Domino's is crushing it in India. It entered the country in 1995,
and since then it's expanded rapidly. There are over 1300 dominoes across
282 cities in India and its footprint continues to grow. Domino's has market share of
more than 70 percent. Domino's in India is even testing
delivery in 20 minutes or less. That's made it difficult for Pizza
Hut and Papa John's to compete. Even local Indian pizza rivals haven't
been able to match Domino's success. So what is Domino's doing
that is so different from the competition? It's localized its product
offerings, but probably the biggest differentiator, ust like in the
U.S., Domino's is winning the pizza war in India because it
offers fast delivery and sophisticated ordering technology. Domino's success has made it more
difficult for other chains to flourish. Papa John's left India in
2017, closing 66 doors, according to its 2017 financial filings. And Pizza Hut footprint has
stayed relatively small compared to Domino's, despite its early
entry to the market. On March 24th, 2020. India announced a 21 day lockdown
during the Corona virus outbreak instead of closing its
stores across the country. Domino's India offers zero contact
delivery and pickup to its customers, according to
the chain's website. Domino's India has taken strategic steps
to stop the spread of coronavirus by making sure company
employees pass medical checks, temperature screenings for employees
before entering restaurants, sanitizing protocols for equipment, bags
and delivery boxes every four hours. And employees must
wash their hands every hour. Pizza Hut has offered similar contactless
delivery, but the brand is still outnumbered by
Domino's store count. It has across the subcontinent. So how has Domino's
won India's pizza war? The pizza market in India is
valued at over $1.5 billion. That's small compared to the U.S. market, which is worth
$46.7 billion dollars. Still, the market is huge considering
the huge population that India has. But when Domino's and Pizza
Hut started operations in India in 1995 and 1996, respectively, the
pizza market was much smaller. It wasn't until July 1991 that India's
leaders decided to open up its economy, marking the
beginning of globalization. India removed subsidies on some items,
lowered some import duties and invited foreign competition in. With globalization came American
brands like Coca-Cola, McDonald's, Pizza Hut and Domino's. When international pizza chains entered
India in the 1990s, some experts say it wasn't immediately
compatible with local tastes. Pizza in India strikes a delicate
balance between being too foreign and not foreign enough. They've been able to kind of walk
the tightrope or the balancing act between localizing to an extent that
is definitely needed to be successful in the Indian market. But again being able to balance
that with, you know, being perceived as, you know, that the top
pizza brand in the U.S. and globally, not just in India. That brings a lot of credibility to the
brand and is why a lot of people want to want to have
it in comparison to others. Domino's success is also thanks
to India's huge millennial population. In general, millennials are more
likely than their older counterparts to eat food from a restaurant. Use technology, travel and
embrace new foods. Millennials account for about two thirds
of the population in India. And research shows that Indian
millennials love eating out, spending three times as much on restaurant
visits than other forms of entertainment. Nielsen research found
that middle income urban millennials spend roughly 10 percent of
their food budget on eating at restaurants. That's significantly higher
than the 3 percent spent by their Gen X counterparts. As pizza's popularity grows, Domino's has
found a huge market in India as of the end of 2019. India is Domino's second largest
market after the U.S.. It's a different story
for Pizza Hut. Its business in India makes up
a small fraction of Pizza Hut. Overall business, the country accounts for
just one percent of system sales. China, on the other hand, accounts
for 17 percent of Pizza Hut sales. More and more local restaurants
are starting to offer pizza, too. Let's say the top 10 cities
in India, you would have at least seven to eight brands of pizza which
are there and would offer at least about who would operate at
least five stores in that city. But experts say no Indian chains are
on the verge of becoming national chains. Most are small and privately
held, so they're not competing on a national level
with American chains. In India, there appears to be a lot
of room for growth in the pizza industry. Domino's local franchise Jubilant
FoodWorks had sales of $510 million in fiscal year 2013,
18 percent higher than the previous year, according to FactSet. In fact, Jubilant FoodWorks sales have
seen double digit growth for 13 out of the last 14 fiscal years. Jubilant FoodWorks also runs Dunkin in
India and operates its own Chinese food chain. But Pizza is the company's most
profitable business segment by far, making up 78 percent of
its revenue, according to FactSet. Domino's footprint in India is huge
compared to its rival Pizza Hut, which has 430 restaurants, according
to its Web site. Domino's has 1,325 stores across 282
cities as of December thirty first 2019. And it's been adding stores
steadily across new cities. They are adding about 200
plus cities in India. And if I look at the potential,
they have the potential of expanding to about 500 cities in the country. So that's fairly substantial. Papa John's entered India nearly a decade
and a half after its rivals, Domino's and Pizza Hut had
come onto the scene. By the time Papa John's expanded into
India, some experts say it was already too late. By the time Papa Jones entered
the Indian industry, Domino's hand-up is ahead have already established
and therefore brand in. Many of the consumers used to prefer
Domino's Pizza Hut to whip up business because of the affordability,
but Papa John's was prized higher. Papa John's tried to close the
gap in 2014 by acquiring Pizza Corner, a south Indian chain. At the time of the deal, Papa
John's had 15 stores through its master franchisee for the region, a company
called Ohm Pizza and Eats Papa. John said the acquisition of Pizza
Corner would expand its presence by at least 40 restaurants. Papa John's had restaurants in 11
Indian cities, according to its Twitter account. Its stores were
concentrated in the southern and western parts of the country. But some experts say it was a mistake
not to branch out to more rural cities. India is a massive country,
it both population and size part of Domino strategy to familiarize Indians
with the brand was expanded to smaller cities and rural
areas, not just one region. Developing a restaurant network at a
national level in India is challenging due to its huge
size and cultural differences between states. But Domino's made it work. But Domino's has invested heavily in
rural areas and not just the cities. And I do think that is an
important point as to why they have been successful in particular in
comparison to their competitors, their main competitors, such as Pizza
Hut and Papa John's having access to something like pizza is like
having access to the rest of the world feeling like you're a
part of global consumer culture and that you can try
something that's different. It has a tremendous amount of
symbolic value, and I think Domino's has recognized that and that people are
willing to kind of pay for that. Papa John's shut its indie
operations in 2017, according to local media reports, experts say. Papa John's just couldn't stand
out against the competition. In the U.S., dominos one, the pizza
wars thanks to delivery and tech innovation. It's a similar
narrative in India. India has a huge population of
Internet users, second only to China. That number is expected to grow, fueled
by the declining cost of data and smartphones in developing
economies like India. Smart bombs are cheaper
option than personal computers. All this means that the Indian
market is perfect for smartphone apps. Domino's franchisee Jubilant FoodWorks says
it was the first food service company to launch online
and mobile ordering nationally in India. Analysts agree and say
that Domino's introduced the online ordering culture. And as of January
2020, nearly 30 million people downloaded Domino's mobile
ordering app. If you look at a market like
in India, Internet is mostly used through mobiles. So mobile administration is a
very high compared to that of a laptop or desktop. So Domino's were very quick to launch
a mobile app and they also see high ordering retro mobiles in
2013 online in mobile orders contributed about 17 percent of delivery
sales at Domino's by the end of fiscal year 2019. Online ordering contributed seventy five
percent of delivery sales. Domino's has stood out in
the Indian delivery market guaranteeing customers free pizza if a delivery
takes 30 minutes or longer. Domino's even tested a 20 minutes
or less delivery guarantee in some Indian cities and offers all
night delivery in multiple cities. While Domino's has succeeded in delivery
and with its mobile app, experts say Pizza Hut was focused more
on dining in just like it has in the U.S.. Some consumers prefer that,
but it means that Pizza Hut needs to rent large and usually
more expensive real estate to offer seating. I may have to travel to
a particular point in the city just to eat at a Pizza Hut or a
Pizza Express that at times it takes away from, though, you know, the desire to
go there or you're not just ordering, then you're
more comfortable. While many fast food brands look
to China for growth, Domino's has struggled there. The company attributes that
to the fact that cheese and bread aren't part of
a traditional Chinese diet. In India, the pizza chain
hasn't had that problem. Domino's tries to make sure its
menu is well-suited to every country. It expands into. In addition to offering American
staples like sausage and veggie, Domino's, India serves pies topped
with familiar ingredients like chicken tikka paneer cheese
and red paprika. Chicken is the most
popular meat in India. And Hindus don't eat beef, which
is why chicken dominates the online menu at Domino's. It's even hyper localized its products
by region etting menu items more suited to tastes
in certain states. For instance, in 2014, South Indian
customers got a spicy banana pizza. Green bananas are often
used in traditional South Indian dishes. Domino's localize more
than its menu. It tailored each restaurant
to local conditions, too. In small cities where people eat out
as a family, the restaurants are larger and have space
for customers dining in. In another huge differentiator, Domino's offers
pies at a lower price than Pizza Hut see when
they launched in the 1990s. Not very many people wanted
to have a pizza. So you had to bring them to
the level of acceptability that, you know, you come in and have a
pizza or you order a pizza. Also, if you look at the kind
of prices that are there, Domino's does awful pizzas, which would be for I think
if I have to put it across an American dollar terms, which would
be less than a dollar. Middle class consumer spending is
on the rise in India. That means they'll be spending more
on food and beverages two times more, according to World
Economic Forum estimates. India's Domino's second largest market
behind only the U.S. and its business is
growing fast there.
