Yo China: Reaping Indian Benefits by Offering Chinese Cuisine


By

Prahlad Kumar Pandey
Faculty Member
INC
Rewa
 


"Our vision is to create a Rs 1,000-crore Chinese food company. We want to do that through different formats — kiosks, dine-ins in malls, outlets in tech parks, international airports and Railway stations"
                                                                        Ashish Kapur, co–Founder & Managing Director, Yo! China

Great restaurants appeals to the guests emotionally. India, however, fought a war against China, but Chinese food has emerged as the second most popular cuisine in India.1 There are many venders selling Chinese fast food in almost every nook and corner of urban India. There are not many restaurants offering quality Chinese food at the price which a common Indian can afford. Increasing size of middle class, in terms of both volume and value, has forced restaurateurs to turn steering to tier II cities in India.

The service led economic growth has not proportionate effect on foods services in India.

The Indian foodservice industry2 is estimated to have a value of $5.5 billion. The industry grew by 5.1% in 2006. The industry is expected to touch the $ 7 billion mark by the end of 2011 registering 27.6% increase since 2006. The cost segment of Indian food industry accounts for 66.4% of the industry's value. 3

Table 1: Foodservice Industry Volume in India during 2002-2006

Year

Transactions in million

% Growth

2002

6,381.1

 

2003

6,466.2

1.30%

2004

6,547.6

1.30%

2005

6,627.2

1.20%

2006

6,708.9

1.20%


The compound annual growth rate (CAGR), 2002-2006: 1.3%                               Source: Datamonitor

Table 2: Foodservice Industry Value in India during 2002-2006

Year

$ billion

INR billion

% Growth

2002

4.5

200.3

 

2003

4.7

208.8

4.20%

2004

5.0

218.9

4.80%

2005

5.2

229.9

5.10%

2006

5.5

241.6

5.10%


The compound annual growth rate (CAGR), 2002-2006: 4.8%                        Source: Datamonitor

A major part of middle class is Food Neophobic4 . Catering Chinese fast food to Food Neophobics at higher prices is ensuring failure to the business. Middle class Indians with age more than thirty five are hesitant to try new foods, at higher price in particular.  Yo china seems to have taken this challenge and facing it successfully since its inception.

Introduction

Yo China, started by an enterprising team of six individuals in May 2003, is India's first and largest Chinese fast food chain. It is promoted by MOODS Hospitality Pvt Ltd. With its tagline of 'Chinese food, Chinese Prices', it aims to deliver high quality Chinese food at very reasonable prices served in an international ambience.  It is headquartered in Gurgaon. The food chain is headed by Ashish Kapur.  Fast service and a child friendly atmosphere is another special feature of Yo China. Its current outlets are all company owned but on the anvil are franchisee-owned outlets besides further expansion in Delhi. The food chain has already won bids for running its outlets at the international airport in Mumbai, and the domestic and international airports in Delhi.5

The restaurant chain has outlets in trendy locations across the country in the following cities – Delhi, Gurgaon, Noida, Dehradun, Ghaziabad, Chandigarh, Pune, Bangalore, Mangalore and Hyderabad.

Table 3 : Some Facts about sales volume of Yo China

Sl No

Description

Frequency

1

Units of Dimsum Sold

5,000,000

2

Visits for servises per month

500,000

3

Homes/Offices Delivery per month

200,000

4

Guest Repeat

65%


Yo China and its management have been awarded various honors like: 'India Today – Young Achievers of 2006', 'CNBC – Young Turks', 'HT City Eating Out Guide - Best Fast Food Chain', 'Times of India – Chinese alternative to McDonalds', etc.

Serving the King

Its target market is the young working professionals, youth and aged between 15 and 35. The restaurants also take orders for birthday and kitty parties as well as parties for large gatherings, in addition to providing dine-in, takeaway & home delivery services. It has a party pack offering in its delivery menu.. The food arrives fresh in party size packs with complimentary Vanilla Ice Cream for the Party. By not serving liquor it tries to become popular hangout place among women and families'.The outlets offer a free home or office delivery service within forty five minutes in limited distance from its outlet with a minimum order value of Rs 129.

Googly Locations

One of its outlets is situated at a very expensive commercial location in Hyderabad where the author has an experience of closely observing its operations and strategy.Operating in such locations where monthly rental is as costly as Rs 80 per square feet, it is as challenging as manufacturing Tata Nano. In addition to that, Central and Pizza Hut is at a stone's throw from Yo China outlet.

But operating at such locations, where footfall is high and other restaurants and  multiplexes are close by, is the well though execution of Yo China's strategy. It has two models first dine in and second food courts.  The ideal requirement for Dine-In models, the restaurant should have 2500 square feet of carpet area on a single floor plate. However, it does have multiple floor restaurants. Its current restaurants are located in Malls as well as High Streets. The food court model requires approximately 350 square feet of space which mandates self service from consumers.

Operating to Ensure Quality, Safety and Affordability

The bright red and yellow interior colors give the restaurant a very lively look. The ambience is soothing. All its outlets receive fresh vegetables, chicken, meat and fish daily. The vendors, from where all raw inputs are supplied, are certified for the quality and safety of their supplies. The chefs are trained to receive fresh supplies. Yo china strictly believes in quality and serving fresh food.

To make safety sure in all outlets, it operates with government license and in authorized premises. It uses commercial gas situated outside the restaurant premises. All vendors are pre certified and the quality check officers do random audits to ensure freshness and safety of raw ingredients. Kitchen staff is well trained and measured on hygiene and food handling and is medically tested on a regular basis. The uniform policy necessitates caps for all chefs and waiter entering the kitchen premises. No unauthorized person or employee is permitted to enter the kitchen premise. The vegetarian and non vegetarian sections are clearly defined and even chefs are different for both the sections. All packaging material is quality and food grade. Apart from this, the chain store is working on industry certifications like HACCP.7

Yo China intends to open 200 more outlets across the country by the end of 2009. To meet this objective, it provides support to its franchisee in two forms:

1. Setup: It helps in the most important factor to its franchisee – location finalization and lease negotiations, at the time of setup.  The outlet designing, equipment sourcing, staff hiring and training, vendor selection, launch planning, advertising and marketing plan and other such assistance is provided.

2. Operations : Its headquarter staff ensures setup the supply chain network, supply standardized items to ensure consistency, help in retraining staff, conduct audits and grade outlet performance, design new marketing promotions, create new dishes. Apart from this the common advertising benefits are also provided to all operational franchisees.

Indian Taste Tests Chinese Price

Pricing policy of yo china is its USP.  It has a variety of dishes with varying prices. Its dishes range from Rs 11 to Rs 230. It sells Chow mein box at Rs. 20 only. It also takes orders for party for which they have special party packs. These party packs are for groups of 16 people, 24 people & 32 people at per head price of Rs 99, Rs 96 and Rs 90 respectively. Hyderabad outlet provides 30% discount on purchase of meals between 3 PM to 6 PM. Its Hyderabad outlet offers 50% discount on the purchase of second main meal as a part of promotional strategy8. Most of Yo china's dishes are priced with ending digit nine and five. Service tax is excluded from prices enlisted in menu, premises and pamphlets. No delivery charges are included in the payable bills. It accepts credit cards also.   All Beverages are served at MRP. Prices of dishes are comparatively less. And these competitive prices seem to be the driver of Yo China success.

According to industry estimates, the "eating out" market is worth Rs 35,000 crore, of which only about Rs 6,000 crore accounts for the organized sector.9 In the light of the above information, Yo China is not only providing employment but also increasing government's revenue. The food market is expected to grow in India as the trend and working culture is changing. Increasing per capita income and new culture in work and life are the other factors that would give wings to food service industry. The expansion plan and success of Yo China at tier two cities is yet to be seen. We never know if sky is the limit for the combo of Chinese taste and Indian Entrepreneurship. 

Questions for discussions:

1. Why does Yo China's Chandigarh outlet serve beer?

2. What steps has Yo china taken to maximized facility utilization?

3. What do you notice in the pricing policy of Yo-China?

References:

1. http://www.supplychains.in/en/art/?525

2. Foodservice is defined as the sale of freshly prepared food and drinks for immediate consumption, either on the premises from which they were bought, or in designated eating areas, shared with other foodservice operators, or in other place in case of takeaways or home delivery transactions.

3. Datamonitor

4. Those deeming themselves hesitant to try new foods

5.  The Business Line, August 24, 2007

6. Only Chandigarh outlet serves Beer

7. Hazard Analysis and Critical Control Points (HACCP) is a systematic preventive approach to ensure food safety, pharmaceutical safety, etc. that addresses physical, chemical and biological hazards as a means of prevention.

8. The offer may also be available in other outlets, The author has only visited its Hyderabad outlet.

9. Business Line, Friday, Aug. 24, 2007

Bibliography:

1. http://www.yo-china.com/

2. http://www.businesstravellerindia.com/200307/bt08gour2.shtml

3. http://sigfood.org/Delhi/Vasant_Vihar/Yo_China

4. http://www.ficci.com/media-room/speeches-presentations/2005/dec/session5/ashishkappor.pdf

5. Fox, Jasmine, Psychology Today, The nose knows, Jan/Feb99, Vol. 32 Issue 1, p22, 1/2p, 1c

6. http://www.mouthshut.com/product-reviews/Yo_China-925066619.html

7. http://www.vccircle.com/2008/01/18/matrix-india-invests-10-million-in-murjanis-owned-luxury-marketer-b mi/

8. http://www.gmrgroup.co.in/corporate_news_item_Hindu_Nd_18Dec06.html

9. http://www.matrixpartners.com/Yo!China112806.pdf

Annexure 1: Prices of single combos at Yo China

 

 

   

Price

Combo 7

Combo 8

Combo 9

Combo 10

Combo 11


Combo 12

Combo 13

Combo 14

Chicken Schezwan

Chilly Chicken

Chicken Hot Garlic

Crispy Honey Chicken

Diced Chicken Hong kong

Lamb Schezwan

Chilly Fish

Prawn Hot Garlic

129

139

139

139

139


145

150

155

   

Price

Combo 1


Combo 2

Combo 3

Combo 4

Combo 5

Combo 6

Mixed Veg Chinese Greens

Veg Sweet & Sour

Veg Schezwan

Veg Manchurian

Veg Hot Garlic Sauce

Chilly Paneer

89


99

115

125

125

130


Annexure 2: Prices of double combos at Yo China

 

 

   

Price

Combo 6


Combo 7



Combo 8



Combo 9


Combo 10

Chilly Chicken + Chicken Hot Garlic

Chilly Chicken + Diced Chicken Hong Kong

Chicken Hot Garlic + Diced Chicken Hong Kong

Chicken Hot Garlic + Chicken Schezwan

Chilly Chicken + Lamb Schezwan

149


149



149



149


155

 

   

Price

Combo 1


Combo 2


Combo 3



Combo 4

Combo 5

Veg Sweet & Sour + Chinese Greens

Veg Sweet & Sour + Veg Schezwan

Veg Manchurian + Veg Hot Garlic Sauce

Veg Manchurian + Veg Schezwan

Veg Hot Garlic + Chilly Paneer

99


119


139


139


149


 


Prahlad Kumar Pandey
Faculty Member
INC
Rewa
 

Source: E-mail March 17, 2008

          

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