Hong’s Kitchen is Jubilant FoodWork’s first own restaurant brand and the third overall in its portfolio of brands
Jubilant FoodWorks Ltd (JFL), which operates Domino’s Pizza and Dunkin’ Donuts restaurant food chains in India recently announced its entry into fast casual Chinese dining with the opening of Hong’s Kitchen restaurant in Gurugram.
Hong’s Kitchen will be the Noida-based Jubilant FoodWorks’s first own restaurant brand and the third overall in its portfolio of brands. The company operates more than 1,200 stores in 271 cities. Hong’s Kitchen has opened its first restaurant in Eros mall, Gurugram, the company said in a press release.
Chinese food is the second-largest cuisine consumed outside home in India with stable and big organised brands such as Speciality Restaurant’s Mainland China, Asia Kitchen, Azure Hospitality-backed Mamagoto, and Yo! China already operates from a long time in the market. That apart, scores of local restaurants and street-side food corners and joints sell variations of Chinese meals to Indian consumers.
With this launch, JFL hopes to address the gap between local food stalls and the more expensive food chains serving Chinese meals.
JUBLIANT FOODWORKS BUSINESS EMPIRE:-
1,200 – Stores JFL operates across 271 cities.
Rs 3.75L cr – Size of India’s food services market in 2017.
Rs 5.52L cr – Estimated size of the market in 2022.
“While Chinese food is the second largest consumed cuisine in the country, there exists a vast gap between street vendors and premium fine-dining restaurants,” said Pratik Pota, chief executive of JFL. “Hong’s Kitchen, with its fast casual format, will address this vast, unaddressed market through great-tasting and affordably priced Chinese food that’s customized for Indian tastes.”
“Key thing to watch here will be pricing, new store openings, capital expenditure per store, ad spends and delivery. In the first few years, any new chain makes losses. However, Jubilant already has huge economies of scale in terms of sourcing and real estate and hopefully will try to occupy gaps between street food and fine dining offerings,” said Abneesh Roy, senior vice-president, Edelweiss Securities. JFL’s move to expand beyond pizzas and donuts comes at a time when the company has seen an improvement in its business. By 2018, the company shuttered half its Dunkin’ Donuts stores in India. In the year before, it spent ₹100 crore in a product revamp for its Domino’s brand. For the third quarter of 2019, the company reported a 46% jump in net profit at ₹96.5 crore. Revenue for the company rose 16.8% to ₹929 crore in the same period.
During the quarter, the company also achieved a break-even for second launched brand Dunkin’ Donuts.
As of 2017, India’s food services market was estimated at ₹3.38 trillion according to a 2017 research report by Ficci and Technopak. By 2022, the market for food services in India is expected to reach ₹5.52 trillion.
With growing number of urban cities and improving standard of living of Indians eating out of home or ordering in offline or online, analysts who closely analyze and track the food industry say there is scope for innovation around food and service in Chinese cuisine. “While a lot of companies participate in the Chinese restaurant market in India, there is always scope to offer better menu and address any convenience loopholes that might exist,” said Ankur Bisen, senior vice-president, retail and consumer at Technopak.
The most important things to watch for will be new store openings, pricing, advertising and marketing spends, capital expenditure per store, food delivery and logistics etc. “In the first couple of years, any new food chain has highest probability to make losses. However, Jubilant already has huge economies of scale in terms of sourcing and real estate and will try their level best to minimize the gap between street food and fine dining players in the market. This will help in keeping margin hit on the lower side,” Roy said in the press release.
Going with this perfect strategy of not depending fully on third-party online platforms and food delivery partners, JFL has not yet made the menu items offered by Hong’s Kitchen available on Zomato, Swiggy, Uber Eats and other food delivery applications. Instead, the company has its own app on Google Play and Apple App Store for online food ordering in addition to a hotline for phone orders. The minimum order size for online delivery has been kept at Rs 99 and the company is not levying extra charges on delivery and packing.
The menu includes both vegetarian and non-vegetarian food meals offered at attractive prices. The pricing starts from Rs 99 to Rs 199 for momos and spring rolls going up to between Rs 199 and Rs 349 for noodles and rice, main dishes, combos and chef’s specials.