Following a decline in dine-in sales during the Ocotber-December quarter, fast food chains are launching value meal offerings to draw customers back to the stores. The companies witnessed a decline in dine-in sales on a y-o-y basis in the range of 4% to 6% due to high competition and rising demand for online delivery. Further, to boost sales in the stores, many are also pinning hopes on the outlet revamp.
KFC India, a subsidiary of Yum! Brands, for the first time, has launched ‘lunch special’ meals at Rs 149 that include chicken and veg longer burgers, rolls and rice bowls paired with hot and crispy chicken, peri-peri chicken strips or fries and refreshing beverages. These specials are available at all of its restaurants.
On the other hand, McDonald’s India West and South, has launched its new offering ‘McSaver Meals’ starting at Rs 99 for customers in Gujarat, Madhya Pradesh and Chattisgarh and Rs 149 for customers in other parts of West and South India. Its Aloo Tikki meal, earlier priced at Rs 230, is now available for Rs 99, and the McVeggie meal, which was previously priced at Rs 321, is now available for Rs 149. In a nutshell, the pricing has been slashed by over 50%.
In the December quarter, Westlife Foodworld (which operates over 380 McDonald’s restaurants across 62 cities in West and South) witnessed a year-on-year decline of 9% in same-store sales growth (SSSG).
During the earnings conference call, Akshay Jatia, executive director, Westlife Foodworld, highlighted two key challenges impacting SSSG. On the macro side, demand conditions remained tough with lower levels of eating-out frequency. The festive season saw a slight uptick, but the demand pressure continued thereafter. In addition to that, around 30% of its stores across West and South saw a 10% to 50% decline in daily sales from mid-October onwards on the back of flood and other external factors.
In Q3, Devyani International’s SSSG for KFC stood at -4% and Pizza Hut’s at -6%, whereas in the case of Jubilant Foodworks (which operates Domino’s Pizza), while the delivery business was up 6%, dine-in contracted by 5%. Reportedly, Domino’s is also planning to launch special value meals for its in-store customers this quarter. Sameer Khetarpal, CEO & MD of Jubilant FoodWorks, recently told the media, “It is a time when we need to pass more value to consumers. In a high-inflation environment, consumers tighten their purse strings, they conserve cash. For Domino’s, delivery is growing; we are bringing in the better value proposition for dine-in customers including more value-conscious meals, and combos.” Currently, 65% of the pizza chain’s revenue comes from delivery, while 35% comes from dine-in.
While Swiggy and Zomato continue to pose a huge threat to firms’ revenue and SSS growth, Karan Taurani, senior vice president, Elara Securities, said that the value-based offerings may get dine-in sales growth back on track. Although the outlook is not quite positive over the near term for the next two quarters and one may witness growth rates being quite subdued, he cautioned.
Ravindra Yadav, partner, Technopak, highlighted that value meals can impact dine-in sales only if value meals and combos are offered exclusively for dine-in. Additionally, outlets need to look into premiumisation in terms of products used and services offered, and the overall dining experience needs to be made more welcoming for the consumers.
Working on enhancing its dining experience, last year, McDonald’s India – North and East, announced its plans to launch 300 modernised restaurants by 2025, with an investment of Rs 400-600 crore. These stores allow customers to enjoy a personalised, stress-free dining experience with shorter queues, along with the convenience of self-ordering via digital kiosks. For its part, Domino’s recently announced a rebranding exercise along with revamping 100 of its restaurants.