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Pizza Hut making inroads into small towns

Pizza Hut has begun its foray into smaller towns where the "Indianised" pizza culture is spreading fast.

india Updated: Feb 03, 2006 15:48 IST

After spreading fast in India's metro market, global fast food chain Pizza Hut has begun its foray into smaller cities and towns where the "Indianised" pizza culture is spreading fast despite the country's rich culinary tradition.

Immediate plans on the anvil include the opening of 35 new outlets this year - most of which will be in the smaller cities - to add to the existing chain of 125 restaurants across 31 cities in India.

The brand has opened outlets at Kanpur, Jodhpur, Vapi, Hubli and Mysore in the last couple of months and more outlets are in the pipeline in cities like Indore, Visakhapatnam, Coimbatore, Mangalore, Amritsar and Jalandhar.

"India has 62 cities with a population of over 400,000 each and all of these form part of our potential market. We are very bullish on the prospects but it depends on a lot of factors like economic growth, real estate prices and infrastructure development," Sandeep Kohli, managing director of Yum! Restaurants International for the Indian subcontinent, told IANS.

Pizza Hut is one of the brands in the portfolio of Yum! Restaurants International global umbrella, the others being KFC (Kentucky Fried Chicken), Taco Bell, Long John Silvers and A&W.

"Pizza started off as an elite indulgence and the discerning eater still goes for international toppings but after we pioneered the introduction of localised ingredients like chicken tikka and tandoori, the acceptance levels among the masses has increased," said Arvind Mediratta, chief marketing officer of Yum! Restaurants.

"Pizza culture is widely prevalent in Sec A cities but with the aggressive pricing and exotic value attached to the pizza eating experience, we hope to be successful in smaller towns as well."

To achieve an exponential growth rate and to drive penetration among what it calls Sector B and small town consumers, Pizza Hut will introduce new marketing schemes with a focus on aggressive pricing while still maintaining its aspirational value.

"A majority of these outlets will be in new cities. A lot depends on the location we get in these cities but we will also consolidate our hold on the bigger cities," Mediretta said.

As part of this plan, cities like Mumbai, Delhi, Bangalore, Chennai and Pune will see the pizza brand further expand its operations.

"For example, the national capital region in and around Delhi has about 30 outlets and we think there is serious potential for more growth," Mediratta said.

As part of the growth strategy, Yum! Restaurants plans to add about 20 outlets to increase KFC's footprint from the present strength of 11 outlets.

"A significant chunk of this operation will target the big cities - especially Delhi and Mumbai - as we would like to tap these markets first," Mediratta said.

"All KFC outlets will be retail outlets and none of them will be run by franchisees, which is our operational model for Pizza Hut outlets."

Asked about the impact of the new government policy allowing foreign equity in single brand retail trade on Yum! Restaurants' operations in India, Mediratta said his group remained unaffected.

According to him, Yum! already had an approval from the government to set up independent operations for KFC and did not need to use the franchisee route.

While company officials remained tight-lipped on the exact infusion of funds, they revealed it took an investment of about Rs 15 million to Rs 16 million (about $350,000) for a Pizza Hut outlet and Rs 20 million to Rs 25 million (nearly $465,000) for a KFC outlet.

Besides, the company sets aside one percent of the total turnover for developing the local market while further funds would be needed for marketing and advertising.

First Published: Feb 03, 2006 15:48 IST