MUMBAI, India -- In normal circumstances, the captains of industry in an erstwhile-protected economy like India's have feared the financial muscle and experience of multinational companies.

But in the pizza segment, a homegrown brand is not only standing up stoutly to the international competition, but showing a healthy bottom line.

Smokin' Joe's Pizza shop.

Smokin' Joe's, a pizza company launched in India in 1993, is more than holding its own in what has become a battlefield for the ready-to-eat pizza sector. Not only has it won hard-core loyalty from its clientele, it's garnered the distinction of being the only pizza company to be profitable in the segment almost from its founding.

International brands like Domino's Pizza and Pizza Hut (the most recent entrant into the Indian market) won't release sales figures, but representatives of both concede that their companies don't expect to break even for at least a few years.

According to a January report in The Times of India, Domino's was expanding at breakneck speed to have 100 stores by 2002. However, many outlets were placed too closely together, causing sales cannibalization and the closure of some stores. It currently has 84 outlets.

Smokin' Joe's 21 outlets in Mumbai, Pune and Nashik, however, have an aggregate turnover of Rs 100 million (U.S. $2 million), spend 5 percent of that on advertising and promotion, and still remain profitable.

Navroze Billimoria, 37, who bought out his old friend and partner, Rashid Billimoria, about three years ago, is franchising to extend his operations to North India. A Smokin' Joe's outlet will open in the Indian capital of New Delhi this month, and Billimoria has the South Indian metropolis of Chennai next on his list.

Goliaths aren't sissies, though

Despite Smokin' Joe's success, the other players in the country's growing pizza market aren't making it easy. Pizza Hut, which has more than 12,500 outlets in over 85 countries, has opened 31 Indian outlets since November 2001. According to a report in India's Economic Times, the company wanted to open 50 stores in 2002 and have 100 total by 2004, but is well short of those goals.

The chain did cause a sensation, however, when it offered 16 varieties of vegetarian and non-vegetarian pizzas on its menu. Some dishes even reach out to the tastes of the Jain community, a strictly vegetarian group that abstains from tuberous root vegetables like onions and potatoes.

"In addition to the international flavors that Pizza Hut has in all countries, we have introduced flavors that have been developed specifically to suit the Indian palate," said Kersi H. Marker, general manager of Pizzeria Fast Foods Restaurants Private Limited, a Madras-based Pizza Hut franchisee. "And in deference to our customers' sentiments, we have separate vegetarian and non-vegetarian tables in our restaurants."

For now, all of India's pizza chains sell pizzas in three sizes: eight, 10 and 12 inches.

At Smokin' Joe's, prices range between Rs 110 (U.S. $2.20) for an eight-inch, to Rs 260 (U.S. $5.20) for the 12-inch special. And due to the chain's nationwide tie-up with PepsiCo, each 12-inch pie delivered comes with a free 500 ml of Pepsi.

Smokin' Joe's stores feature small dine-in parlors, but most of its pizzas are sold via carryout or delivery.

Just like Domino's Pizza stores elsewhere, the company's Indian units offer carryout and delivery only. Domino's prices also are 15-20 percent higher (Rs 130 to Rs 320) (U.S. $2.60 to $6.40) than Smokin' Joe's for same-sized pizzas.

Among the top toppings offered are lamb and pickled ginger. Out of deference to the nation's many Hindus, Domino's doesn't sell beef pepperoni, but it does offer spicy chicken and sausage.

Pizza Hut pies are the most expensive of the lot, fetching Rs 140 (U.S. $2.80) for an eight-inch basic Margherita, to Rs 405 (U.S. $8.10) for its 12-inch Super Supreme.

Apparently, though, being the cost leader doesn't concern the company.

"We are not worried by the competition, as we offer a far better product than any of the others," boasts Pankaj Patra, senior manager, Indian subcontinent, of Tricon Restaurants International, the holding company which operates Pizza Hut, Kentucky Fried Chicken and Taco Bell chains there.

Dine-in or delivery?

The high cost of commercial space in large cities has Indian pizza chains operating in stores with very limited dining areas. Consequently, lower overhead associated with building delivery-carryout stores has made that design option increasingly attractive.

Currently, however, Pizza Hut views the dine-in option a winner. According to Marker, 70 percent of the customers (500 to 600 people on weekdays and 800 to 1,000 people on weekends) drawn to Pizza Huts in Nungambakkam and Adyar stay and eat. Delivery accounts for nearly 20 percent of sales, while carryout consumes the rest.

Domino's Pizza shop.

The opposite is true for Smokin' Joe's, where "more than 80 percent of sales come from home deliveries and take-aways at most of our outlets," said Billimoria. "Of course, if we could have more sitting space, we would have been happy to entertain more dine-in customers. The pleasure of eating a hot, freshly baked pizza straight from the oven simply cannot be compared with eating it at home half an hour later."

Pizza Corner, which opened its first dine-in outlet in 1997 in Chennai, operates mainly in North and South India. The New Delhi-based company's stores are a mix of delivery-carryout operations and dine-in sites with family-oriented rooms.

"Our first delivery outlet in Chennai at Nandanam opened on January 29, 1998," recalled Bhupendra Singh, managing director of Pizza Corner, which has 41 total outlets. "All our restaurants have a theme. The Bangalore Brigade Road property, our flagship restaurant, has a Hollywood theme and can seat 164 guests. The restaurant at Banjara Hills in Hyderabad has a soccer theme, the one at Sardar Patel Road, also in Hyderabad, has a Water Sports theme, and so forth."

Today, Pizza Corner has 14 outlets in New Delhi alone, and Singh claims it dominates dine-in, delivery and take-away activity in the cities of Chennai, Bangalore, Mysore, Pondicherry and Hyderabad.

"It is we who came to Hyderabad first and introduced the city to our top-class Italian pizzas," said Singh. "We have first-mover advantage and are confident of retaining our clientele."

Formidable outside competition

As if the ready-to-eat pizza market weren't tough enough in India, the chains face further competition from heat-and-eat pizza players whose parent company's brand identities are well established in India.

Heat-and-eat pizza represents the genesis of a new segment in the India pizza market, one launched a year ago by Gujarat Cooperative Milk Marketing Federation (GCMMF) under its well-known brand name Amul.

The company's initial offering was a single six-inch vegetarian model topped with cheese, peppers, tomato and onion, and sold at an extremely affordable Rs 20 (U.S. 41 cents). So successful did it prove that Amul was encouraged to offer an eight-inch version of the same pizza for Rs 30 (U.S. 60 cents).

"With people working longer hours, ready-to-cook pizzas are ideal," said V. J. Matthai, assistant general manager at GCMMF. "They are ideal in an evening when the lady of the house does not wish to cook a structured meal. Our pizzas are inexpensive, and one has to spend only a few minutes in the kitchen. The more varieties we introduce, the greater will be our success."

One example of Amul's advertising has captured the attention of the hordes of daily visitors to Mumbai's most popular beach, Chowpatty. One prominent advertisement displays a microwave oven with text that reads, "The only buttons you will have to press to eat pizza."

GCMMF is already experimenting with different pizzas, some of which may be rolled out later this year. With more and more consumers seeking ready-to-eat meals, other companies view the segment as a potential goldmine.

Noteworthy is the fact that GCMMF sold more than Rs 1 billion ($20.5 million) worth of Amul pizzas in the first year. That success motivated General Mills India Limited to launch the famous Pillsbury brand of ready-to-eat pizza in four Indian metropolitan centers -- Mumbai, New Delhi, Kolkata and Chennai -- in April.

Pillsbury's Pan-Fresh Pizza comes with dough, sauce, mozzarella cheese and Italian seasoning. After assembly, 10 minutes in the oven finishes the product. At Rs 35 (U.S. 70 cents) for the single pack and Rs 60 (U.S. $1.20) for a double pack, General Mills reckons it can sell 150,000 pizzas every month.

My, what a market!

Smokin' Joe's advertisement.

Experts estimate that the Indian pizza market will grow at a compound annual rate of 15 percent. As per estimates of the Ministry of Food Processing, the ready-to-eat market in India today exceeds Rs 40 billion (U.S. $800 million), with the size of the heat-and-eat pizza market being Rs 2.5 billion (U.S. $50 million). Most of those sales will come in large metropolises and mini-metros like Pune, Ahmedabad, Bangalore and Hyderabad.

Do dine-in and home-delivery pizzerias feel threatened by the new heat-and-eat players? The question produces expansive smiles on the faces of Pizza Hut's Patra and Pizza Corner's Singh.

"Both Amul and Pillsbury have only limited flavors to offer, whereas we have a large range," said Patra. "And, of course, there is a vast difference in the quality and taste of our handmade pizzas and those mass-produced ones."

Said Singh, "People come to our restaurants to enjoy the ambience of each place, and to enjoy the taste of freshly baked pizzas. During the recent World Football Cup, we had rigged up large screens to show the matches live to our clients. ... We had sell-out crowds throughout the month, with large numbers waiting outside to gain seats. That is an indication of our popularity."

Pizza Hut's Marker points out that not only does the ready-to-eat market have a good head start on heat-and-eat products, ongoing change in the way Indians perceive pizza will help pizza chains become more successful.

"(P)izzas are now being perceived as a meal option," Marker said. And that's "a marked change from the earlier mindset, when they were thought of as mere snacks."

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