According to experts, individual consumption throughout the day is preferred over group consumption.
Despite food inflationary pressures affecting discretionary categories like fast-food, there is one sub-segment that is defying the slowdown.
Burger sales have been consistently outperforming pizza sales for the past five quarters, as evident from the same-store sales (SSG) growth figures of key players like Westlife Foodworld and Jubilant FoodWorks. This trend is anticipated to persist as food inflation continues and consumers become more value-conscious, reducing non-essential spending.
Westlife operates McDonald's outlets in the western and southern regions of India, while Jubilant FoodWorks holds the master franchise for Domino's Pizza in India, Bangladesh, Sri Lanka, and Nepal.
Experts credit this trend to the perception of burgers as being preferred for individual consumption, whereas pizzas are often associated with group consumption. Burger chains like McDonald's and Burger King have strategically promoted combo meals, positioning them as value-for-money options that include burgers paired with french fries, drinks, or other products, providing a satisfying experience for consumers.
A combo meal can be as affordable as Rs 150-200 (for example, McSaver meals at McDonald's are priced at Rs 179), and the price can increase depending on the consumer's additional order preferences. On the other hand, pizzas vary in price based on size and toppings. For instance, Jubilant FoodWorks offers a regular-sized veg pizza at Rs 99, but as part of its Pizza Mania offer, the price has been reduced to Rs 49-69 in recent months. Additionally, the chain is driving sales by offering two regular-sized pizzas for Rs 99.
Sachin Bobade, the Vice President of Research at brokerage firm Dolat Capital, emphasizes that consumers are particularly discerning during inflationary periods, considering every advantage and disadvantage. He points out that burgers provide a fulfilling experience that pizzas may not match. Pizzas are often associated with family occasions or gatherings with friends, whereas burgers can be enjoyed individually anytime and anywhere. These attributes work in favor of burgers, making them more appealing to consumers.
According to industry estimates, burgers and sandwiches account for 31% of the quick-service restaurant (QSR) segment in the Indian fast-food market, while pizzas make up approximately 28%. Although the gap between the two categories is not substantial, experts note that burgers and sandwiches experience a higher growth rate (19-22%) compared to pizzas (13-18%).
Harminder Sahni, the founder and MD of Gurugram-based Wazir Advisors, believes that there is a greater opportunity for all-day, individual consumption than group consumption of comfort food like pizzas. This perspective could explain the contrasting sales performance between burgers and pizzas.
Looking ahead, Jubilant FoodWorks is pinning its hopes on upcoming occasions, such as the Cricket World Cup, to boost sales. During events like these, group consumption is expected to rise as people gather to watch matches together.
During the recent investor call, Sameer Khetarpal, the CEO and MD of Jubilant FoodWorks, the largest food-service operator in the country, announced the launch of a new spicy range, consisting of four pizzas priced at Rs 179.
Additionally, the company has successfully enhanced consumer engagement, particularly online, with a record-breaking 10 million downloads of the Domino's Pizza app, as reported by Khetarpal.
Akshay Jatia, the executive director of Westlife Foodworld, shared with FE that the June quarter's same-store sales growth was primarily driven by product innovations and platforms like the McSaver Value.
Looking ahead in the medium term, the company's focus will be on boosting meal sales, providing an omni-channel experience, and maintaining cost leadership, as stated by Jatia. Westlife Foodworld currently operates a total of 361 restaurants spread across 58 cities by the end of the June quarter. In comparison, Jubilant FoodWorks operates a total of 1,838 restaurants across 394 cities.
