KFC and Pizza Hut hope India will fall in love with fast food

Rati Motwani of Mumbai treats her seven-year-old daughter to a fast-food fix almost every weekend. Western chains increasingly are gaining a following and changing old dining habits, she says.

“In Indian cities today, pizza and burgers have become staples and have replaced the traditional daal and chawal (lentils and rice), which we grew up eating. This is their fun food, this is what they enjoy,” said Motwani, 33.

KFC and Pizza Hut parent Yum Brands is hoping this western fast-food phenomenon reaches millions more Indians as it tries to mirror the success story of China, which now contributes half of its operating profit.

Yum is targeting Indian students and young office workers with adaptations of popular western fast-food products designed to appeal to their unique tastes — and the nation’s many vegetarians: Tandoori paneer pizza or vegetable “Zinger” burgers anyone?

By 2020 Yum expects to have 2,000 restaurants in India, up from 374 now.

But few experts expect Yum’s ride in India to be as smooth as in China, where the company has 4,500 restaurants after virtually uninterrupted growth from the day KFC brought Colonel Sanders’ secret fried chicken recipe to a restaurant on the edge of Beijing’s Tiananmen Square in 1987. Still, they say India’s young and upwardly mobile population promises to deliver enough growth by 2020 to offset an expected moderation in China.

India versus China

India is expected to overtake China as the world’s most populous nation as early as 2025.

While China’s population is aging, 60 per cent of India’s 1.2 billion residents are under the age of 30, and that is the sweet spot for fast-food restaurants.

People in India currently spend less on fast food — 2010 spending per person was $11 in India versus $60 in China — but India’s GDP growth is expected to exceed China’s as early as 2014.

Nevertheless, even as Yum, McDonald’s Corp. and other chains race to build a leadership position in India, experts say low wages, rickety infrastructure and government bureau-cracy are hurdles to growth. The country lacks China’s commitment to building roads and other transport systems needed to get fresh and frozen food to restaurants and Indian incomes remain very low. Lunch from a street stall can cost less than 25 rupees, or 50 cents.

Yum and McDonald’s are responding with value menu items, like veggie burgers, that sell for as little as 25 rupees.

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