India has long had a reputation as being unfriendly to foreign businesses. But when it comes to fast food, international chains are being warmly welcomed by a young, upwardly mobile population.
In the past few months, Taco Bell, Krispy Kreme, Burger King and McDonald’s have either announced plans to expand in India or have opened new outlets around the country. Krispy Kreme was the latest to open a new store with its first outlet in Delhi last month, adding to its five branches in Bangalore.
Despite the country’s economic troubles, the average middle-class Indian consumer’s spending power is steadily increasing, with more people, particularly women, entering the workforce.
The Indian market for chain restaurants was an estimated $2.5 billion in 2013, according to a study done by analysts at Technopak, a management consulting firm in Gurgaon, India. And it is expected to grow to $8billion in 2020.
“In India today, I think people are acquiring new tastes rather than changing their tastes, because it takes a whole generation to actually change tastes,” said Pinakiranjan Mishra, partner and national leader for retail and consumer products at Ernst & Young India.
Burger King, the world’s second-largest burger chain behind McDonald’s, has joined with the Everstone Group, a private equity and real estate firm focused on India, to bring the restaurant chain to India. The first branch is expected to open in the first half of this year. McDonald’s is expanding in India with the introduction of the McCafe, a coffeehouse-style chain.
Foreign chains find that operating in India has its challenges. Like every good business, restaurants need to know their customers. In India, that means no beef products, as in McDonald’s case, or no egg, as in Krispy Kreme’s case.