The world’s cheapest Domino’s Pizza is in inflation-hit India. It costs $0.60 – Times of India

Chennai/New Delhi: How the world’s largest pizza Brand responds high inflation In the world’s most populous country? with the world’s cheapest Domino’s Pizza,
The Rs 49 ($0.60) pizza in India, which is Domino’s No. 1 market outside the US, is the tip of the spear in the fight against rampant inflation that is eroding profits and turning many customers off pricing, according to its franchisee’s CEO.
The company “wants to own that price point”, said Sameer Khetarpal, adding that the seven-inch cheese pizza with a “sprinkler” of basil and parsley is Domino’s cheapest.
“You are coming to the store or opening the app because there is a callout of Rs 49,” he said, adding that Domino’s global team supported the plans. “Customers are eating out less because prices are higher everywhere – our existing customers shouldn’t be exposed to any competition.”
By comparison, Domino’s cheapest savory pizza costs about $3.80 in Shanghai, and about $12 in San Francisco, as online menu prices show. Domino’s global headquarters forwarded questions about India to their local franchisees.
Reuters interviews with six executives and 12 store managers revealed how Domino’s and other global fast-food giants such as Pizza Hut and Burger King are being forced to change strategy in the face of rising inflation in a market of 1.4 billion people.
The companies are attempting to capture market share gained during three decades of rapid growth in a country crucial to their future – and a country with a street-food culture and hot samosas for less than Rs 10. It’s hard to compete with.
Khetarpal, whose Jubilant Foodworks runs 1,816 Domino’s outlets in the country, says he holds a staff meeting every Monday to discuss new ways to manage costs and fight “historically high inflation”, which has The first three contributed to a 70% drop in their profits. months of 2023.
He gave new details about Domino’s India pivot and its financial benefits; His company has removed the lids from all pizza boxes it sells in stores since December, saving 0.6 cents each time. He added that this is a significant savings in packaging cost as 37% of Domino’s Indian business is dine-in.
Khetrapal declined to give more details about the cost advantage, saying Jubilant — whose Domino’s business accounted for most of its $635 million in revenue last year — aims to get rent discounts from some store landlords by offering upfront payments. Have to do too.
empty pockets of customers
Domino’s is not the only one deciding on prices in India, it is a highly price-sensitive market which is currently facing higher inflation than many other markets including the US. The hope is that the lower price offers will attract people to stores and apps who may end up ordering more add-ons or upgrades, executives said.
Pizza Hut is aggressively promoting pizzas starting at Rs 79 ($0.96), which it launched last year and its Indian franchisee, Sapphire Foods, said it is the brand’s lowest priced globally.
Merrill Pereira, Pizza Hut’s managing director in the Indian subcontinent, said the chain is developing products that “make the brand relevant and accessible” to price-conscious consumers in India, adding that its budget pizzas are aimed at young people. were hits between
McDonald’s launched half-price meals in June. According to Akshay Jatia, executive director of Westlife Foodworld, which runs 357 outlets in western and southern India, they will focus on promotional efforts in the coming weeks. The food will bring in more customers and boost sales and margins, he said.
The budget product is actually running a digital and physical marketing campaign across the country — with stores, and even a posh New Delhi mall, decked out with banners, according to a Reuters visit to stores in four Indian states.
Domino’s’ flagship inflation-buster is the Rs 49 pizza, which was launched in February. Khetrapal said it has been “re-engineered” by cutting down on the price and price of tomato, which was earlier the cheapest at Rs 59.
Franchise Jubilant said in May that it saw a 40% increase in the price of paneer, and a 30% increase in chicken and paper boxes during 2022-23. There have been further shocks in recent weeks, with tomato prices soaring more than 400% to a record high and rising rates for everything from milk to cereals and spices hitting families hard, according to official figures Has been
The industry players narrated the story of two consumers in a country with a deep gulf between rich and poor.
Many low- and middle-income earners, who saw dining at foreign chains as an improvement in their lifestyle when the economy boomed, are bracing for rising inflation, while the wealthy spend on expensive products such as smartphones and SUV cars. We continue to do so, whose sales are touching new heights.
When Khetrapal visited Domino’s stores in Chennai and other cities, he said he saw customers emptying their wallets and only being able to withdraw Rs 49. In contrast, he said, Domino’s new flavored pizzas cost up to $14, which saw sales jump in some affluent areas.
‘a little layer of cheese’
It has been a disappointing year for Indian fast-food restaurant leader Domino’s, as well as other companies, with a market share of around 12.5%.
Pizza Hut’s Sapphire Foods’ pre-tax profit more than halved in the March quarter. The net loss of Burger King’s Indian franchisee, Restaurant Brands Asia widened by 9%.
However, it is not all doom and gloom. Euromonitor International estimates that India’s roughly $5 billion market for quick-service restaurants serving fast food is a fraction of the United States’ $341 billion and China’s $137 billion.
India’s $2.1 billion niche market for pizza, burger and chicken restaurants, dominated by Western chains, will grow, but at a slower pace. Euromonitor estimates its projected growth rate to be around 15% per year until 2027. This is compared to an increase of 21% in 2022 and 43% in 2021, mainly due to post-Covid consumption growth.
Pizza Hut owner Yum Brands sounded a bullish tone in June, comparing its 17,000 US outlets to its more than 2,000 outlets in India, where it sees “tremendous growth opportunity”.
There are still tough challenges ahead in the near future.
“In the current environment where inflation is hurting their pockets, (the new offers) are still on the higher side for the street-food population,” said Devanshu Bansal, consumer analyst at India’s MK Global Financial Services.
And many pizza-lovers like Kiran Raj would never think of a budget offering. The 26-year-old bank employee said he was ready to pay a little more for the cheese-filled product as he had a slice at Pizza Lounge, a local restaurant in Chennai.
“I avoid buying pizzas that cost less than Rs 100 from shops operated by large chains as they usually have fewer toppings and a smaller layer of cheese,” he said. “It’s just a rough layer.”