International Expansion: Church's Chicken Lands in India
The quick-service restaurant chain sets up shop in India to reach a growing middle class and younger population.
By Maya Norris, Managing Editor -- Chain Leader, 10/27/2008
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| Church's Chicken opened in Hyderabad, India, on Sept. 11. In Europe and Asia, the brand is known as Texas Chicken. |
What makes India a lucrative market for Church's Chicken?
India has 1.1 billion people. That is one-sixth of all humanity. And Indians traditionally consume the largest quantity of fried food, believe it or not. Even more than the Americans, the Chinese, the Brazilians. And chicken is the No. 1 protein of any meat in India. And fried chicken is a natural food item for Indians. Therefore our product, our spice level, our pricing strategy is made for India.
Why did you decide to enter India as opposed to China, which is the fastest-growing economy in the world?
The world is in a recession as we speak. And despite all of that, China is still growing at about 9 percent, which is slower than it used to be but still very fast compared to the rest of the world. And India is slightly behind at 7.5 percent in terms GNP growth.
Now the reason we chose India vs. China is the following: The first is our competitive environment. China has over 2,000 KFCs. India has at best 50 KFCs. So we've chosen to be more competitive against our competition in India vs. China.
Second, the consumption of the middle class in India is much bigger than the middle class in China even though Chinese overall consumption is obviously bigger than India.
The other is, India's population is at least 10 years younger than China's population, which means we're getting there earlier and therefore becoming a part of the younger generation's diet when they're 17, 18, 15 as opposed to 25, 28 years old.
Will you eventually go into China?
We will eventually go into China. Any company that wants to be global, which our intention is, it's critical to be successful in both countries at the end of the day-India and China....We will probably end up opening in China...in 2010.
What adjustments did you make to the concept to adapt to the local customs and tastes in India?
Half of the Indian population eats only vegetarian. They do not eat meat. So that's something to take into account. Out of 1.1 billion people, about 550 million eat meat and 550 million do not eat meat.
Having said that, the first thing that American fast food has to be very cognizant in a country like India is cultural sensitivity in how you build the menu as well as the store itself. This is the only place in the world we have separate vegetarian and nonvegetarian kitchens. So a fryer that's being used to fry chicken cannot be used, will not be used, to fry french fries, as an example.
We do have an Indianized menu. So we have our main thrust that does not change, which is Southern-style fried chicken made in the USA, if you will, in terms of brand positioning. That doesn't change, but our sides change and even our sandwiches and the flavoring of the sandwiches change quite a bit.
I'm going to give you some examples. On our menu, here what you call a chicken sandwich is called a chicken burger in India. Another example would be the herb chili burger, which is very popular among vegetarians. The Mexican burger is very popular among meat eaters. It is a chicken patty that has the nacho chips on it, then topped with salsa, and on top of that we have some lettuce.
One of the sides that is very unique-and we happen to be the only American fast food in India selling this side item, which neither McDonald's nor KFC have--and that is Paneer strips. Paneer strips is homemade cheese created in slabs, cut and then fried in the commissary. It's par-fried and then transported to the store where it's completely fried. We have a commissary system in India, where the commissary prepares food on a real time basis and delivers to the stores. In some cases, the side items are par-fried.
A complete meal in India is considered not just to have chicken or fried chicken, but in addition to that they're looking for Indian bread, which we call a roti, as well as a lentil-based soup called dahl. It is very necessary to have a platter or meal concept for Indians where just eating a chicken sandwich or bone-in chicken is not a complete meal. You've got to have a bread accompaniment as well as a lentil-based soup accompaniment. That makes a difference.
The other thing that Indians are obviously known for are spices. India consumes the largest amount of spices as well as spicy food in the world. Our spicy chicken, our spicy flavor in the chicken, is a very, very big hit. We have literally doubled the level of spiciness in our chicken in India compared to the U.S.
Does your main customer demographic differ in India than the United States?
In India it is much more mainstream. It is much more what we call the B market, which is middle class to upper-middle class, but not necessarily the richest, not necessarily the poorest. Generally on the younger side. And we continue to focus and go after families, which is again a little bit more unique with our positioning. Not unique to Church's or Texas Chicken, as we call ourselves in India, but it is unique in terms of American fast food, which generally focuses on the single person in India. We have chosen to go very heavy focus on the families in India.
What's the biggest challenge of opening and operating in India?
Selecting the right franchisee is very critical in India as well as in countries like China. You're only as successful as the partner you select locally. That's very important. The emphasis of the local partner and the right partner is very critical.
The other is definitely thinking through the cultural sensitivities in terms of the kitchen as well as the menu.
And finally, emphasizing heavily on training, which is very, very important because Indians go into action, generally speaking, as fast as they can. We actually have to slow them down and say investment in training is critical. We need to do that to get the staff trained and ready to go before we launch.
The store has only been open a little over a month. How has it been doing?
It has first of all exceeded expectations. Sales are very strong. We had our grand opening day on Sept. 11, and it was pouring heavily. What really astounded me a little bit was the number of customers who were already lined up way before the store even opened. And despite the pouring rain, the activity and the buzz and the interest level was very high.
What's the potential for Church's Chicken in India in terms of expansion?
We're looking at approximately 300 stores in the first 10 years. And this is a very unique country like China and that is, India will add at least 100 million new customers to the middle class every five years for the next 20 years. So the market's going to be growing rapidly.
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