DEST), the world's leading maternity apparel retailer, is excited to announce the opening of two more Motherhood Maternity® shop-in-shops in India. Motherhood's trendy, affordable maternity fashions are now available for the first time at the Center Square Mall in Vododara, India and the Gulmohar Park Mall in Ahmedabad, India. Motherhood Maternity shop-in-shops are found in Mom & Me® stores which are owned and operated by Mahindra Retail, part of the Mahindra Group, Destination Maternity's master franchisee in India. Mom & Me stores offer an extensive range of pre- and post-natal products including maternity wear, baby clothes, toys, wellness products, nursery furniture and more. Including these two new locations, there are now a total of nine Motherhood shop-in-shops in Mom & Me stores in India.

Under a multi-year franchise agreement, Destination Maternity has granted to Mahindra Retail the exclusive rights to operate branded retail locations and market merchandise under the Company's Motherhood Maternity®, Destination Maternity®, and A Pea in the Pod® brands in India. Mahindra Retail is part of the Mahindra Group. Mahindra Group is one of the leading industrial companies in India with operations in several key sectors of the Indian economy. Mahindra Retail as a master franchisee is not offering the Destination Maternity Franchise Opportunity to other entrepreneurs in India.

About Mahindra Retail
Mahindra Retail is an extension of the Mahindra Group's trading foray in the domestic India market. The Group believes that this is the favorable time to extend its distribution business into direct retailing, when the organized retail market is expanding in India. Apart from distributing toys, games and apparel under licenses from various international brands like LEGO®, Disney® and Mattel®, it has now entered into a unique venture with the launch of Mom & Me stores, which specialize in infant and maternity care.

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Fitch affirms Jubilant FoodWorks' Bank loan ratings

Dec 1 - Fitch Ratings has today affirmed Jubilant FoodWorks Limited's (JFL, earlier Dominos Pizza India Limited (DPIL)) National Long-term rating of 'A-(ind)'. The Outlook is Stable. Simultaneously, the agency has affirmed the ratings on its bank loans as follows: - Term loans aggregating INR850m: 'A-(ind)'; and - Fund based working capital limits amounting to INR30m: 'A-(ind)'/'F2+(ind)'; The rating affirmation reflects JFL's established presence in India's organised pizza industry with the largest market share. JFL is Domino's Pizza Overseas Franchising's (DP Overseas) exclusive master franchisee in India since 1995. 

The ratings are underpinned by JFL's strong and expanding operational network across India, its track record of managing the pizza business, its efficient working capital management and its strong brand recall. The ratings are also supported by the stable demand for JFL's products and the continued growth in the food services industry. In September 2009, JFL renewed its master franchise from DP Overseas for the period till 2024. However, concerns continue to emerge from its reliance on a single source of revenue - the master franchise from DP Overseas, and increase in competition from other pizza players and quick service restaurants. JFL has an ambitious plan to expand its chain in the coming years, which exposes it to execution and cost overrun risks. Fitch also notes that JFL was a loss making enterprise until FY05, and the net accumulated losses at FYE09 were INR732.72m. JFL continued to grow in FY09 both in operational size as well as revenues. While the number of stores increased from 182 at FYE08 to 241 at FYE09, the revenues increased by 32.89% from INR2.1bn in FY08 to INR2.8bn in FY09. 

Same store sales grew by 5.98%; however, net income declined to INR73.03m in FY09 from INR85.5m a year earlier due to increased interest costs arising from debt funded capex. The company continued to maintain its operating margins (op. EBITDA/revenues) at around 12%, in line with the trend over the earlier three years. Significant improvement in financial leverage (Total adjusted debt/op. EBITDAR), and substantial improvement in profitability on a consistent basis, backed by significant same-store sales growth, will positively impact its ratings. However, a higher than anticipated debt-funded capex leading to deterioration of financial leverage to over 5x (measured by Total adjusted debt/op. EBITDAR), and inability to achieve growth in revenues as anticipated will negatively affect ratings. At FYE09, the company had a total balance sheet debt of INR824.45m.

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JIP earmarks Rs 200 crore to develop Chili’s Restaurant Franchise in India over five years

Starts operation of the first The Great Kabab Factory outlet in Mumbai

JIP Fashion and Restaurants Pvt Ltd, the Indian arm of Bahrain-based Jawad Business Group (JBG), plans to invest Rs 200 crore in India to develop the restaurant franchise Chili’s over the next five years. The company, which has franchise rights for the US-based restaurant brand Chili’s in South and West India plans to build a portfolio of 15 restaurants over the next five years. It presently has one restaurant located in Bengaluru and recently started operations in a 140 cover restaurant in Mumbai.

The company will adopt ‘multiple restaurants per city’ format to grow the brand. Currently, the primary focus is to launch the brand in Hyderabad and Pune and develop more outlets in Bengaluru and Mumbai. The restaurant in Hyderabad will be located at Inorbit Mall and is presently under construction, informed Rakesh Gadoo, Business Head - Restaurants, Jawad Business Group. Post establishment of the brand in the metro cities, it will consider locations in the Tier II and Tier III cities. “Mumbai itself can accommodate four to five Chili’s outlets. We will consider the demographics of each city before multiplying the brand,” Gadoo added. The company is scouting for opportunities in both high street and mall locations for the same, concentrating on office complexes and a sizeable residential catchment area around the outlets to provide them with good footfalls.

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DIL signs JV with Delhi International Airport (GMR Group) to roll out food retail chain

Devyani International Ltd (DIL), the Indian master franchisee of global food retail chains Pizza Hut, KFC and Costa Coffee, has reportedly entered into a joint venture (JV) with GMR Group to set up multiple food retail outlets at the Delhi International Airport.

DIL is also planning to set up food courts at Jaipur, Amritsar and Chandigarh airports, and has already put in tenders with the Airports Authority of India for the same. On an average, the investment on a food court of about 12,000 sq ft involves a cost of close to Rs 10 crore. 

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