Business Today

Competing to Go Native

Global fast food giant KFC launches a cheap potato burger exclusively for India just as rival McDonald's had done earlier.
Dearton Thomas Hector        Print Edition: May 12, 2013

Recent visitors at KFC outlets across the country have been getting a surprise - there is a new, 10-item, low-price menu on offer. Its highlight is the 'Potato Krisper', a vegetarian burger costing Rs 25, where the fried patty within consists almost entirely of potato. This was created exclusively for the Indian market, the first time the global fast food giant has done so. Indeed, it is also the first time KFC - known for its chicken items, marinated in a 'secret sauce' - has ever created a potato burger.

Other items on the new menu, called the 'Wow' menu, include 'Chicken Shotz - pieces of fried chicken - again available for Rs 25. 'Combos', where a fizzy drink or other accompaniments are offered along with the burger or the chicken fries, are available for just Rs 59. It is a steep price slash for KFC, where all other items cost a lot more - the popular 'Chicken Zinger', for instance, sells at Rs 99 a plate.

Not surprisingly, even more than the trendy music and decor at KFC outlets, the new bargain-basement menu has proved a great attraction for young people, especially students, whose disposable income is limited.

At the outlet in New Delhi's Connaught Place, for instance, a group of three - two girls and a boy - were relishing the Chicken Shotz. "We usually spend around Rs 100 per head when we come here with our friends," says Husna Syed, a student at Mata Sundri College for Women in the city. "Now we can eat a lot more for the same amount."

What prompted KFC to go native in India, 18 years after it entered the country? Industry watchers believe it is a belated effort to measure up to rival chain McDonald's 'Happy Price Menu' launched in 2004. That, in turn, was a cheap variant of McDonald's 'Dollar Menu' available in the United States.

The key feature of the Happy Price Menu too is a potato burger called McAloo Tikki, also priced currently at Rs 25. (It used to be Rs 20 when launched in 2004.) In comparison, McDonald's well known Chicken Maharaja Mac costs Rs 95. A part-bypart evaluation of the KFC and McDonald's potato burgers shows there is hardly any difference between them, though McAloo Tikki is a shade heavier. (See Counterpunch.)

Both McDonald's and KFC acknowledge that the low price strategy was adopted to expand their Indian presence. Indian taste buds were secondary this time - both already have vegetarian burgers on their menus. "India is a price sensitive market and the Happy Price Menu has helped us take our brand to the masses," says Vikram Bakshi, Joint Venture Partner and Managing Director, McDonald's India, North and East. Sandeep Kataria, Brand General Manager and Chief Marketing Officer, Yum Restaurants International, which owns KFC, echoes him. "Value never goes out of fashion," he says. "The current economic situation has put more strain on consumers' purses. But we want them to have a memorable experience without worrying too much about the cost."

Is it viable, selling at such rockbottom prices? Both outlets claim it is. "We are certainly not losing money," says McDonald's Bakshi. "We serve millions every day. The volumes help us build and sustain profits." Tarun Lal, KFC's General Manager for India and surrounding countries, agrees. "We also source our ingredients locally, and that helps," he says.

Industry watcher Ankur Bisen, Vice President and Head of Retail at consultancy firm, Technopak Advisors, points to the small size and low weight of the cheap offerings. "The product size is small," he says. "They save on the amount of food."

KFC's Lal never once mentions the McDonald's precedent, and maintains it was KFC's own research which led it to the Wow menu. "Our research showed consumer needs are different at different times of the day," he says. "Between 11 and 1 pm, as well as between 3 pm and 6.30 pm, people want snacks. They don't want heavy meals at these times and we wanted to meet this need."

Potato Krisper was test-marketed in Bangalore from October last year, and following its success there, launched at all of KFC's 230 stores across Indian cities from February this year.

Many more KFC stores are also in the offing. "We've grown three times in five years and plan to expand to 500 stores by 2015," adds Lal.

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