For long, McDonald's has been riding on the affordability plank, advertising its prices that are apparently a throwback to an era. Now, it has to share the plank with India's oldest fast food giant, Nirula's when it comes to people picked from sepia tone menus.
The burger battle
In spite of a rise in input costs, homegrown fast food chain Nirula's, which a-decade-and-a-half ago was the only one of its kind in Delhi, has slashed its prices. The hotel chain that started in 1934, has introduced an all-new menu at lower price points to take on the likes of McDonald's.
The US-based hotel chain, which entered India in 1996, has a 'happy price menu' that offers a range, from burgers to soft-drinks, at a flat Rs 20.
Nirula's has priced its grilled burger with potato filling, a new addition to the menu, at Rs 19 plus taxes.
Its cheese onion tomato pizza (8 inches), another addition, costs only Rs 69 plus taxes. For those who are not big on burgers and pizzas, Nirula's is offering an Indian platters starting at only Rs 30.
Nirula's, India's oldest fast food chain, used to be the outlet of choice for most middle-class Delhiites, until it was overshadowed by McDonald's burgeoning yellow arch. Two years ago, Malaysia-based private equity fund Navis Capital Partners had acquired majority equity control in the firm.
Also, Samir Kuckreja, a relative of outgoing owners Lalit and Deepak Nirula, bought a minority stake in the company in a deal said to be worth Rs 85-90 crore (Rs 850-900 million).
Kuckreja, a former executive-director with Nirula's, assumed the post of managing director.
The new menu, accompanied by a move into new formats and nation-wide expansion, shows the new management is using to regain past glory.
However, steering clear of McDonald's advertising blitzkrieg, Nirula's is keeping below the line. "We are introducing new formats in order to be present at places where our consumers need us.We will advertise more once we have expanded considerably," says Sudipta Sengupta, senior vice-president, marketing and sales, Nirula's.
Confined for decades to regular family restaurant and Potpourri formats, Nirula's is expanding into formats like Nirula's express, fuel station units, food court units, Pegasus bars and ice-cream kiosks.
McDonald's however says it did not bring down the prices but chose to give the consumer the right price. "We are a mass brand committed to deliver value for money to our patrons. We keep our ears close to the ground and conduct studies including price sensitivity.
Way back in 2004, we identified Rs 20 as an acceptable and affordable deal for our customers and we continue to bring delight to our consumers," says Vikram Bakshi, the managing director & joint venture partner with McDonald's India (North & East). McDonald's re-engineered some products to bring them under the 'happy price menu'.
Nirula's does not see its new pricing as an attempt to take on the competition. "The new price menu was in line with our marketing calendar so it had to come," says Sengupta. "Our focus is on the consumer and not on the competition."
Nirula's, which is primarily a north India chain, is going national. It plans to increase the number of its outlets from 57 to 200 by 2010 across India, with Mumbai getting the first in the next two months.
McDonald's runs 136 restaurants in the country and plans to invest Rs 1,200 crore (Rs 12 billion) to set up cold chains and other infrastructure.
