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: KFC wants to grow its network to 100 stores by 2010, up 43 restaurants in 10 cities currently. Setting up the logistics infrastructure has been keeping Unnat Varma, marketing director, KFC India, occupied these days. An MBA from Symbiosis Institute of Business Management, Varma joined the company in 2006, and was instrumental in launching 19 of the 43 stores in the country. He spearheaded KFC’s entry into the three big metros—Delhi, Mumbai and Chennai. Varma took time off to speak to Alokananda Chakraborty of FE about how the chain plans to grow in India and about the lessons KFC learnt from its early mistakes. Excerpts:

What are the challenges of operating food retail business in the country when the environment is not congenial, given the looming food activism?

India is a country of fried food from breakfast to dinner—people prefer their food to be deep fried. Unfortunately, most people associate obesity more to the kind of food than the eating habits. It is actually the other way round. There are healthy oils available, particularly the ones with zero transfats, which most mom and pop restaurants and street vendors aren’t even aware of.

In this environment, KFC has taken several initiatives to deliver food that is not only healthy but also safe. As a global responsible restaurant brand, we use only zero transfat oil. Our food technology and science of food preparation ensures minimal calories despite being deep fried. We are working with Indian research labs to ascertain the calorific value of our products and plan to share the information soon. We also work with some of the largest and the most reputed suppliers to ensure that we deliver absolutely safe, hygienic and real food at KFC.

The company seems keen on underplaying Kentucky Fried Chicken’s ‘fried’ and ‘chicken’ (read non-vege-tarian) proposition in India by abbreviating the brand name to KFC. What is the gameplan?

The migration to KFC happened almost a decade ago for reasons linked to consumer trend of abbreviating—as has been seen in the case of other brands as well. KFC was a more efficient way of communicating on our signage. You would see a lot of reference to Kentucky Fried Chicken inside our restaurants.

Any global brand operating in India, especially in the food and beverage space, faces a dilemma of localisation both in terms of palate and pricing. How have you managed to strike the balance?

The Indian customer is increasingly demanding global experiences across categories—whether it is their clothes or food. We ensure we provide that global experience to our customers in India. We are building a brand that offers the same international taste and quality of food that it offers in all markets globally. Adapting to any local market is important, but keeping the originality of the brand is essential. We want the Indian consumer to try our unique proprietary chicken, burgers, meals and side orders that make us what we are. Therefore, our strategy in mid-term will be to maintain global experience in terms of our food and the look and feel of our restaurants.

We do understand that localisation is important and sometimes critical for success. We, therefore, have a menu that is part localised and we will stay with it for the next few years before we evaluate the launch of unique and differentiated local offerings in a big way. Some of our localised offerings unique to India include vegetarian offerings like KFC Veggie Snacker and KFC rice meal. We plan to maintain an international edge even with these localised offerings.

KFC has made many changes in its menu and communications since the time it opened shop in India in 1995. Could you enumerate the changes and how it has helped the brand restart the journey on a clean slate?

KFC’s initial stint in 1995 featured a limited range of products and absence of a strong value proposition. Since then the brand has had a metamorphosis and today we have more than doubled our offerings: we only serve 100% whole muscle real chicken prepared fresh several times a day just like fresh food prepared at home. This delivers on our single most important proposition of ‘Finger Lickin’ Good’ food. Also we have more vegetarian options today and have products targeted at specific customer groups. For example, the Snack Box is a mid-day snack for youngsters and Zing Kong box is a complete meal in itself for executives on the go. We have improved the overall value perception of the brand by offering an entire gamut starting from low-priced snacks to wow-priced individual and group meals.Our communication has also undergone a change over the years. Our communication was earlier limited to print and outdoor advertising that limited effective communication of our ‘Finger Lickin’ Good’ proposition. Which is why audio-visual communication became an imperative. KFC launched a TVC for the first time in 2007 and since then we have had four different campaigns with the latest campaign on Zinger burger featuring ace cricketer Muttiah Muralitharan. Our TV campaigns have been supported by advertising on the Internet, radio and mobile.

With the benefit of hindsight, what were the early mistakes of KFC and what lessons did you learn from them?

A limited menu and limited focus on value were probably our shortcomings. However, since then we have consistently worked on sprucing up our menu and pricing of our products. Today, we serve a wide variety of chicken and vegetarian products and our uniqueness is that every chicken dish is prepared with 100% whole muscle chicken, which sets us apart.

At a time when middle class consumers are becoming increasingly weary of spending money... given the overall inflationary conditions... what is KFC doing to keep the footfalls trooping in?

The current inflationary scenario has certainly impacted consumer sentiment, which in turn has had a ripple effect across sectors. However, we haven’t seen any negative impact of this on our business.

This is probably because while eating out is here to stay due to changing lifestyles, people are foregoing premium dining out options in the favour of QSRs (quick service restaurants) like ours, because we offer better value. Looking at this trend we have upped our marketing investments and launched our latest Zinger campaign.

KFC’s sister chain Pizza Hut has expanded by leaps and bounds, while KFC seems more cautious. Why?

Post re-launch in 2006, KFC has progressed at almost the same pace as Pizza Hut in its formative years. We have big plans for the brand in India and the first milestone is to grow our network to 100 stores by 2010.

Are real estate costs an issue in India?

Yes, it is a serious issue. In fact, in India we have European rentals and products priced in Indian rupees! Real estate cost continues to be one of the biggest cost line in our profit and loss. We have accepted the challenge and taken the current softening of prices as an opportunity for accelerating our growth.

How many outlets do you have at present? Which regions do you sell more?

Currently we have 43 restaurants in 10 cities. The major portion of our business continues to come from the metros.

What is your average footfall on weekdays and on weekends?

We see three to four lakh people step into our stores on weekdays. This number goes up significantly to five lakh on weekends.

Franchisees have been a pivot of KFC’s growth and expansion in India. What are KFC’s criteria for choosing a franchisee?

While choosing a franchise partner we look for their ability to invest both financial and people resources, experience in service industry, strong knowledge of real estate and, most importantly, the cultural fit with our organisation.

When will KFC bite the home delivery bullet?