MOS Term Paper

Marketing QSR services in India: A study of Subway

Part 1

Submitted by:
Arpit Kesarwani 13pgdm013
Harminder Singh Puri 13pgdm024
Jhanakar Mehra 13pgdm027
Mohanish Ranjan 13pgdm035

Table f Cntents
Unique Aspects of the subway................................................................................................................ 1
Prerequisites for effective marketing of Subway in India ....................................................................... 1
Market Size ............................................................................................................................................. 2
Growth patterns..3
Evolution of service3
PEST for QSRs ..4
Industry players and competitive scenario .......................................................................................... .. 4
Marketing Implications ............................................................................ Error! Bookmark not defined.

a. Unique aspects of the Quick Service restaurant

1) Brand : A brand is the sum of all qualitative and quantifiable aspects of the restaurant.
The qualitative factors include:
Ambience
Food Variety
Quality
Modes
Level of service
Aesthetics
Facilities
The quantitative factors include:

Service speed
Food being served at correct Temperature

Every brand defines its best at service : for example for Pizza Hut it is best hot served soft base
pizzas or subways best at nutritious subs.
2) Consistency: consistency in service levels is perhaps one of the most important and
challenging aspects in any service industry. In terms of QSRs it is about consistency between
units and between visits giving customers the assurance of food, service and experience will
be the same, ensuring brand loyalty.
3) Food offer and menu development: focus is own: variety, option to customize , availability of
combos in both veg and non-veg.
4) Service speed: The crux of QSR is speedy service keeping the promised quality intact. This
requires improving food preparation times without cutting down quality by optimizing
kitchen layout, work station re-engineering , careful selection of suppliers,cold storage
facilities, careful demand planning
5) Store design: QSRs are slowly moving towards fast casual restaurants in terms of store design
as the brands realize that there need not be compromise between quality and affordability
when design has clearly defined goals based on the brand strategy. However, primary focus of
designs remains longevity, clean ability and durability.
Following table shows a typical fast casual and QSR global brand store design component
usage:

Source: WD partners report on QSR

b. Prerequisites for effective marketing of Subway in India
There are certain prerequisites to be kept in mind for effective marketing of QSRs like Subway in
India.

Quality Service
- Health and hygiene factors are crucial

Monitoring quality of products

Establishing a strong supply chain
Maintaining the quality standards

Mass Appeal
- Affordable prices
- Standardization of product across outlets
- Localization of menu

Unique Experience
- Well-trained staff
- Focus on all customer touch points
- Service, interiors and menu items must add to the experience

Strong Brand Identity

- Effective promotion activities
- Build a recognizable brand
- Improve customer brand loyalty

Distinctive Ambience
- The store layout and design must be distinguishable
- Lively and comfortable atmosphere
- Less clutter, more space

c.1 Market Size

The food services market in India is worth INR 247,680 and can be categorized into organized and
unorganized sector. Organized sector comprises standalone and chain players across quick service
restaurants, full service casual and fine dining restaurants, hotels, bars, cafes, frozen dessert
lounges, etc. The unorganized sector include dhabas, sweet shops, roadside vendors, etc. Further
the market is expected to INR 4,08,040 by 2018

The organized sector can be divided into six formats:

Frozen dessert (including Ice Cream and frozen yogurt)

Caf (including Bakery)
QSR (quick service restaurants)
CDR (casual dine restaurants)
FDR (fine dine restaurants)
PBCL (pub, bar, club, and lounge)

The specialist international brands offer burgers, pizzas, wraps, sandwiches, etc. The likes of Taco
Bell have introduced customized, localized cuisine options like nachos and falafel to the Indian
platter.
A noteworthy aspect is focus of Indians players on multiple cuisines such as wide offering of
Haldirams, Bikanervala, etc. who interestingly are also skewed to vegetarian food in contrast to
international players like McDonalds, Dominos, KFC, Subway, etc. The chain space is marked by the
presence of 90-100 brands with ~2900-3000 outlets spread across various cities in India.

Market segmentation on basis of number of outlets by region

Source: RPT
c.2 Growth Patterns
Indian QSR industry has grown rapidly over the past few years. The major factors that have fuelled
this growth include:
1) Increase in per capita income
2) Evolution of food services format with increasing number of outlets
3) Changing food habits and consumption patterns
This changing pattern is still largely an urban phenomena but is also emerging in rural areas as the
rood connectivity and income levels rise in rural areas.
c.3 Evolution of the service
Entry of international players in the market
Beginning as a largely unorganized sector, the influx of foreign players especially in the QSR
segment with many global players like Mc Donalds, KFC, Subway, Pizza Hut, Taco Bells along with
new additions in the recent years such as Dunkin Donuts by Jublaint Foodworks and Starbucks a Joint
Venture between Starbucks coffee company and Tata Group. These international players have
targeted young population in this country which is increasingly spending more on eating out.
Localization of the Cuisines
The global brands have successfully modified their menus to suit indian taste buds. From McDonalds
Mc Aloo Tikki to Subwayss Chicken Tandoori sub, these brands have completely indianized the
menu, serving as a direct competition to local snacks shops. Also, the pricing between Rs 50 to 100,
for many of these offering has meant that price point is no longer a concern for the indian customer.
Rising number of domestic chains
Chains such as Nirulas, Bikano Chat, Haldirams in north and Murgan idli house and MTR in south
have been major contributors of growth in Indian QSRs .
Expanding to Tier2 and Tier 3 Cities
QSR have expanded to tier -2 and tier -3 cities such as Ambala, Kanpur, Agra, Cochin, Coimbatore
and many more. Similarly, Nirulas has also increased it presence in tier 3 cities with meerut and
Pathankot being the latest additions.

Evolving formats of food servicing

The food services format has evolved in terms of food courts and kiosks in malls, multiplexes.
Mordernization of railway station , metro station development and airport revamping in many cities
has provided ample opportunity for QSRs to flourish due to high demand and high footfall in transit
places where customers prefer take aways.
Online ordering systems
Pizza hut, Dominos, McDonalds offer online ordering systems. These QSRs offer discount coupons
for ordering online. Pizzas Huts PHD system provides online ordering and payment options, with
virtual representative support making the ordering experience convenient and easier.
Changing Promotions strategy
There is no denying the fact that internet and mobile phone penetration has taken several industries in
india by a storm, no different is the food and services industry. From increasing your presence on
social networking sites to getting better rating on apps like Zomato, the promotions strategy is
becoming more and more complex.
d. PEST for QSRs
Political Factor:
Health and safety guidelines of the government including the individual state policies
Labeling guidelines especially for genetically modified foods
Factors such as the tax law, employment law and related trade restrictions
Economic Factor:
Changes in inflation and exchange rates
Expanding middle class
Disposable income
Perceived value of money
Cost of raw materials
Social Factors:
Busy lifestyle leading to need for quick service
Nuclear families
Health consciousness
Socializing activities mall and multiplex boom
Technological:
Online order systems
Mobile apps
Electronic payment modes
Advanced hi-tech equipment
e. Industry Players
The Indian Quick Service restaurant consists of various players having numerous offerings in their
portfolio. The development of nutritious and healthy foods as a substitute for traditional ones at these
restaurants has led to mass consumption of these foods. On a competitive front, the market is poised

for a rapid expansion with the continuous entry of foreign players as well as national players who are
willing to try their fortunes in this rapidly growing market.
There have been numerous steps taken up by these organizations to create a sustainable advantage and
maintain their growth pattern. Some of them include:

Entry into Tier-II and Tier-III cities through different formats

For example: Nirulas is planning to open restaurants in Amritsar, Bhopal and other cities in
the format of Family Style Restaurants (FSR) and parlors
Increase the number of stores and enter the untapped markets
For example, both McDonalds and KFC have planned to increase their existence. (McD
planning to reach 1000 stores by end of 2020 and KFC to 500 by end of 2015)
Continuously innovating and customizing their products according to the trends seen and
forecasted
Example: Dominos is planning to come up with a new range of Diet pizzas

QSRs

Pot of Gold: As per the reports of ASSOCHAM, the Indian Quick Service Restaurant market
touched around $50 billion in 2013-2014
Market players: Dominos, KFC, McDonalds, Subway, Burger King (new entrant)
Share of the respective franchisees: Dominos: 16.2%, McD: 14.2% (According to the reports
by Euromonitor)
The other players in the unorganized sector include the Dhabas, Road side shops and sweet
shops

Competitive Scenario

The consumer foodservice retail operators benefited due to a high demand in the year 20132014
Although the share of the market is not huge for any particular player, yet most of the food
categories had a double digit growth in the previous year
Also, with the entrance of many new international players, the competition is on the rise, still
there are many untapped markets which are being tapped by these players.
The competition is highly fragmented with no single brand accounting for a major share in the
market. McDonalds has the highest market share followed by KFC and Dominos (according
to report by Euromonitor)

Market Share for burgers and sandwiches chains on basis of revenue

Source: RPT

Market Share for Major QSR Players offering Indian Cuisine on Basis of revenue

Source: RPT
f. Marketing Implications

Hygiene factors: People go to QSRs for a quick and fast service when they are in a hurry and
that it should not be time consuming. Also, many of these chain of restaurants focus on
healthy aspect of their store
Marketing Mix (The 4 Ps)
o PRODUCT: Consistency and innovation in the product is very essential. The focus
should also be on:
Freshness of Ingredients

Availability of all items on the menu

Variety in the menu that would add to the delight factor
PRICE: Customers also give importance to price and they compare one QSR with
another before taking the decision whether to visit the store or not. The customers
mostly look for combos and place an order out of them as their bill value has not
increased significantly
PLACE: Accessibility to the store is important as people look for convenience and
they would generally visit the nearest store. Thus, being available in locations close to
high volume traffic is highly important
PROMOTION: The advertisements and other forms of promotions should focus on
the target customers. The imagery in the advertisements especially the product needs
to be enhanced. There should be focus on increasing the recall of these promotions
and advertisements.
There needs to be a congruence between the brand personality and individual
personality of the customer and the brand should position itself in that way
The promotions should be focused on the service aspects of Convenience,
Quick service, reasonable price and good quality