{"id":3895,"date":"2014-11-27T07:32:27","date_gmt":"2014-11-27T07:32:27","guid":{"rendered":"http:\/\/www.franchisemart.in\/franchise\/?p=3895"},"modified":"2014-11-27T07:39:34","modified_gmt":"2014-11-27T07:39:34","slug":"kfc-franchise-business-block-western-india","status":"publish","type":"post","link":"https:\/\/www.franchisemart.in\/franchise\/kfc-franchise-business-block-western-india\/","title":{"rendered":"KFC franchise business on the block in Western India"},"content":{"rendered":"
\"Yum!-Brands\"<\/a>

Yum!-Brands<\/p><\/div>\n

Franchise News India<\/a><\/strong>,Franchise In India<\/a><\/strong>,NEW DELHI<\/a><\/strong>: Yum! Restaurants<\/a><\/strong> has put its company-owned KFC business<\/a><\/strong> on the block in western India. The US chain, which has 700 KFC, Pizza Hut and Taco Bell stores in the country through a mix of company-owned stores and franchisee outlets, wants to sell the business to a franchisee to avoid real estate<\/a><\/strong> costs such as rents, staff costs and other overhead expenses that are corroding its profitability. Yum directly operates 18 stores in the western region.<\/p>\n

Slowing discretionary spends have been impacting same-store sales growth and profitability of restaurant chains despite low prices and value offers. The earnings statement of Yum! Restaurants for the quarter ended September shows a 14% increase in system sales in its India division, driven by 26% unit growth. But same-store sales declined 4% and operating loss stood at $3 million. Industry experts say operations run by local entrepreneurs bring down overhead costs substantially. A Yum! spokesman said in response to ET’s query: “While we continue to explore opportunities in the course of business, as a policy, we do not comment on market speculation.” ?”Yum India is uniquely positioned with both Equity as well as well- capitalised franchisees<\/a><\/strong> across all markets including the West, making it one of the fastest growing restaurant companies in India.”<\/p>\n

Debashish Mukherjee, partner at consulting firm AT Kearney, said: “Typically, multinational firms prefer to leverage entrepreneurship of local franchise<\/a><\/strong> operators, and themselves operate on lower cost models while focusing on branding and customer relationships.”<\/p>\n

Other quick-service restaurants are feeling the heat as well. Jubilant Food-Works (JFL), the listed exclusive franchise of food chains Domino’s Pizza and Dunkin’ Donuts, reported a 5.3% decline in same-store sales growth for the quarter ended September 30, compared with 6.6% in the year-ago period. The chain, which reported a 12.7% decline in standalone net profit to Rs 29 crore, attributed it to moderated growth trends in revenue combined with higher expenditure.
\nMcDonald’s west and south region operator Hardcastle, too, reported a 7.9% drop in same-store sales in the July-September, compared with 5.5% in the corresponding year-ago quarter. UK cafe chain Costa Coffee’s India business, run by Devyani International, has shut down 15-20 loss-making stores over the past one year. The cafe business wants to focus only on profitable stores and had shuttered those which were in the red or proving to be a drag on business, an industry official in knowledge of the development said.<\/p>\n

While its 340-odd Pizza Hut and Pizza Hut Delivery businesses are entirely run by franchisees including the Ravi Jaipuria-promoted firm Devyani International, the 350-plus KFC, or Kentucky Fried Chicken stores, are run partly by franchisees and partly by Yum! itself.<\/p>\n

Devyani is Yum!’s biggest franchise<\/a><\/strong> operator, and runs close to 300 Pizza Hut and KFC stores in the North and East. Other franchisee partners of Yum! Restaurants, operating a smaller number of stores, include the Dubai-based Dodsal group and Malaysian firm KFC Malaysia. Dodsal group is learnt to be keen on exiting the eating-out business.
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