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Food chains eye the highways

By Neeraj Thakur in New Delhi
July 05, 2009 17:36 IST
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After commercial districts, residential markets and malls, fast-food chains like McDonald's, Barista Coffee and Nirula's have now trained their guns on highways. With the improved road network, brand-conscious Indians have begun to travel like never before.

And this is the abusiness top food chains want to tap. The organised retail food market is worth Rs 2,500 crore (Rs 25 billion) per annum and is growing at 25 per cent.

McDonald's already has 14 outlets on national highways and plans to open 50 per cent of its stores in the coming years on highways. It has tied up with oil marketing companies like Hindustan Petroleum and Bharat Petroleum to open stores on a revenue-sharing model.

Coffee chain Barista Coffee has plans to open 30 stores on different highways over the next two or three years. It already operates one on the Bangalore- Mysore highway. The next one could be at Murthal on the busy road that connects Delhi with Chandigarh and Shimla. It is learnt that Barista will even offer paratha and butter milk there. It too has tied up with a couple of oil retailers.

Nirula's too is bullish on the prospects. "Highways are the next destination for the big food retailers to expand as the profits are higher from these stores", said Nirula's CEO & Managing Director Samir Kukreja.

At less than ten per cent of sales, the real estate cost of such stores is less than in cities, though highway stores need to be larger as big toilets need to be provided for travellers. Most of these stores can be operated for full 24 hours. And the average ticket (bill) size is higher by at least 40 per cent than in cities because orders here are food-oriented.

"On highways, we have observed there is higher average expenditure on food as people move in large or big groups," said McDonald's India (North & East) Managing Director Vikram Bakshi. "As more and more people are taking the highway to travel these days, we get around 20 per cent more customers in our outlet on the Bangalore-Mysore highway," added Barista Coffee Head (marketing & product development) Vishal Kapoor.

"Currently, most people travelling on highways have to take food from dhabas (unorganised restaurants). The opening up of organised food retail chains on highways will give a choice to the travellers," said Technopak Associate Vice-president Purnendu Kumar.

However, there are challenges in the business. Some analysts said that highway stores with their different menu call for a different supply chain. Also, the signboard of the outlet needs to be visible form a distance so that travellers in high speed do not miss it.

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Neeraj Thakur in New Delhi
Source: source

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