Tuesday, February 27, 2007

Darshinis and (Mc)Donalds

The fast food market in India is a case study in itself on the effect of foreign competition. The effect of new entrants in the fast food market in India can be seen best in Bangalore thanks to the local fast food joints and the presence of some of the international ones.

The category of joints in Bangalore can be classified as Darshinis and Sagar. The darshinis cater to the lower end of the market and have no seating or service section. The Sagars cater to the next segments and many have a service section in their restaurants (which is a little more expensive). These are truly fast when it comes to food. Their peak time is breakfast when people walk in for freshly made idlis, vadas and pongal and of course, coffee.

The foreign entrants or their Indianized versions like McDonalds cannot cater to either the breakfast crowd (burgers for breakfast - naah) or the crowd that splurges at Darshinis (they run at dirt cheap rates). They therefore have to cater to the upmarket crowd (unlike in the US). So, if you can get a sumptuous breakfast at any of the above for 20 rupees, the minimum you will have to spend in a fast food place is 100 (50 if you are a skinflint. Coffee at a McD will be 20 bucks while it is 4-5 bucks in a Sagar. And then again, McD is not perceived to be healthy, while idlis are - so its a double whammy. So, the Sagars are the utility or a necessity which is considered as a true breakfast option, while the McDs and the rest are "luxuries" and then again their offerings never quite suit our palate as "breakfast" or "lunch" - they are more of a snack. Thus, in a way, the two operate in distinct market settings - necessity versus luxury.

There is space for both these models in the huge market that is India, but I am not sure the foreign fast food labels will make a big dent in India unless they innovate to provide healthy food offerings and work on their pricing. Right now the focus is more on pricing and bundling. By the time they have set shop in India, the world is on an awareness binge on the dangers of fast food - so the hope that Indians will feast on burgers and french fries may not be very realistic.


Right outside the Forum mall in Bangalore is a darshini (or a Sagar). One would have thought that the mall and its inviting food options and food court would have forced the Sagar out of business. Nay, the restaurant is more crowded than it ever was. People hang out in the airconditioned mall and eat at the Sagar. Another example of India and its quirks.

5 comments:

niti bhan said...

But Sagar is a rock solid brand that we know stands for good, hot, cheap food, no? Its established. How can a new comer of a decade hope to quickly take over the established brand that has been around for donkey's years?

Plus, it will take a generation or two before indians will be impulse buyers living on debt to spend that much difference in money without some forethought. And a huge section of the populace never ever will be taht way anyway.

just rambling...

Anonymous said...

I think McDonalds in India are like Indian Restaurants in the US. We can find quite a few of them in the main cities, but they can never compete with the local fare.

Neelakantan said...

...that being said, "sagar" is not a brand, its just a name. A "sagar" is not the same as another "sagar". It is just a class of restaurants.

And, the food being served in both places is different too. So, yes, in a sense we are comparing apples and oranges - and as you rightly say, they will remain so.

Rangachari said...

Very interesting article. As it happens, I was just reading this article about McDonalds in Businessweek. The difference in the way McDonalds is perceived is quite remarkable in the US and India. Its generally a blue collar establishment here but they are striving to go upscale.

vijayakumar said...

hi

nice article... Even i used to wonder daily whenever i see the sagar opposite to forum mall, as i'm staying in the area just opposite to Forum mall....

By the way, the photo clarity is good, please tell me which camera mobile you're using....

cheers
VJ