Burger King eyes a big slice of the Indian market

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when Forbes India first visited Burger King in July this year, its office in
Mumbais Lower Parel business district was a beehive of activity. Employees
were busy scouting for locations, negotiating with suppliers, conducting blind
tastings and fine-tuning the international hamburger chains India menu. At
the time, the $1.1 billion (2013 revenues) global fast food giant was still a
quarter away from launching in India, but the countdown had begun.
A late entrant into the market, Burger King has seen many a competitor trip in
its understanding of the Indian consumer.
Which is why, 45-year-old Rajeev Varman, chief executive officer of Burger
Kings India operations, emphasises that menu will be the differentiator. We
will have burgers that no one in India has ever had before, he tells Forbes
India.
This would sound like a grand claim, one that is easier said than done:
Development of the menu and, more importantly, adapting it to appeal to
Indian tastes has taken established international players years to implement.
Rivals such as McDonalds and KFC met with success only after they
indigenised their offerings as per local taste profiles. It took them a decade to
arrive at a winning and money-making formula.
And therein lies Varmans biggest challenge. Can he find a shortcut, and give a
menu that Indians will love from day one? He is confident of his success.
At the time of writing this story, Burger King was set to open its first India
outlet in Select Citywalk in Saket, Delhi, on November 9; this will be followed
by a Mumbai launch the week after, at Phoenix Mills. By December, there will
be a dozen Burger King outlets but only in Mumbai and Delhifor now.
Varman does not want to reveal the fast-food chains long-term India plans.
Burger King is entering the hyper-competitive Western quick service
restaurant (QSR) space at a time when consumer spending has been under
pressure. Competitors such as McDonalds, which has over 350 outlets across
India, KFC, with a chain of 361 stores, Dominos Pizza (772 outlets) and
Subway (472), have all seen consumer spendinghit by high inflation slow
down in the last year. Still, Crisil Research estimates the market to grow to Rs
7,000 crore by 2018 from the present Rs 3,400 crore; this is an annual growth

of 27 percent with average spends of Rs 3,700 per household per year in metro
cities.
Its very early days, but 3G Capital, the multi-billion dollar Brazilian private
equity parent which owns Burger King, has made all the correct moves. The
only reason we had not entered the Indian market till now was because we
couldnt find the right partner, says Elias Diaz, president, Asia Pacific, at
Burger King. The company was loath to enter the Indian market on its own
realising that real estate, sourcing and taxation issues would divert its
attention from the task of getting stores up and running.
In 2013, however, in what could well be a master stroke, Burger King tied up
with the Sameer Sain-led Everstone Group (an Indian private equity firm with
experience in the QSR space) to help it navigate the already-crowded Indian
market.
A Fortuitous Partnership
Burger King has been keen on entering India since it was acquired by 3G
Capital in 2010 in a $3.8 billion deal. Any private equity player will be
looking for rapid growth, and India would be an obvious market for a brand
like Burger King, says Devangshu Dutta, founder of Third Eyesight, a retail
consultancy in Delhi. And the fast-food chain plans to be in India for the long
haul. Everyone has seen spends slow down in the last couple of years, but if
you are entering a market with a 20-year time horizon, this slowdown is just a
blip, says Dutta.
At the time, Everstone Group had its hands full with the takeover of Blue
Foods, now Pan India Food Solutions, which owns Copper Chimney, Noodle
Bar and Bombay Blue, among other brands. Before it was acquired by
Everstone, the restaurant chain had been burdened with heavy debt and high
attrition. But it was in turning it around that Jaspal Singh Sabharwal, a
partner at Everstone Group, saw an opening in the QSR arena. We realised
that there was room for a brand in the space, but what we needed was an
iconic name, he says.

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