Bassi's growth pitch: "We will focus on a few cities initially and then grow from there"

As someone who was raised in ''an environment where food was very important'', Peter A. Bassi would seem like the perfect steward for a global chain of restaurants. But as President of the $8-billion Tricon Restaurants International (tri), the international division of $22-billion Tricon Global Restaurants, he must cultivate a different sort of appetite as well. An insatiable one, for business growth.

Pizza Hut, Kentucky Fried Chicken (KFC), and Taco Bell, the classic triad of PepsiCo chain-brands, already have some 11,000 franchised non-US outlets. Bassi wants more, though not recklessly so. It's a game of ''staying within your swing'', as he uses a golf metaphor to put it. On a recent visit to India, he spoke to BT's Shailesh Dobhal on a host of issues. Excerpts from an exclusive interview:

What are Tricon's plans for India?

First, we think that we can probably grow with both brands, Pizza Hut and KFC, pretty well across India. We are very confident that Pizza Hut can grow very rapidly from this point, all across India. There is nothing, I think, that stands in our way to make Pizza Hut a national brand. We will have 50 Pizza Huts by the end of this year in India. As you grow, you become more and more connected to your consumer, because as the consumer knows more about your brand, she can give you insights to help make the brand more attractive.

With KFC, we are close to thinking of starting out again (we have only one restaurant in India currently). When you start something, you're not going to grow everywhere at once. It will be like with Pizza Hut: focus on a few cities initially and then grow from there.

Whenever you grow rapidly, go from 30 to 50 outlets in six months, you worry about the capability you have: do you have supply chain (capabilities)... Do you have enough people to build and run restaurants? But I think one of the areas where we've done a pretty good job here is that we've operated within our capabilities. So one of the concerns you have elsewhere, you don't have here, because we have been very careful about not growing too fast. There is just no need to bring new brands at the moment to India.

Are you pleased with how you have grown in India?

If you look at India by the age-of-market in our category, it is already pretty well ahead of schedule. We will have 50 restaurants in just six years in India, and we did not have 50 restaurants even in China (entry in 1986) in the first six years. And most countries have not grown this fast.

Well, would I love to have 200 restaurants in India right now? Of course I would. But it takes time for a retail brand to develop, and that's why it is so important to focus and do the right things now, so that 10 years from now we can have a huge business here. India is more challenging than other markets because the real estate component here is very complex. And when we started out (in 1996-97), the consumer's acceptance of Western brands was another challenge. On the consumer side, there is the affordability issue, and we will need economic growth, though we can certainly have a few hundred restaurants here even with the current growth. As long as the Indian economy keeps growing, with the size of the population here, even a 3-5 per cent growth increases the size of our market enormously.

"In our case, almost 85 per cent of the rupee value of a pizza is sourced locally in India"

The key to our success in China is economic growth. Even 10 years ago, a very small percentage of the population could afford us in China. And we are still too small to be influenced by any negative consumer sentiment (witnessed by most other categories) in India. In America, where we have 20,000 restaurants, you bet we were impacted after 9-11.

So, from a 10-year perspective, India is a very important country for us, as we will source large part of our growth from India, besides China and Japan in Asia.

KFC is a success globally, even in other Asian markets. What went wrong in India?

Well, a few things. First, we made a mistake, and learnt from experience that it's very difficult to start both brands simultaneously. KFC is a more challenging concept in India than Pizza Hut, simply because 'chicken' is in our name! It is harder to make KFC acceptable to vegetarians than. Also, if I remember correctly, we started KFC when real estate prices were at an all-time high, which distorted the brand's economics.

When KFC started struggling in India, we decided to focus on just Pizza Hut for a few years. I think now we have to do a little bit of work on the vegetarian positioning of KFC. You can make your restaurant approachable to vegetarians in the way you format your menu. There's nothing wrong with having meat on the menu, as long as you offer attractive vegetarian options. The KFC in Bangalore is doing well. We will open only a couple of new KFCs, next year. You've got to drive within your headlights. It makes a lot of sense to stay within your realm of capability.

Pizza Hut is the largest pizza brand globally, but here in India it lags behind Domino's. Why has market leadership eluded you?

I can give you an argument that we are already No 1 in terms of marketshare. And marketshare isn't defined by the number of restaurants, but what your sales are in the country. Though Domino's has more restaurants, I am not sure if they have more sales.

We saw Domino's growing rapidly, four years ago, and we decided that's not what we want to do. We have higher per-restaurant sales than they do, and we decided to stick within our business, and play our game, not theirs.

The dine-in concept fits the Indian market today more than delivery. Usually, Pizza Hut starts in any market as a dine-in. In most markets, people learn the concept by eating in the restaurant, before getting comfortable with off-premise consumption.

Tricon claims 'multi-branding' gives it an edge. How soon will you introduce it in India?

The concept of multi-branding is that you put two brands in one building, to offer choice. Typically, only two, though we have tried three, which doesn't work as well because it gets operationally difficult. For example, there is a hamburger and hotdog chain we just bought called A&W, and putting KFC and A&W together has been a tremendous success in the US. In America, the best growth that we have is in multi-branding.

Multi-branding might eventually come here. We can always test a KFC-Taco Bell multi-brand here, and see whether it works. But India is in a great position that it doesn't need to do it. We have two virgin brands here, and we can grow a while without it.

KFC/Pizza Hut are viewed as American symbols in this region and are often targeted by people protesting against globalisation. How do you handle that?

What you do in any local community is that you try to explain that you're a plus to that community, not a minus. Five years ago, we had equity in 27 countries. It's down to 12 currently. And some day we will be down to seven. In India, all tri restaurants are owned and operated by Indian franchisees. And we are great source of employment and skill development. Also, we try to source locally as much as possible. Almost 85 per cent of the rupee value of a pizza is sourced locally.

The good news is that the problems we had are relatively small on a global scale. Post 9-11, out of 11,000 restaurants internationally, we had only three damaged.

Why is Tricon changing its name to YUM Brands?

Well, Wall Street refers to us as yum all the time-because our ticker is 'yum'. It is a more descriptive name for us. Moreover, after we acquired Long John Silver and A&W, we had to change our name from Tricon (which stands for 'three') to something more generic.