Analysis: Yum eyes young India to help mirror China profits

Tue Feb 28, 2012 5:41pm EST
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By Lisa Baertlein and Nandita Bose

LOS ANGELES/MUMBAI (Reuters) - Rati Motwani of Mumbai treats her 7-year-old daughter to a fast-food fix almost every weekend.

Motwani, who lives in a nation where most people still eat home-cooked meals and where lentils and rice are staples, says Western chains increasingly are gaining a following and changing old dining habits.

"In Indian cities today, pizza and burgers have become staples and have replaced the traditional daal and chawal (lentils and rice), which we grew up eating. This is their fun food, this is what they enjoy," said Motwani, 33.

KFC and Pizza Hut parent Yum Brands Inc (YUM.N: Quote) is hoping this Western fast-food phenomenon reaches millions more Indians as it tries to mirror the success story of China, which now contributes half of its operating profit.

Yum is targeting Indian students and young office workers with adaptations of popular Western fast-food products designed to appeal to their unique tastes -- and the nation's many vegetarians: Tandoori paneer pizza or vegetable "Zinger" burgers anyone?

By 2020 Yum expects to have 2,000 restaurants in India, up from 374 now.

"I look at India as the most dynamic market for us in the 21st century," Yum Chief Financial Officer Richard Carucci told Reuters in a recent interview.

But few experts expect Yum's ride in India to be as smooth as in China, where the company has 4,500 restaurants after virtually uninterrupted growth from the day KFC brought Colonel Sanders' secret fried chicken recipe to a restaurant on the edge of Beijing's Tiananmen Square in 1987.   Continued...