ALBAWABA – In response to skyrocketing inflation, Domino’s India launched the world’s cheapest Domino’s pizza ever, last week, at $0.6 (49 rupees).
Apparently, Domino’s India is spearheading the fight against inflation, which is squeezing profits and pricing out customers, CEO of the Indian franchisee company Sameer Khetarpal told Reuters.
Domino's flagship inflation-buster pizza was launched in February.
It was "re-engineered" by cutting price – and tomatoes – from its earlier cheapest offering of $0.72 (59 rupees), the CEO said.
Notably, India is Domino’s number one market outside of America, Reuters reported.
Domino’s wants to "own that price point", said Khetarpal.
The CEO also confirmed that the stripped-down, seven-inch cheese pizza with a "sprinkle" of basil and parsley is Domino's cheapest anywhere in the world.
Meanwhile, India is suffering a surge in inflation, with tomatoes and other produce hitting unprecedented highs in July.
Franchisee Jubilant said in May it witnessed a cheese price surge of 40 percent in 2022-23, and a 30 percent rise in chicken and paper boxes.
There have been more shocks in recent weeks, with tomato prices rising over 400 percent and households toiling under rising rates of everything from milk to cereals and spices, Reuters reported.
"Customers are going to eat out less because prices are higher everywhere – our existing consumers should not go out to some competition," Khetarpal said.
Customers are "coming to the store or open[ing] the app, because there is a 49-rupee callout," he said, adding that Domino's global team supported the plans.
Since then, promotional campaigns were launched, selling two pizzas for the cheapest price of one, according to the company's social media channels.
In Shanghai, China, Domino’s cheapest savoury pizza is priced at about $3.8, while the cheapest one in San Francisco is priced at about $12, according to the restaurant’s menu prices.
Reuters interviewed six executives and 12 store managers on how their fast-food franchises in India are dealing with rampant inflation in a critical, significant 1.4 billion people market.
The companies are striving to hold onto market shares gained over three decades of rapid growth in a very important market, business-wise. One with a particularly tough-to-beat street-food culture and sizzling samosas for as little as $0.12 (or 10 rupees).
Khetarpal’s Jubilant FoodWorks runs all of Domino’s India’s 1,816 outlets.
The CEO holds a staff meeting first thing every Monday to brainstorm new ways to manage costs and fight inflation, which has cut the company’s profits by 70 percent in the first quarter of 2023.
To cut costs and be able to afford a $0.6-pizza, Domino’s India removed the lids of all pizza boxes sold at stores, starting December 2022, saving $0.006 per box, the executive said.
It may not seem like much, but it mounts up to a lot, considering that 37 percent of the company’s Indian business is dine-in.
In 2022, Jubilant, Domino’s India’s franchisee, made $635 million in revenues.
Domino’s India takes on the competition
Pizza Hut is aggressively promoting pizzas starting at $0.96 (79 rupees) that it launched last year and its India franchisee, Sapphire Foods, said it was the brand's lowest-priced globally.
Merrill Pereyra, managing director of Pizza Hut in the Indian subcontinent, said the chain was developing products that "make the brand relevant and easy to access" for price conscious consumers in India, adding its budget pizzas were a hit with young people.
McDonald's also launched half-price meals in June.
They'll be the focus of promotion efforts in coming weeks, according to Akshay Jatia, executive director at Westlife Foodworld.
The company runs 357 outlets in western and southern India. He said the meals would bring in more customers and boost sales and margins.
Looking forward for India’s fast food market
It's been a bleak year for Domino’s India, the Indian fast-food restaurant leader with a market share of about 12.5 percent, the Canada-based news agency reported. The same goes for other companies.
Pre-tax profit at Pizza Hut's Sapphire Foods more than halved in the March quarter. Burger King's India franchisee, Restaurant Brands Asia, saw its net loss widen by 9 percent.
Hoverer, The pizza market, specifically, is estimated at $2.1 billion, and Euromonitor International estimates it will grow at a 15 percent rate until 2027, according to Reuters. This is down from 21 percent in 2022 and 43 percent in 2021.
More so, Pizza Hut owner Yum Brands sounded pretty optimistic in June, comparing its 17,000 United States (US) outlets to its more than 2,000 in India, where it sees a "tremendous growth opportunity".
Overall, the size of the fast-food market in India is estimated at nearly $5 billion, compared to $341 billion and $137 billion in the United States and China, respectively.
