Premiumization is driving growth of food chains like KFC, McDonald's, Popeyes: ICICI Securities

An ICICI Securities research report says "We believe different brands are now catering to varied price points and target audience."

With competition intensifying and consumers' increased frequency of eating out, the premiumization of food items is driving the growth of food chains. An ICICI Securities research report says "We believe different brands are now catering to varied price points and target audience."

Brands are tapping premiumization, Chizza by KFC (a pizza prototype); Oven Baked Pasta in PH and Burger Pizza in Dominos (a unique combination) and The Cajun flavour by Popeyes (the first to tap). Brands like Biggies Burger, BurgerMan and a few others are fiercely competing with these national brands in the chicken space. Fried chicken has become the competing edge as each player (be it organised or unorganised) offers competitive price points based on taste.

Oven Baked Pasta in PH and Burger Pizza in Dominos (a unique combination). Brands like Biggies Burger, BurgerMan and a few others are fiercely competing with these national brands in the chicken space ICICI Securities report says, "We believe organised players (KFC/McD/ Popeyes/Burger King) are looking for market share gain led by network expansion, increased disposable income from GenZ and working millennials and improved start-up ecosystem."

Brands are luring consumers with pricing strategies and new product launches. KFC has launched its Lunch special combo (11AM to 4PM) at Rs 149 has improved its footfall and enabled customer traction. Its Chizza, priced at Rs 300, is a great success with stores, is selling 8-10 per cent of its portfolio every day. On Wednesday, Saturday and Sunday, KFC stores are witnessing improved traffic.

The brand contributes 85 per cent of revenue from non-veg while 15 per cent from veg. Pizza Hut launched Melts, a unique thin-crust pizza, starting at Rs 169 which is auguring well in the street. It's Don't Cook Wednesday promotion offers 50 per cent discount on any medium pizza. QSR brands are promoting the concept of eating out mid-week (a transition from weekend dine-out) which is enabling these brands to grow.

Popeyes, at its early stage of launch, had struggled on product positioning vs KFC and McD. The brand competed in the fried chicken space where KFC was the market leader. While KFC continues to source the chicken locally and marinate it in store for 2 hours, Popeyes differentiated it with a 12-hour margination process done at its commissary in Bengaluru.

The Cajun flavour also interests consumers vs the Indian spices from other players. The Peri Peri flavour by Mcdonald's has driven its success as a topping for French Fries, proving premiumization-driven growth. Market competition is fierce from local players on price points and brands are competing closely through attractive combos and offers.

IPL is an add-on growth factor to improve the ticket size further in this quarter, with consumers preferring to order their meals at home. Overall attractive combos, discounts like lunch combos and new product launches with unique flavours are benefitting brands with improved consumer confidence and rising growth. (ANI)

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