Not too many meals represent quintessential American ‘fast food’ better than a burger. And it seems Indians, too, can’t get enough of it. Food delivery platform Zomato recently revealed that the burger was among the most searched foods on its app last year. And this can only be good news for players like Burger King, as it is for the ₹4.2 lakh crore Indian food industry with a predicted 9% CAGR growth.

Also known as the home of the Whopper, Burger King is the world’s second-largest fast food burger brand with a network of 17,800 restaurants globally. Burger King India, which made its debut on the Fortune India Next 500 list at No.319 this year, is a joint venture between the U.S. burger giant and private equity firm Everstone Capital. The company plans to invest $200 million in the next sixseven years in India.

In November 2014, India became the 100th country in which Burger King set up shop, and at the helm is Rajeev Varman, its CEO here. With close to two decades at the company, Varman has helped expand the restaurant’s global footprint to markets like Canada and the U.K. Now, he is back in India to grow the brand. And there’s no better way to do it, he feels, than by giving the customer real value.

Under Varman, the company has tailored its menu and messaging to suit Indian tastes. For instance, it is building a wider vegetarian offering, enhancing its flame-grilling expertise, and focussing on value leadership rather than price as a differentiator. “Value does not necessarily mean buying cheap products. We need to be value [oriented] in pricing and premium in quality,” says Varman.

He’s setting the stage to meet an ambitious target of opening 700 outlets by December 31, 2026. This is a part of Burger King’s exclusive National Master Franchisee Rights agreement, which according to brokerage firm Motilal Oswal, provides it with the ability to use its globally recognised brand name to expand in India. A part of its expansion will be financed by proceeds from its public offer last year, which was oversubscribed by 157 times. The offer helped Burger King India raise ₹810 crore.

What helps is that the franchisee agreement also gives it flexibility in tailoring menus and efficiencies in supply chain management. “During the first five years of its operations, it reached 200 restaurants, thus becoming one of the fastest growing quick-service restaurants (QSR) among international brands in India,” Motilal Oswal points out.

To amplify Burger King’s efforts, Varman is using what the company calls its “cluster approach” and penetration strategy which drives down costs and helps in better management of operations. Currently, it has six main clusters in India: around Delhi-NCR, Mumbai, Punjab, Bengaluru, Hyderabad, and Kolkata. Of these, the company is slowly developing the sixth and latest cluster, around Kolkata. This cluster will also cover the state of Odisha. “We basically build 70% of our restaurants in any given year in existing clusters. It helps use our best economies of scale in distribution and costs,” Varman says.

Image : Graphics by Rahul Sharma

In a sense, Burger King is making up for lost time. By Varman’s own admission, the company has missed the first mover advantage enjoyed by global brands like Domino’s, McDonald’s, and KFC who have been in India for over two decades. “We came in late and walked into an environment where there are two-three very established brands,” points out Varman. “We always have to size up and deal with the shortcomings of coming late as well.” What aids Varman, however, is that the other brands have already put in place supply chains, distribution centres, and production units. “And when you come in as a brand almost two decades later, you are able to take advantage of all that setup,” he says.

Even as the brand was in its growth phase, its progress was hit by the pandemic. Burger King India’s revenue from operations declined a little over 28% year-on-year to ₹162 crore in Q3 of FY21. Of this period, Varman, however, likes to say: “We had a pause, not a stop.”

Image : Graphics by Rahul Sharma

Burger King used this “pause” to create a fresh menu with a new Whopper range, more sauces for the Indian taste, and four premium burgers—cheese, paneer, tandoori chicken, and fiery chicken—in addition to its existing 18 vegetarian and non-vegetarian burgers. “When we opened up, we actually opened with a very new kind of product line,” says Varman. “We had those plans for this fiscal year but during the lockdown we were able to do it much faster. And we also took this opportunity to put a lot of emphasis on our digital business. It was important to have our own app, riders, and delivery system. In the QSR space in India, we are the first ones in the burger business to come out with a loyalty programme.”

This investment in digital was inevitable. Reason: “One thing that I’ve experienced in the last seven years is that Indians are much more digitally savvy,” says Varman. “So, a company that does not invest in digital will find itself lagging behind in terms of connecting with its audience.”

Image : Graphics by Rahul Sharma

The strategy seems to be working. According to Elara Capital, Burger King India’s annual growth rate of 53.4% over FY17-20 is the highest among peers, with Jubilant FoodWorks (the franchisee for Domino’s in India) posting 10.1% and Westlife Development-owned McDonald’s’ 10.4% growth in the same period.

Post-lockdown, Burger King reported a quarter-on-quarter growth of 69% during the third quarter of FY21 as dine-in sales picked up. Meanwhile, rival Jubilant’s revenue from operations, too, increased by 31% sequentially to ₹1,057 crore in Q3. “The resilience of our business was tested like never before over the last nine months, and we are gratified to see that our strategy for navigating the crisis worked,” points out Pratik Pota, CEO and whole-time director, Jubilant FoodWorks Limited.

Apart from the inevitable Covid19-related issues, a persistent challenge for Burger King India is in the form of unorganised players, who form almost 60% of the Indian food services market. But Varman isn’t worried. “India has a lot of headroom for growth. An average Indian goes out between six to eight times, whereas this number in China is more like 30 to 45 times a month,” he says. “So, there’s enough space for building a business and unorganised food players will either slip away or will become more organised.”

What strongly differentiates Burger King from competition, according to the company’s chief marketing officer Srinivas Adapa, is its five-inch Whopper. That’s a whole meal for ₹100, a draw for millennials, who make up about approximately 60% of the Indians eating out. “India has the largest millennial population, and also the largest population which spends most money eating out, with dual income families, higher disposable incomes, less time to make food at home, etc.,” says Varman. And, according to Adapa, this ties in well with Burger King’s brand personality. “It’s about being authentic, quirky, not necessarily being politically right all the time. That’s really how the brand is positioned, of course, globally, as well as in India,” he says.

The goal, he adds, is to hit the delicious spot between their core proposition—the Whopper—and what the customer wants. Consider how Adapa was quick to preempt the trend towards healthier eating. “Health-driven consumer behaviour has been [in existence] long before that [the pandemic]. About three years ago, we put together a programme called ‘trust in taste’. We had removed trans fats, worked on having no MSG added in our products, and in the last year or so, we have removed artificial colours and flavours,” he says. “And we are on our way to removing artificial preservatives as well.”

Talking about competition, Karan Taurani, vice president (research analyst) at Elara Capital, argues that as the economy opened up, the recovery of businesses such as Jubilant has been much faster. “If it recovered by say 95% in October then Westlife or Burger King had recovered only 65%,” he says.

However, Burger King India has been swift-footed in reducing its outlet size, feels Taurani. “They want to have an outlet size which is almost 25%-30% lesser than that of a Westlife. That may have some kind of benefit,” he says. “Until now, whatever they have done is all a ‘me too’ of McDonald’s in branding, pricing, strategy, etc. But if they’re able to differentiate in terms of branding and product innovation, I think they stand a chance to get an edge over the others.” To resolve this challenge, and any others that may come along, one thing is a constant: Varman will go back to basics, to his days of running a Taco Bell restaurant in his 20s, to put the customer front and centre. “I carry those learnings with me even today, as I continue to grow the brand across three continents. I always reflect on my days when I used to close the restaurant at three o’clock in the morning and drive for one hour back to California,” muses Varman.

He has, in fact, made it mandatory for all employees to spend at least a week at an outlet on joining the company, to get a sense of what the customer wants. Varman also doesn’t shy away from eating out at rival outlets. “We have the humility to make sure we learn from the competition. Anyone who doesn’t do that in today’s world is missing out. I keep telling my development team, we are a mile wide, but only an inch deep,” he points out.

(The story originally appeared in Fortune India's March 2021 issue).

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