Web & mobile-driven sales at McD's, KFC on the rise, helping them cut costs by half
Hungry? If you have a smartphone, you can order a burger online and be rest assured McDonald's is lovin' it.But that's not the only chain that likes online orders. Domino's, KFC, restaurants like Mainland China and Punjab Grill and even local outfits such as Biryani Zone are pushing this route aggressively in an environment that continues to see sales and profits under pressure.
Why? Online orders slash the cost of restaurant chains by half because they reduce the dependence on call centres as these are routed directly from the website to the relevant outlet. They are also more convenient as they allow customers to order from anywhere -on the move or unable to make a phone call. The restaurant chains add that orders through apps help them inform customers about offers, promotions and new menu items, not always possible when an order is placed by phone and is dependent on how effectively the call centre operator can communicate.
“Sheer convenience is driving online ordering numbers,“ said Harneet Singh Rajpal, senior VP, marketing, at Jubilant FoodWorks. The company said its mobile ordering app has crossed 2 million downloads across smartphones, with the online contribution to delivery sales in the July-September quarter touching 27%, compared with 18% in the year earlier.
“People downloading apps on their mobiles or through their iPads or computer screens is not only a personalised way to order, it also saves us time and costs since the orders are flashed directly on kitchen screens of the concerned restaurants,“ Rajpal added. Jubilant reported a 5.3% decline in same-store sales compared with 6.6% in the year-ago quarter and a 12.7% decline in standalone net profit to Rs 29 crore in the July-September quarter.
In global markets such as the US, web and mobile ordering contributes more than 50-60% to sales of restaurants. In India, the trend is gaining ground very rapidly, said experts. Harminder Sahni, founder of consulting firm Wazir Advisors, said: “Online ordering can bring down cost by up to 40-50%... There is a direct correlation as the firms save on maintenance of call centre costs which reduces pressure on profitability.”
McDonald's west and south region operator Hardcastle Restaurants revamped its online delivery business this January in recognition of the trend. “Ever since, contribution of our online delivery business has gone up from 5% to about 30% now,“ said Amit Jatia, vice-chairman of Hardcastle, which runs 192 restaurants across the region. “With web and mobile ordering, it is very rewarding to report positive results in an intensely competitive market, even though we expect economic challenges to persist in the near term,“ Jatia added. Harcastle reported a 7.9% decline in same store sales in the July-September compared with 5.5% in the corresponding year-ago quarter.
For KFC, Yum Restaurants' fastestgrowing restaurant chain in India, online orders are almost a fourth of its delivery sales, a spokesperson said. Yum's India division system sales for the July September quarter were down 4%.
Online food ordering platform foodpanda.in, which connects 4,000 restaurants in 100 cities and operates in 40-plus countries, said its mobile app has now crossed 5 million downloads. Foodpanda.in co-founder Rohit Chadda said even fine-dining restaurants such as Mainland China and Punjab Grill are getting traction on online orders.“While a combination of orders placed through com puters and mobile apps is driving sales, there is a clear emerging preference towards using mobile apps for online ordering, ahead of computers or tablets.“ Chadda said October saw a 78% increase in orders from Delhi, Mumbai, Bangalore, Gurgaon and Pune, adding that firms are introducing specific online promotions.
Ritesh Dwivedy , founder CEO of JustEat, another online food ordering platform aligned largely with smaller and local restaurants, said even entities with two or three stores per city are gaining traction from online orders. “We are witnessing that the mobile app is the preferred online ordering tool specially in tier-I and -II cities,“ Dwivedy said.