Growing at a CAGR of 75% for the past five years, Kentucky Fried Chicken (KFC) India has proved to be a finger-licking brand for its parent company, Yum! Restaurants, which runs close to 36,000 eateries globally. Yum, owner of brands such as Pizza Hut and Taco Bell, is now looking at dishing out anywhere close to Rs 1,000 crore for the expansion of KFC here over the next five years. Unnat Varma, director, marketing, KFC India, tells FE?s Shreya Roy how the colonel?s secret recipe has taken KFC to the number two spot in the branded eating out market in five years and what the next five years will look like.

You have recently opened your 100th store. What is KFC?s expansion plan for India now?

We?ve been operational since 2006. The first two years was really about understanding the proposition of the brand, understanding the consumer and the economic viability. We are now ready to ramp up to 500 stores by 2015. Over the last two years, we have pressed the gas on expansion, 50 of these 100 stores have come up in the past 14 months. The plan now is to get to 500 stores by 2015. Majority of the stores we are looking at will be company owned. The ratio will be 75% company owned and about 25% franchised.

How much will the parent company invest in India for this accelerated ramp up?

As I said, not all of it will be company owned. A certain part of it will be invested in by franchisees. Investments will happen on various fronts. There is a store investment that happens to build up the store, brand activity, supply chain, among others.

Judging historically, how much investment would this require?

Typically, it takes about Rs 2 to 2.5 crore to put up a store. If 400 new stores have to come up, there is a Rs 1,000 crore investment sitting right here. But beyond that there could be brand investments, supply chain investments. This is just for stores.

On the revenue front, what growth are you seeing?

It will be a few thousand crores definitely. It wont be a billion dollars, which is roughly Rs 5,000 crore, but it should be in the vicinity of Rs 3,000 to 4,000 crore. KFC will the be largest restaurant brand in India by revenue terms. Today, we are No. 2 in the branded eating out space, by our estimations. Unfortunately, there is no published study to provide accurate data on that.

What are the geographies you are targeting?

Same time last year, we were present in about 12 to 13 cities. Now we are in 21 cities. We are expanding as much in large towns where we already have presence, as in newer cities. We cannot say growth will come from one specific kind of market. That will happen much later. Right now, we are under penetrated. Even after having 25 to 30 stores in Bangalore, we feel there is still room for at least another 30 here.

Where does India feature in Yum?s global plans?

India is very small right now. Globally, we have about 16,000 stores whereas in India we have 100. But what we have been seeing is a 75% CAGR for five years now, which makes this the fastest growing market for Yum globally. We plan to grow at this level for the next five years. This is why the company is putting up direct investments here, opening owned stores. World wide, 20% is company owned, 80% franchisee owned, and in India, cosidering the pace at which we plan to grow, the reverse is true.

How have your marketing initiatives and brand positioning worked in India?

KFC here is a remarkable story of how to position a brand. What builds the brand is both the product’s ethos, its history, and its context. KFC here talks majorly to the youth. Ten years back, the mindset towards India was always that India cant afford it, so lets serve a diluted product to India. The norm was to give India a third world experience.

Since we have had that experience, what we have done with KFC in India is to give possibly one of the best avatars you will see of a KFC anywhere in the world.