According to Jatia, when the country's GDP was growing between six and nine per cent, the purchasing power of people increased and so did consumption. The moment GDP growth dipped to 4.5 per cent, consumption took a beating. "The decision to go to a QSR is invariably impulse-driven," he had said. "You step out for shopping, feel hungry and decide to walk into a McDonald's. When the GDP growth dropped, fewer people stepped out for shopping and, consequently, we lost footfalls."
The last one year has surely seen an upward swing in consumer sentiment. Why is it then that QSRs, which are at the lowest end of the eating-out economy in terms of pricing, are reporting a de-growth in same store sales? Yum! Brands, which owns Pizza Hut, Taco Bells and KFC, reported an 11 per cent dip in same-store growth (SSG) in the fourth quarter of 2014-15. The picture has been equally gloomy for the likes of Jubilant Foods (which owns Domino's and Dunkin Donuts) and McDonald's. Global coffee retail chain Starbucks has also reported a dip in SSG.
This brings us to the fact that it is surely not low GDP growth that is to be blamed; in fact, it has more to do with oversupply.
When McDonald's entered India in the mid-1990s, a sea of people would queue up outside their stores, waiting for their turn. The likes of McDonald's and Domino's even Indianised their menu by offering variants such as McAloo Tikki burger and Chicken Tikka pizza to make sure that the consumer stuck.
However, two decades since, there are dozens of new QSR restaurant brands that have set up shop and are vying for the same set of consumers. They are not just burger or pizza chains, but players such as Taco Bells, Nando's or Maroosh also fall into the quick service category.
"Indian consumers are flirting with new options and the existing players haven't done enough to suit their offerings to the changing needs of the consumer," points out Raghu Vishwanath, MD of brand valuation company, Vertebrand.
Celebrity chef Sanjeev Kapoor agrees: "The dynamics of the restaurant industry has changed over the past few years. Eating healthy food has become a fad today and consumers are increasingly staying away from QSRs as the food they serve is perceived as unhealthy."
McDonald's McAloo Tikki Burger or Dominos Chicken Tikka pizza were indeed great innovations and worked extremely well for both the brands. But do Indians really want to go to a McDonald's to eat an Aloo Tikki burger? "QSRs usually work well with the youth and their excitement with Aloo Tikki burger is gradually waning. The QSR chains need to do some serious thinking on their products and rejuvenate themselves," remarks Kapoor.
The likes of McDonald's and Domino's are seeing some serious competition coming from Indian QSR chains such as Goli Vada Pav and Jumbo Vada Pav.
A city like Bangalore, says Vishwanath of Vertebrand, has a large catchment of youth from the IT industry. During lunch time, one sees a significant crowd at outlets such as Goli Vada Pav. "They prefer an authentic Indian vada pav to an Americanised aloo tikki burger. Most of the QSRs need to redefine their offerings. What was relevant a few years ago is no longer relevant," he says.
The past few months has also seen the shutting down of several coffee shops and the existing ones not doing too well in terms of same store sales. Here again there is a clear case of oversupply.
For instance, Linking Road in Bandra in suburban Mumbai has four coffee shops within a radius of 2-3 km - Café Coffee Day, Coffee Bean and Tea Leaves, Dunkin Donuts and Starbucks (which is off Linking Road).
A partner at a well-known PE company that invests in food companies says that unlike the western world where eating out is a way of life, Indians still prefer to cook at home. "In a market like India, having four coffee shops or multiple burger chain in a single locality will obviously not work," he says.
QSR chains are adopting desperate means to grow their same store sales by giving buy-one-get-one-free offers or offering 20-25 per cent discount on the bill value.
Dunkin Donuts, which promotes its burgers more than its core offering (doughnuts) in India, has launched burgers at Rs 49. On the other hand, Starbucks is offering a voucher of 40 per cent of the bill amount to anyone who buys coffee or food before 4 pm from a Starbucks outlet in Mumbai, Delhi, Chennai and Bangalore.
The need of the hour, however, is a serious rejig in their brand strategies to drive conversions.