Monday, January 9, 2012


Exciting days are ahead in the fast food chain sector in India with the announcement by Reliance group to enter into this business. As a truly Indian organization Reliance can be expected to know what Indian consumer wants and accordingly tailor make the offerings to suit local palate. However the "pardesi" food chains which have already established their foot prints in India are not going to present the leadership in this sector on a platter without a fight. If the new "desi" food chain is going to imitate the menu and models of the existing players the going can be expected to be tough. Late entry may also cause problems in securing strategic locations in many urban areas besides them being very expensive calling for high investment. One of the shining examples of success in chain restaurants in India is that of Cafe Coffee Day which has established itself as a major player with standardized menu, excellent quality coffee and high class ambiance. If Reliance can adopt the same strategy and carve out a separate and distinct identity for its food offerings, probably there can be reasonable chance of success. Here is a take on this new development.

'Reliance Industries became India's biggest company by fueling the subcontinent's cars and homes with oil and gas. But for its next venture, the $50 billion conglomerate has its sights set on another kind of energy altogether: fast food. According to The Economic Times, Reliance, which is headed by multibillionaire Mukesh Ambani, is gearing up to launch a new chain of fast food restaurants for Indian consumers within the next year. Reliance Industries has recruited Rishi Negi, the COO of movie theater company Fame Indian and a former Pizza Hut India executive, to develop and run the new fast food brand. Sources close to Reliance have said that the chain's style of food has yet to be determined. But the business model is said to be based on companies like McDonald's, with a standardized menu and hopes of national domination. Sources have said that delivery will be a key part of the chain's revenue model. The Indian fast food sector has been growing quickly over the past few years. But India, as compared to China and Russia, whose industries have also experienced rapid expansion, has been relatively slower to warm up to international fast food chains. For example, Yum Brands, the owner of KFC, Taco Bell and Pizza Hut has been hugely successful in China for more than a decade, but just launched an independent Indian division a few weeks ago. But if the Indian fast food market is in some ways an unusually difficult one, Reliance's new entrant will also have some unusual advantages. The chain will be a subsidiary of Reliance Retail, which has already become a major player in Indian consumer goods since its founding in 2006, and so knows the market well".

It is true that Reliance, through its retail arm, has an established resource base that can serve to feed the food business but the fact remains that in spite of 5-6 years presence in the retail market, it has not been able to achieve even 5% of its targeted business so far raising troubling questions regarding the ability of this group in successful diversification. Earlier fiasco in retail petrol business is still fresh in memory and one can only hope this time the new venture will become landmarks across the country with pan-India foot print and a distinct aura of its own.


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