Franchise brands go extra mile to survive in India

Domino Pizza released the 49-rupee pizza in India last February, making it the cheapest on its menu. Although this seven-inch pizza, less than an adult’s hand span, only serves one person with few toppings on it, its high popularity led the company to invent two more varieties in the Indian market in April. Despite the criticism that it is just dough that you end up chewing in your mouth, Domino Pizza chose this strategy to respond to rising prices.

Reuters on Thursday (local time) covered a story of global fast-food brands overdoing themselves for the sake of their survival even while giving up on profits in India, a country that has long suffered severe inflation. With its competitor’s 49-rupee pizza in mind, Pizza Hut released the 79-rupee pizza last year. McDonald's also scrambled to join the competition by luring consumers with a buy-one-get-two-free burger promotion last month.

Domino India’s CEO Sameer Khetarpal explained to Reuters that the prices running amok in the country have caused local consumers to tighten the purse strings and businesses to try everything it takes to earn profits, describing the 49-rupee pizza as one of the brand’s best-hidden cards.

Added to this cheap pizza included in the menu, Domino Pizza also tried hard to cut costs in the Indian market. It has since last December used a lid-free pizza box for takeaway orders. Although it can only save 0.6 cents for every pizza, it argues that it can help cut back on costs considerably given that takeaway orders account for 63 percent of the total sales – and that carton prices rose as high as 30 percent last year amid inflation.

India’s monthly inflation rates have since 2020 remained over four percent. Last month even saw a 4.8 percent increase on a year-on-year basis. Vegetable prices spiked as high as 12 percent. For example, as tomato prices surged a whopping 288 percent over a period of one month, McDonald's announced on July 7 that its burgers would not contain tomatoes anymore. What’s worse, the flood in northern India will increase pressure on food prices.

It may come as no surprise that these global franchise brands feel forced to secure their market share in India even with such a low-profit approach considering that its populous market of 1.4 billion consumers promises growth potential. Euromonitor International projects that India’s current 2.1-billion-dollar market of pizza, burgers, and chicken foods will grow by 15 percent every year by 2027.


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