It?s celebration time for Pizza Hut, a part of the US-based Yum Restaurants which completed 15 years of operations in India recently. When the company started its journey back in 1996, the organised eating out category hardly existed. But Indians were willing to step out of their homes and try new cuisines and that?s what Pizza Hut has cashed in on. In an interview with Rohit Nautiyal of FE, Sandeep Kataria, chief marketing officer, Yum! Restaurants India talks about the importance of innovation in attracting consumers, the challenges in the country?s Rs 470-crore pizza market and the way forward for the brand. Edited excerpts.
What was the main objective behind the launch of Pizza Hut in 1996 when pizza was considered a luxury? Has the Indian consumer become ready to experiment when it comes to new cuisines?
Fifteen years ago Yum Restaurants as a corporate decided to go beyond its existing markets in the US, Europe and Latin America. We could see immense potential in India’s eating out market which is currently as low as 2% of organised trade and stands at $90 billion. The concept of eating out was not alien to the country and so we made our foray. Today we are present across 34 cities with 200 stores including dine ins and delivery outlets.
Moving beyond the comfort of enjoying familiar tastes, Indian consumers have become experimental over the years. Innovations in menu are key drivers for Pizza Hut’s growth globally. We are now known as an affordable casual dining restaurant (ACDR). One of the defining moments for us was to go beyond pizzas and add items like appetizers, soups, salads and beverages to our menu. This has been done over the past four years. We have just added 15 new Indian pizzas to commemorate Pizza Hut?s 15 years in the country. After making additions to our menu, we observe customers’ reaction over a period of time and based on that take a decision on how long a particular dish should stay on our menus. We have positioned ourselves as a brand that has something for everyone. The importance of the digital media has increased in past two years for us. We have close to a million and half fans on Facebook who interact with us on a regular basis.
Why did you take so long to get into delivery with Pizza Hut Delivery (PHD) in 2007?
Actually, we had started delivering way before establishing PHD as part of our dine in set-up. Delivery has a different trajectory and a different operating platform. We are now focusing on strengthening the delivery side of our business with a better understanding of the demographics, income profiles and nuclear families.
Most players in the pizza segment have started entering the smaller cities recently. What are your expansion plans for these cities?
Over and above growing our footprint across the metros, we will penetrate deeper into smaller cities as they are important for us. To give an example, Bangkok alone has 400 KFC restaurants. Similarly, metros in India still have scope for the expansion of Pizza Hut. By 2015, we are looking at adding 300 more restaurants and delivery centres. We evaluate the metros versus smaller cities with the help of a large onground team that studies various locations.
What are some of the challenges Yum has faced in India so far?
The biggest challenge for any food services company in India is that your cost is first world and prices are third world. Also, as you expand it is a challenge to bring the right and experienced talent onboard. We focus a lot on in-house training. Three months ago, India was spun off as one of the divisions. So now we have the US, China, International and India. We are looking forward to touching $1 billion sales by 2015.
Yum brands including Pizza Hut have been able to command a premium for their offerings. What will be the right pricing strategy for Pizza Hut in the future?
It is important to have access points for consumers across the spectrum in India and we have done that. I believe we charge just the right money for our offerings. ‘Taste’ is the most important factor for us to attract consumers who are now willing to pay a small premium. Both Veggie Supreme and Chicken Supreme priced higher are two of our star products. We do not see the need to focus on budgeted offerings to get higher numbers.