Reliance to enter fast food business
13 Dec 2011
Reliance Industries plans to enter the fast foods business. According to unconfirmed reports, the group - which is sitting on a cash pile of about $25 billion - has hired Rishi Negi, a former top executive of Pizza Hut in India, and COO of Fame India, which owns multiplexes, to head its quick service restaurant (QSR) business.
India's largest private sector enterprise – with a turnover of $58 billion – already operates a vast network of retail outlets under its Reliance Retail brand. It has nearly 1,150 outlets across India operating under brands such as Reliance Fresh, Reliance Super and Reliance Mart. It also has bakeries in Reliance Mart.
The QSR business in India – with revenues estimated at nearly Rs10,000 crore a year – is growing at between 25 and 30 per cent annually and has attracted top international brands including McDonald's, Kentucky Fried Chicken, Subway, Pizza Hut, Dominos and Barista. Besides, many domestic brands have also been expanding rapidly in the QSR segment.
While the Reliance spokesman has refused to comment, media reports have quoted unidentified executives as saying that the new venture would offer express deliveries as well as have a presence in food courts and independent outlets. It would cater to Indian tastes, offering Chinese, Italian and Indian cuisine.
Relianec Retail is believed to be aggressively buying vast tracts of land in major cities to develop big-box hypermarkets. Most retailers in India – including Reliance Retail – prefer to lease propreties, but the RIL subsidiary is now investing in land to set up the large-format stores.
Though the UPA government was forced to backtrack on its decision to allow 51 per cent foreign direct investment (FDI) in multi-brand retail, large Indian players including Reliance are gearing up to meet the expected challenge from the likes of Walmart and Tesco.
Bijou Kurien, president, Reliance Retail, confirmed to the media that the company was buying land for its large-format stores. The company has already opened two hypermarkets – in Mumbai and Pune – and plans to start half a dozen more by the end of this fiscal.
With revenues of nearly Rs5,000 crore, Reliance Retail has emerged as India's second-largest retailer (after the Future group). The company has recently hired some top executives from Wal-Mart China.
