In the land of tandoori rotis and masala dosas, does Italian food have any place? Yes, say the statistics. The pizza industry is really sizzling with hectic activity. The Rs. 150-crore industry, growing at an annual rate of 50 per cent, is expanding at a frantic pace.

Pizza Corner India, which owns the Chennai-based Pizza Corner chain, recently had a bash to celebrate the sale of '100 acres' of pizza (approximately 1.5 million) ever since it started operations in this city four years ago.

The two other major players, Domino's Pizza India Ltd. and Tricon Restaurants International (which owns the Domino's Pizza and Pizza Hut chains), are silently rejoicing the exponential growth.

Says Mr. Antoine Bakhache, chief executive officer, Pizza Corner, "Our target segment, the Indian middle class population, equals the total population of many pizza-eating countries."

Speaking about the organised food service industry, Ms. Sapna Naik, manager, research, food & agriculture, Rabo India Finance Pvt Ltd, Mumbai, says, "We expect the high double-digit growth for this segment to be a continued feature for the next decade. It is driven by increased consumer propensity to consume food away from home, increased economic prosperity of the target segment and robust development of food distribution infrastructure."

According to her, organised food service is characterised by "a chain of outlets using a uniform brand identity across all outlets, centralised procurement of supplies, focus on quality, standardisation and safety from suppliers, uniformity in product menus across outlets, uniform taste, existence of strong controls and the use of technology".

Unlike in developed countries where organised retail chains are driving the changes in the food chain, in India, organised food service will take the lead for driving change in the short to medium term. This will result in the creation of capacities for warehousing and logistics of chilled and frozen products, she adds.

The process has already begun. Running a pizza chain is not as easy as it seems. Managing the supply chain is a mission critical function and all the three major players are focussed in their approach. (See related story, Pizza and logistics?)

Adding more links to the chain

Meanwhile, though officials would like to keep mum, the three major domestic pizza players are enjoying salivating margins, higher than what pizza chains earn in other countries. Their studied silence juxtaposed with their ambitious expansion plans speak volumes of the handsome margins they make.

The Rs. 24-crore equity-based Pizza Corner, owning 25 outlets, plans to add another 16 regular ones by this year-end. The company has two formats – dine-in and delivery outlets.

According to Mr. Bakhache, a dine-in restaurant would need an investment of Rs. 80 lakh, while a delivery outlet would cost half of that. "As a company, we will break even on opening our 29th outlet," he adds, while exuding confidence that the chain will close the year with a turnover of Rs. 23 crore.

In order to expand their network fast but at a lower capex, Pizza Corner and Domino's Pizza are opening smaller outlets in places frequented by high net worth families.

Pizza Corner is setting up what it calls ‘Pizza Corner Express’ outlets – an 11 ft x 11 ft outlet manned by two persons to deliver pizzas in less than five minutes. The outlay for each outlet will be in the range of Rs. 7 lakh. Similar outlets are planned along the highways. As per plans, the company plans to open 100 such outlets in three years.

On its part the country's largest pizza chain, Domino's Pizza is planning to add more outlets to its existing 100. The company has tied up with the Indian Oil Corporation (IOC) to set up pizza outlets in the latter's petrol bunks and in the process save on real estate costs.

The pizza chain will open such drive-in-drive-out outlets in around 100 IOC petrol stations in 16 different cities. It intends to invest around Rs. 40 crore to expand its network.

"We have tied up with a real estate consultancy firm, C. B. Richard Ellis, to locate space for opening outlets", remarks Mr. Pavan Bhatia, chief executive officer of Domino's Pizza. The opening of outlets in petrol bunks has made the company to revise its current year turnover target from Rs. 72 crore to Rs.100 crore.

In addition to domestic expansion, Domino's Pizza, according to Mr. Bhatia, will be floating two wholly-owned subsidiaries in Bangladesh and Sri Lanka with an investment of around $ 4 million.

While Domino's Pizza follows the concept of own outlets – except the one in Coimbatore belonging to a franchisee – Pizza Corner, apart from owned ones, has around six franchisees.

However, the first entrant, Tricon Restaurants, which owns the world's largest pizza chain, Pizza Hut (around 12,500 restaurants in 90 countries), is surprisingly slow in its Indian operations despite its head start in the sub-continent. The company also owns two other popular chains, Kentucky Fired Chicken (KFC) and Taco Bell, which dishes out Mexican fare.

It may be recalled that Tricon Restaurants' earlier fast food venture, KFC, got mired in controversies. With the two other pizza chains making good money selling pizzas, Tricon Restaurants decided to focus its attention on Pizza Hut.

However, unlike the other chains, Tricon Restaurants follows the franchisee model to spread its pizza brand in the country. The company has so far opened 18 Pizza Hut outlets in nine cities and has plans to open 30 more by this year-end and 80-100 more in the next three years.

On its part, Tricon Restaurants involves itself actively with its franchisee while getting six per cent of the latter's turnover as brand royalty. "We invest in supply chain, marketing and training of franchisees' personnel," explains Mr. Pankaj Batra, senior marketing manager, Indian sub-continent.

With a presence in all the major cities, Pizza Hut is conspicuous by its absence in Mumbai. But the chain has plans for Mumbai too. Mr. Batra, says, "We will open our first restaurant in Mumbai this year. The city has the potential to have at least 30 outlets. In the next fifteen months, we will have about 10 outlets there." The franchisee for Mumbai city is Wybridge Holdings, Indonesia, and housing finance major, HDFC has a small stake in the franchisee company.

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