Wendy’s is taking McDonalds head-on in the Indian market

India’s Quick Service Restaurant war seems to be never ending. At a point when saturation point in burger has been reached, thanks to Burger King, McDonalds and KFC, a new player, Wendy’s has joined the race. World’s third largest burger chain boasts in the fact that they won’t reduce the price compromising with the quality. A time when the price war has triggered a tough competition making McD and KFC to sell burgers at Rs 25-35 onwards, Wendy has earmarked the burgers above Rs 59.

As per a news report by The Economic Times, its starting menu has 11 vegetarian and 10 non-vegetarian products with burger prices going up to about Rs 200 apiece. Jaspal Singh Sabharwal, MD at private equity firm Everstone Capital that partners Burger King in India, agreed it is not easy to do a quality product at less than Rs 30.
Talking to the ET, Wendy's global president Darrell van Ligten said, “"We are starting at Rs 59 because we believe that's where quality comes in.”

"It is a strategic call that the brands take. You can play the sub-Rs 30 game by re-engineering the product build and certain consumers don't mind it because they understand the price-value equation very well. For brands, this means lower per unit profits but much higher penny profits driven by huge traffic and an added opportunity to up-sell other items like fries and beverages," Sabharwal told the ET.


According to Sabharwal, the price elasticity at lower price points is huge in India. "You can sell more than 700 burgers a day at Rs 27 per unit but this drops to 250 if you increase price to Rs 35 per unit," he says. Prices at Burger King start atRs 35, McDonald's sells burgers upwards of Rs 27, and KFC sells burgers starting at Rs 29. Wendy's Ligten admitted that the firm had lost the first mover advantage in India, but hinted that coming in late has its advantage. "Thanks to them (McDonald's and KFC), we don't have to educate Indian consumers about western QSRs (quick service restaurants)," said Ligten, a former employee at Yum! that owns KFC and Pizza Hut chains.

The Et report reads, officials at Wendy's, however, feel there are enough consumers for 'quality' products. "People are eating less pizzas and burgers here despite low prices because of the quality of the food," said Jasper Reid, head of Sierra Nevada Restaurants, exclusive franchise partner to Wendy's in India. "New Delhi is no different from New York. Consumers are the same everywhere. There's a flight towards quality," he added. Sierra Nevada is a joint JV between UK firm International Market Management and domestic firm Rolltainers. Sanjay Chhabra, director at Sierra Nevada, said it plans to set up 8-10 Wendy's restaurants every year over the next five years or so.

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