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  Pie in the sky!
 
 

Just a decade ago, it might have been hard to imagine that the take-out food of choice for millions of Indians would be a baked good of Italian origin.

But since then, calling for a pizza has become quite the urban ritual, though its possible that many of the pies that are rushed to Indian homes wouldn’t be recognised in the country of origin.

Like most consumer brand successes, pizza has been customised for the Indian market, from its toppings to its delivery models. And in this fast-growing category, it’s a bunch of homegrown brands that have turned into stars, leading the way for MNCs to pick up the crumbs from the table.

Smokin Joe’s, the first chain to open in Mumbai, before Pizza Hut and Domino’s set shop, was a result of two like-minded companies forming an alliance and today boasts of 60 outlets in 23 cities.

A breakaway started by one of its founder members — Garcia’s, today is a Rs 10 crore brand and is seen as a major competitor to the big guys. Bangalore-based Pizza Corner started in Chennai over a decade ago and has expanded into other markets with 60 stores to date, while Delhi-based Slice of Italy which started in 1996 has a 2.5 lakh strong customer base and sees Rs 40 lakh revenue a month across its six outlets in Delhi, with another five in the pipeline.

Even the numbers seem to be on their side. Estimates Ajay Kaul, CEO, Domino’s India, “The pizza industry is about Rs 450 crore, growing on par with the fast food industry at a healthy 25-30%. The category is still in the growth stage and the country can take about 500 more stores.” Says Kaushik Roy, CEO, Pizza Corner, “The consumer has definitely evolved over the years. There are more people ordering out in the second rung cities, while pizza is first on the priority list in metros when it comes to deliveries.” Nirmal Momaya, director of Smokin’ Joes, points out, “Earlier, pizza was limited to just the elite and now anyone who eats at an Udipi, eats pizza too.”

The big brands have outlets in markets as varied as Hubli, Goa and Faridabad as well as in the top metros, and even some international expansion plans. Devangshu Dutta, chief executive of Delhi-based consultancy Third Eyesight, believes that in order to build brand loyalty, players need to work on differentiation, “Anyone who wants to establish a brand has to be clear on positioning and the outlet format and metrics has to be geared in that direction,” he says.

Most brands are doing just that. A brand positioned as a delivery and ‘value for money’ brand, started just four years ago is Mumbai-based Garcia’s Famous Pizza. Founder Ashit Patel researched the US market and decided that there was space in Mumbai for a fourth pizza brand — Garcia’s now has 17 outlets in Mumbai with plans to enter Pune next, followed by other major cities.

“I knew the basics and understood the food business. I thought to myself, ‘It’s no magic: base, puree and cheese’,” he reminisces. Garcia’s first store opened in the Mumbai suburb of Bandra, an area where Domino’s, Pizza Hut and Smokin Joe’s combined had sales of Rs 30 lakh. Patel believed he could take away 20% of that with the price, service and sales points that he had in mind. Patel chose the brand name “as it sounded ‘catchy’ and more quirky, because of Elbert Hubbard’s essay titled ‘Message to Garcia’ about self-reliance and problem solving.”

For Patel, it was pretty much a one man show for the first couple of months as he wore the hats of a distributor, business developer, marketer and chef. He remembers going door to door distributing flyers, and striking deals with suppliers.

Before the first Garcia’s outlet could break even, Patel thought that more shops would result in higher awareness and started a second one in South Mumbai, “So I had not one, but two shops making losses!” he says. His first store finally saw sale breaking even a year later, but today, a new store breaks even in just a few months.

“The initial temptation of taking the franchisee route was immense, but somewhere my conscience did not allow that. I came across investors but our visions didn’t match. For instance, someone wanted to start a 100% vegetarian restaurant and I was not convinced that it would work,” he says. Patel says that a lot of thought goes into the new offerings that they launch to avoid wastage and customer dis-satisfaction. “As a person who understands food, I know that something out of the ordinary will not work on pizza just because it is an Indian topping.

There is only so far that you can take innovation for the product,” he says. Some of the popular toppings for the chain are cheese and pepperoni based with basics like capsicum, corn and jalapenos and 70% of its customers place repeat orders for these toppings.

Interestingly, while one might think most of the focus is on delivery, a significant chunk of business comes from dining in. Smokin Joe’s, formed by a merger in 2000 between Navroz and Rashid Billimoria’s Billimoria Foods and Nirmal Momaya’s Pizza Express, started out positioned as a delivery chain.

The brand has now tweaked its model and format depending on what works in each city; but 60% of its revenue today is from its dine-in business. Delhi-based Slice of Italy currently gets 85% of sales from delivery but in the past few months it has concentrated on a dine-in model and also increased the contribution of cakes and desserts to its turnover. In Delhi’s Lodhi Colony the chain has a 65-seater, and plans to turn its outlet on Nelson Mandela Road into a 120-seater by adding more to its food and beverage menu.

The reason for this shift, says Slice of Italy’s Tarun Chaudhary, is that the chain’s customers wanted to see the place they’ve been ordering from, “As we have a real estate background, we are able to identify profitable locations. We would look at a franchise model where we could manage so that we don’t compromise on quality. Slice of Italy’s USP is, “authentic Italian food cooked in American style and delivered to your doorstep. We do not make fast food,” he explains.

Some believe that the franchisee route is the way to make money in the F&B space, like, for instance, Smokin’ Joes. “Both companies were clear that we wanted to take the franchise route and wanted to be pan-India,” says Momaya of Smokin’ Joes.

He says, “The average bill size has gone up since we started, but not more than by 15-20%.” On an average, the brand has seen a 16% increase in sales per store in towns and smaller cities and a 15-20% sales increase in larger markets.

Meanwhile, Slice of Italy is weighing funding and joint-venture options from Malaysia and Middle East and will be deciding on an option in the next few months. Smokin’ Joes has a total of 38 different kinds of pizza on its menu and plans to have the ‘world’s biggest pizza menu’ in the coming years. For smaller regional players who aren’t yet able to offer a huge range or bank on delivery, more differentiation is needed.

Quality, local tastes, and even a neighbourhood positioning can all help. “As regional players are able to offer products at lower prices, it makes a difference to a certain segment of society,” says Dutta. For instance, in a large-volume market like the US, there are two giant national players — so consumers looking for something different often turn to the single neighbourhood outlet.
 

 
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