Burger King leads, Starbucks lags

Oct 23, 2018

 

Burger King accounted upper growth in India than Starbucks did in FY18. This phenomenal growth is due to active stores expansion, attractive entry-level pricing and a comprehensive vegetarian menu than the meals offered by other players in the global quick-service restaurant market.

Burger King entered India in 2014 and showed an increase of 66 per cent in sales at Rs. 389 crore in FY18, while Tata Starbucks that opened its first store in 2012 grew at the rate of 28 per cent in revenue with Rs. 348 crore. A year earlier, the Seattle-based coffee chain was leading with annual sales of Rs. 272 crore against Burger King’s Rs. 234 crore.

“Burger King India witnessed double-digit same-store sales and traffic growth, while continuing to open new restaurants at a rapid pace, exceeding all players,” said Rajeev Varman, CEO, Burger King India. “We continue to be on plan, as well as profitable at a restaurant level. We have increased our investments in growing brand awareness, sharpening our menu and value offerings and building the infrastructure in India, as we progress to launch over 500 restaurants by FY23.”

On a per-store basis, both Starbucks and Burger King posted average sales of Rs. 3 crore, lower than rival Westlife Development, which runs McDonald’s in the South and West and had average sales of Rs. 4 crore at each outlet. India has been the fastest-growing market in terms of store expansion for both chains — Burger King had 129 stores, following shortly was Starbucks which had 116 outlets until March this year.

Burger King, however, notched up higher numbers than Jubilant Food-Works (JFL), where average sales per outlet were at Rs. 2.6 crore from both Domino’s Pizza and Dunkin’ Donuts.

Burger King, known for its whooper burgers, had entered India in November 2014 when most quick-service restaurants were struggling with falling sales. The 66-year-old burger chain partnered Everstone Capital in India, which holds a majority stake in the company through subsidiary F&B Asia Venture. It has also lined up $100 million for expansion over the next few years.

“Although Burger King tried to open its stores next to McDonald’s, its overall reach is very less as of now. Also, we believe that Westlife Development will accelerate its store opening rate to 40-45 a year from FY20 going forward, which is line with the strategy of KFC and Burger King in India. Hence, the penetration gap between McDonald’s and other peers will remain,” said a report by Nirmal Bang Securities.

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