Corporate: Tricon's Second Course

CORPORATE: MARKETING
Tricon's Second Course

While KFC's chickens are refusing to mature, Pizza Hut is earning its condiments, forcing the restaurant major to rewrite its menu in India.

By Suveen Sinha

It was a toss-up between pizzas and fried-chickens. Unable to digest its huge losses, KFC, the second-largest food-chain in the world, has begun to rejig its operations after a short-but-turbulent four-year stint in India. Instead, Tricon Restaurants International, which took over PepsiCo International's food-chain businesses in 1997-Pizza Hut, KFC, and Taco Bell-has decided to focus on Pizza Hut.

While KFC has already shut down its three outlets in Delhi-with only the Bangalore outlet in operation-in the past four months, Pizza Hut plans to nearly double its outlets from 13 to 25 over the next six months, and further quadruple it to 100 by 2003. According to Sandeep Kohli, 43, Managing Director (Indian sub-continent), Tricon, the new strategy is driven by the fact that, given the level of competition in India with the entry of Dominos, Pizza Pizza Express, and TGIF, the business requires immediate attention. For, Kohli aims to achieve 300 transactions-or, minimum revenues of Rs 48,000-everyday per outlet for Pizza Hut.

Another factor that is driving the strategy is the decision to concentrate only on the franchisee model to grow in India. Globally, Tricon has decided that only 20 per cent of its nearly 30,000 outlets will be owned and, that too, in markets like the US. In India, however, all the KFC outlets were owned while the Pizza Hut ones were run by franchisees. ''Franchisees do a better job of running an outlet since they have lower overheads,'' explains Pankaj Batra, 34, the Senior Manager (Marketing) of Tricon's operations in the Indian sub-continent.

True, since Kohli admits that two of KFC's three outlets in Delhi were in the red. He says: ''The issue was that we were not making money.'' While KFC's outlets were hit by high rents in Delhi, the cost-structure for the outlets in the city got skewed after its decision to close down the two loss-making ones. ''It didn't make sense to build a supply-chain for one outlet,'' admits Kohli. Apart from that, KFC's menu did not suit the Indian palate. ''If you look at Indian food, a lot of it is not fried,'' says Uday Punj, 38, whose Bistro Hospitality is the franchisee for TGIF's single outlet in Delhi.

So, does that mean the end of the road for KFC in India? Not really, since Tricon might just re-launch KFC through franchisees. Avers Kohli: ''KFC is a strong brand compared to Pizza Hut, and can be re-introduced in India.'' In addition, Tricon, is planning to give the Indian customer a taste of Mexican food by bringing Taco Bell to India. That should set the bell ringing in the minds of its competitors.

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