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Study of Trends in Quick Service Restaurants

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Sameer Koranne Sachin Borgave

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Study of Trends in Quick Service Restaurants

Sameer Koranne*, Sachin Borgave**

Abstract Thousands of outlets and hundreds of Indian and

international brands has captured the fancy of growing
Changing socio economic environment has brought
phenomenal developments in food service industry in
youth market. Even though the number of multinational
India and quick service restaurants segment is front brands of quick service and casual dining restaurants is
runner in this growth story. This study is an attempt to comparatively petite, a marginal chains account for the
ascertain the trends and popularity of QSR amongst bulk of restaurants. Indian food service companies are
Indian masses and the catalysts of the widespread also expanding through franchisee model and opening
acceptance. A brief of customer opinions have provided multiple restaurants, establishing outlets at best of the
some significant trends in customer preferences
of places for eating out. The attributes of QSR that
public places. Food court layouts at malls, multiplexes
influence a customer perception and magnetize it to and airports has given much demanded space at very
QSR and a particular brand is estimated in focused competitive costs, concessions and better experience in
market. A descriptive research with cross functional logistics of sourcing have benefitted the QSR industry.
analysis is presented in the most appropriate manner.
The present study is an attempt to understand the dynamics
Keywords: QSR, Growth, Customer Preferences, of QSR industry at summarize its growth through
Food Service Industry extensive review of available literature and facts. A brief
survey with well structured questionnaire is conducted to
understand the significant factors that influence customer
INTRODUCTION perception about QSR and most important factors that
attract a customer to a specific brand. Data analysis is
Indian food service industry has witnessed large scale carried out with appropriate statistical tools and inferences
development and the study of trends in quick service are drawn.
restaurants in India is very much essential as the growing
Scope: Geographical Scope of the study was twin cities of
QSR market is a major contributor to Indian economy.
Pune- PCMC with its major tourist attractions, business
Many multinationals have entered India where a tiny
centers and educational hubs. Since these cities boasts
part of populations used to eat out with very little
cosmopolitan characteristic, it has a mix of ethnicities,
number of branded eateries. The changing trends in
educational-social-professional backgrounds.
shopping and entertainment have also fueled the growth
of the segments as it has become a essential part of Problem Statement: Despite being a popular segment
entire shopping experience. This industry has somehow abroad, Indian market happens to be critical about
succeeded to answer the questions on its credibility and accepting QSR as mainstream food service segment.
has convinced the market by satisfying the Indian taste- Adoption of branded fast food was also a new
buds. Better supply chains and cold storage infrastructure phenomenon. Seeing the growing popularity of QSR
has helped the industry to spread across entire nation segment, it becomes imperative to understand the growth
and equal growth is witnessed in tier 2 and 3 cities and dynamics of this industry along with the significant
ASSOCHAM has estimated growth at a 25% CAGR & reasons to substitute it for traditional eateries. It is also
likely to touch Rs 25,000 crore mark by 2020. essential to know the critical factors that play a greater
role in brand attractiveness in this industry.

* Assistant Professor, Sinhgad Institute of HMCT, Lonavala, Maharashtra, India. Email: spkoranne@gmail.com
** Director, Sinhgad Institute of Business Administration & Computer Application, Lonavala, Maharashtra, India.
26 Atithya: A Journal of Hospitality Volume 2, Issue 2, 2016

Objectives: The specific objectives of the study are - and snacks prepared away from home, including all
1. To explore the dynamics and growth of Indian QSR takeout meals and beverages. A quick service restaurant
industry. is fast-food outlet: Pay at the counter, Offers food that
is ready to eat quickly after ordering, Minimal service,
2. Understand customer preference to QSR as main-
Mostly Requires that customer pays for food prior to
stream eating place.
consumption.
3. To know the critical factors that attracts customers
to a brand of QSR. Main items include entrees such as pizza, submarines,
burgers, sandwiches and also do include donut, snack,
LITERATURE REVIEW coffee or other specialty foods unless they serve entrees
on their menu.
The National Restaurant Association [NRA] defines the The brief market segmentation of the food service industry
restaurant industry as that which encompasses all meals is illustrated as:

Restaurant
Industry

Organized Unorganized

Full Service Kiosks & Bar &

Restaurants Carts Lounges QSR

Take Away
Eat In

Fig. 1:  Market Segmentation of the Food Service Industry

Market Share

10% 10%
Organized -Fine Dine
etc
Unorganiezd Market

Organised -QSR

80%

Fig. 2:  Composition of Indian Food Service Industry

 Study of Trends in Quick Service Restaurants 27

Major part of food service industry is composed of Table 2:  Leading QSR Brands in India
unorganized eat outs whereas organized sector is only up
NORTH SOUTH EAST WEST
to 20% out of which QSR comprises half. It includes all
the types of eateries offering varieties of snacks and other Nirula’s Pizza Corner The Great Papa Jones
Haldiram’s Chicking Kebab Fac- Garcia
fast foods. It is further divided as illustrated below.
Bikano Chat Taco Bell tory Falafel
Slice of Italy Bangs Fried Kathi Zone Jumbo
Table 1:  Composition of Indian QSR Industry
Kent’s Fast Chicken King
Cafes Pizza International Ice- Indian Confec- Food Shiroz Spaghetti
Fast Food Creams Fast tionaries Wimpy Kitchen
food Copper
Chimney
44% 23% 15% 10% 6% 2%
Gelato Ital-
iano China
The QSR industry has grown in all the parts of country
Town
with presence of various branded and non branded Noodle Bar
outlets, some of them have their foot hold in specific part Bombay
of country whereas most of the brands have pan India Blue
presence.        PAN INDIA Local Gi-
ants
The size of the Indian food service industry is projected International Specialty – Coffee Goli
to grow at 11-16% by 2018 and Indian fast food market Mc Donalds Dosa Plaza Barista Vadapav
is growing at an annual rate of 25-30 percent. The foreign KFC Yo China CCD Jumbo
fast food chains are aggressively increasing their presence Sub Way Tibbs’ Frankei Costa Cof- King
in the country. The market is dominated by global brands Pizza Hut Kailash Parbat fee Joshi Vade-
like McDonalds, KFC and Dominos, currently occupies Domino’s
wale
60% due to sophisticated technology, large store size and US Pizza
Brand Image, and would be about 40% of new stores in Smokin Joes’
future. As per RJ Whitehead, the QSR is expected to grow
by 26% CAGR to reach Rs117bn by 2017. QSR industry has witnessed phenomenal growth in the
last couple of years and has surpassed other industries.

Table 3:  Approximate Industrial Growth in India

Managed Education Recreation Transportation Health Care Lodging Organized Unorganized

Services Food food Service
Service
1% 4.4% 3.3% 3.8% 2.3% 2.7% 20% 8%

NOVONOUS estimates that the organized fast food 18% for next 2-3 year. Organized modern formats like
market in India is expected to grow at a CAGR of 27% by malls, multiplexes and food-courts have also become a
2020. CNBC estimates the QSR market to grow double favored destination. Larger companies are teaming-up
in next five years and McDonalds to add 250 stores in with small franchisors to set-up their brand.
next five years. McKenzie has approximation of Chain
food service to grow from Rs 5500Cr to 16785Cr in 2018 QSRs started with big metros, but are now building their
whereas HVS survey suggests thatQSR to Grow by 16- presence in Tier 2 cities like Pune, Ahmadabad, Surat
Chandigarh, Jaipur, Trichy and Bangalore.
Table 4:  Growth of QSR in Indian Cities

TIER I Cities 2010 (5500 Cr) 30%CAGR 2013 (6780Cr) 35% CAGR 2017 (19260 Cr)
TIER II Cities 2010 (2520 Cr) 108%CAGR (5260Cr) 28.5% CAGR 2017 (18300Cr)
28 Atithya: A Journal of Hospitality Volume 2, Issue 2, 2016

The major GROWTH CATALYSTS are summarized as • The study of growth of quick service restaurant
Market conditions, Expanding middle class, Urbanization, industry.
Nuclear families, Youth spending, Mall & Multiplex • Qualitative discussion and inputs from QSR opera-
boom and Better logistics. tions staff.
Some important findings about the Indian market have • Brief questionnaire survey of tourists and locals.
suggested that 25% of Populations Eats out at least twice • Data analysis, drawing inferences and conclusion.
in each month with average bill of Rs. 150- 300. As
reported by CRISIL, almost 50% of the Indian population Sampling and sample size: An exclusive and scientific
is eating out at least once in every three months. study is carried out with an aim to reach correct number
and most appropriate forms of respondents. It was decided
ASSOCHAM finds that on an average, an individual eats to find at least a representative of each segment of market;
eight times in every month in bustling metros as compared some parameters of sampling were gender, age group,
to US (14 times), Brazil (11 times), Thailand (10 times) income, residence for guests. Due to time and resource
and China (9 times).In 2020 it is expected that 35% of constraints, Standard convenience sampling method was
India’s population will be in urban areas, RJ Whitehead used for collection of data. Total sample size calculated
(2015) study expects that increased Eating Out -fuelled by was 130 and total Questionnaire filled were 142, however
the arrival of more international chains and strengthening only 127 to be found valid for further study.
of local players as well.

Changing patterns of Indian population is illustrated as DATA ANALYSIS AND DISCUSSION

below:
This research on QSR industry required multiple methods
Table 5:  Changing Patterns of Indian Population of data sourcing. With the objectives clearly set in the
mind, data collection is broadly divided in two parts as
Total Population of Gen 30 Crore +
Primary data and Secondary data.
Next 13 to 25 Age Primary Data: Major sources of primary data include
Total Population of ~30% or 9 Crore + responses of Tourists, hotel guests, shoppers and locals at
Gen Next different locations. There is a specific questionnaire used
Living in Urban Areas for collecting information. Demographic data is collected
Key Areas of Spending Clothing, Fashion, Entertainment, with multivariate questions and preferences section of
Food & Beverages, Durables
questions with five point likert scale. The objective of
Spending Power Rs. 3000 to 40000 per month the study is well discussed with the every contributor and
the information provided by these sources is arranged for
Urban Youth Behavior Socially Active, Hangs out late further analysis with appropriate statistical tools.
Spends time in Malls & Multiplex
Prefers to be seen at right place Secondary Data: Research includes extensive literature
Express Identity review on QSR and consumer behavior from relevant
Brand Conscious research journals, newspapers, proceedings of the
Awareness TV, International FM, Social Me- conferences, dissertations at the pre-doctoral and doctoral
dia level, published & unpublished texts and cases as well as
renowned data bases such as Ebsco, Emerald inside etc.
are used effectively.
RESEARCH METHODOLOGY
Statistical tools and techniques: Appropriate statistical
Methodology accepted for present study is test such as Ordinal regression analysis and Kruskal Wallis
• The conceptual framework of quick service restau- test is performed with the help of IBM SPPS latest versions.
rant industry and allied issues. The data and results are presented in charts and tables.
 Study of Trends in Quick Service Restaurants 29

DATA ANALYSIS AND DISCUSSION: Male 79 62.2%

Gender
Female 48 37.8%
The collected data has provided opinions of mixed Below 20 44 34.6%
respondents with good mixture of age, gender, education, Age 21-40 58 45.7%
income, marital status, family status and preferences about 40 Plus 25 19.7%
places of eating out. The data sets Gender, Age, Income,
SSC 84 66.1%
Marital status, Family Status and preferred eating outside Education
Graduate 43 33.9%
are ordinal type and categorical. To predict and analyze
causation in the preferred eating habits on the basis of Low Income 39 30.7%
independent variables, Ordinal regression analysis is Middle In-
Income 36 28.3%
applied. come
High Income 52 40.9%
In the studies of statistics, ordinal regression or ordinal Single 82 64.6%
classification is a kind of regression analysis that is used for Marital Status
Married 45 35.4%
predicting an ordinal variable, that means those variable Nuclear Fam-
whose value subsist on an arbitrary scale where only the 80 63.0%
Family Status ily
relative ordering between different values is significant. Joint Family 47 37.0%
It is an intermediate problem between regression Valid 127 100.0%
and classification. Ordinal regression is frequently used in
Missing 1
the social sciences even for modeling of human levels of
preference. Ordinal regression may also be called ranking Total 128
learning
Model Fitting Information

ORDINAL REGRESSION ANALYSIS Model -2 Log Chi-Square df Sig.

Likelihood
Intercept
Case Processing Summary 113.703
Only
N Marginal
Final 96.526 17.177 8 .028
Percentage
Link function: Logit.
QSR 94 74.0%
Preferred eating Fine Dine 32 25.2%
out No Prefer-
1 0.8%
ence

Goodness-of-Fit
C h i - df Sig.
Square
Pearson 139.271 106 .017
Deviance 76.317 106 .987
Link function: Logit.
Parameter Estimates
Estimate Std. Error Wald df Sig. 95% Confidence Interval
Lower Bound
Upper Bound
[Preferred eating out = 1] 1.928 .804 5.758 1 .016 .353 3.503
Threshold
[Preferred eating out = 2] 5.928 1.286 21.266 1 .000 3.409 8.448
30 Atithya: A Journal of Hospitality Volume 2, Issue 2, 2016

[Gender=1] -.338 .645 .275 1 .600 -1.602 .926

a
[Gender=2] 0 . . 0 . . .
[Age=1] -1.476 .735 4.033 1 .045 -2.916 -.035
[Age=2] -.916 .667 1.884 1 .170 -2.224 .392
a
[Age=3] 0 . . 0 . . .
[Eucation=1] .911 .629 2.100 1 .147 -.321 2.144
a
[Eucation=2] 0 . . 0 . . .
Location
[Income=1] .829 .591 1.967 1 .161 -.329 1.986
[Income=2] 1.083 .569 3.628 1 .057 -.031 2.198
[Income=3] 0a . . 0 . . .
[MaritalStatus=1] -.257 .500 .264 1 .608 -1.236 .723
a
[MaritalStatus=2] 0 . . 0 . . .
[FamilyStatus=1] 1.286 .538 5.722 1 .017 .232 2.340
[FamilyStatus=2] 0a . . 0 . . .
Link function: Logit.
a. This parameter is set to zero because it is redundant.

Test of Parallel Linesa

Model -2 Log Likelihood Chi-Square df Sig.
Null Hypothesis 96.526
General .000b 96.526 8 .000
The null hypothesis states that the location parameters (slope coefficients) are the same across response cat-
egories.
a. Link function: Logit.
b. The log-likelihood value is practically zero. There may be a complete separation in the data. The maximum
likelihood estimates do not exist.

Analysis: The Model fitting information table shows significant however the threshold value for finedine is
the significant value of 0.28 this indicates the ordinal considerably high than that of QSR.
regression model for the data set is fit and suitable.
The goodness of fit is also significant at 0.017 Pearson In the test of parallel lines, logit is applied as link function,
sig value. However, the deviance is not significant at since the data has small intervals and is expected as
0.987(>0.05), this indicates that the deviations are not location parameters are same across response categories.
considerably high and are likely similar. The table shows significant value, this expresses that
we reject the null hypothesis and consider that there is
In parameter estimates, threshold value for preferred influence of independent variables on preferred eating
eating outside in QSR and Fine dine are on higher side. outside. The independent variables like Age in lower
While in locations Age (below 20), middle income group, categories (youngsters), Middle income group (juggling
and nuclear family are showing higher estimates and in jobs and house) and nuclear families are most important
there ratio is substantially high, these groups are showing factors causing the changes in preferred eating outside,
significant value. Hence we shall consider that people in especially in fine dine and QSR.
lower age groups are quite inclined towards eating outside
similarly middle income groups are also have preferences The specific data about customer preference to QSR over
towards eating outside in quality restaurant and fine and other typical restaurants and for a particular brand is on
dine. The nuclear families are quite obvious to indicate five point likert scale. It is analyzed with Kruskal Wallis
the significant values for preferring to eat in QSR and Test. It is also referred as one-way ANOVA on ranks, is
fine and dine. The preferences for finedine and QSR are a rank-based nonparametric test that is used to determine
the statistically significant differences between two or
 Study of Trends in Quick Service Restaurants 31

more groups of an independent variable on a continuous service restaurants. However, if we compare the mean
or ordinal dependent variable. It is understood as the ranks of the reasons, following are the prime identified
nonparametric alternative to the one-way ANOVA and reasons to opt quick service restaurants
also as an extension of the Mann-Whitney U test that 1. Preferred Staple meals
allows the comparison of more than two independent
2. No. time for cooking
groups. To find out the prime reasons for preferring Quick
service restaurants, a variance test is applied. Since the 3. Enjoying the Branded restaurant meals
data set is ordinal a Kruskal Wallis test is applied. 4. Trying the recommended restaurants
Kruskal Wallis Test- To identify the most prominent attributes of quick service
restaurants a non parametric test Kruskal Wallis is adopted
Test Statisticsa,b
for processing data regarding a particular brand of QSR.
Rating
Chi-Square 78.104 Kruskal Wallis Test-
df 9
Test Statisticsa,b
Asymp. Sig. .000
Scale
a. Kruskal Wallis Test
Chi-Square 10.587
b. Grouping Variable: Reasons
df 9
Asymp. Sig. .305
Ranks
a. Kruskal Wallis Test
Reasons N Mean Rank
b. Grouping Variable: Reason
1 98 600.26
2 98 371.66
Ranks
3 98 620.07
Reason N Mean Rank
4 98 459.07
1 98 457.55
5 98 392.80
2 98 526.78
Rating 6 98 546.23
3 98 440.27
7 98 491.39
4 98 498.23
8 98 436.82
5 98 491.37
9 98 506.69
Scale 6 98 469.41
10 98 480.01
7 98 498.10
Total 980
8 98 532.45
9 98 515.94
Descriptive Statistics
10 98 474.91
N Mean Std. Minimum Maximum
Total 980
Deviation
Rating 980 3.23 1.398 1 5
Descriptive Statistics
Reasons 980 5.50 2.874 1 10
N Mean Std. Minimum Maximum
A non-parametric method for one-way analysis of Deviation
variance used to determine if three or more samples Scale 980 3.25 1.446 1 5
originate from the same distribution. The Kruskal-Wallis Rea-
980 5.50 2.874 1 10
test essentially a standard one-way analysis of variance, son
with ranks assigned to the data points replacing the data
The test is not significant, since p value is 0.305 which is
points themselves, and is similar to the Mann-Whitney U
greater than 0.05. This represents that all the mentioned
test, but applicable to more than two sample groups.
attributes are important and the variance is less explained.
The test is significant and indicates that there are There are negligible differences in opinions in rating of
differences of opinions towards preferences of quick attributes. However, comparison of mean ranks explains
32 Atithya: A Journal of Hospitality Volume 2, Issue 2, 2016

the prominent attributes to consider are it is mostly recommended by peers and friends. The most
1. QSR provides a meeting point, intimacy and privacy significant factors that provide a competitive edge to a
particular brand over competition are accurate billing and
2. Accurate/ appropriate billing and
use of modern technology. It shows that people prefer
3. QSR Using modern technology modern technology in the service industry and they find it
more reliable in terms of transactions with the restaurants.
Industry stalwarts like Amit Jatia of McDonalds
To add to this the intimacy and privacy provided at most
has stated that Localized menu, not just seen as an
convenient locations is one of the most important aspect
international brand, but one which the people of India feel
while preferring a brand of QSR.
comfortable. As found by Arvind Singhal of KFC, more
young people in workforce , growing economy, a rising
female work force, and increased mobility, more diverse
menu fuelling growth. As per MD of Jumboking, easier REFERENCES
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