Retail: Increase in promotions to lure customers

28 Mar 2024 , 03:36 PM

Key highlights from analysts of IIFL Securities channel checks across the QSR sector: 1) No price hikes by Dominos and Pizza Hut (PH) since their last survey in Dec’23. Also, there have been no price hikes over the last one year. 2) Both the pizza players have increased cash discounts on their respective apps, while on third-party platforms, discounts are similar vs analysts of IIFL Securities last survey. 3) Pizza Hut launched “Melts” in Feb’24, starting at Rs169. Pizza Hut Melts comes with a two-slice offering, targeted at solo audience. No new launches were done by Dominos. 4) No price actions were undertaken by fried chicken players, KFC introduced “Lunch specials” in Jan’24 starting at Rs149 only for dine in/ takeaway customers. 5) KFC also increased discounts on both its app and Zomato; Popeyes offers were similar. 6) While there were no price actions by McDonalds and Burger King at an overall portfolio level, few of the Chicken SKUs saw some price increase. 7) Barbeque nation saw no price change in the buffet section, which is portfolio-heavy; while there was a marginal increase in a couple of SKUs. BBQ is offering discounts of Rs200 on barbeque boxes (valid on weekends and only delivery) which wasn’t there in the earlier survey.

Pizzas

• Price increases: Domino’s and Pizza Hut have not taken any price hike, over the last 15 months on an overall portfolio level.
• Price comparison: Based on the latest delivery prices through thirdparty player, Pizza Hut stays at 19% premium to Domino’s, which has been the case in the last survey as well. The premium is mainly on account of packing charges charged by PH.
• Promotions: Cash discounts on both Dominos and PH app have increased vs analysts of IIFL Securities' last survey; while on third-party platforms, it is similar. On its app, Dominos is providing cash discount of up to Rs100 vs Rs60 earlier and PH is providing discount of Rs125 vs no cash discount earlier.
• New launches: Domino’s has not made any new launches since Dec’23; while Pizza Hut has introduced “Melts” in Feb’24 starting at Rs199, which is targeted at solo audience.

Fried chicken

• Price increases: KFC and Popeyes have not taken any price increase since analysts of IIFL Securities last survey in Dec’23. Popeyes had taken ~8% hike during the Dec’23 survey; while KFC had taken 3-4% price hike in Apr’23.
• Promotions: KFC is giving cash discounts of up to Rs100 on order value of 699 or more (4th order onwards) on its app. On third-party platforms, there are cash discounts worth Rs75 vs Rs50 in the last survey. Popeyes, on its app, is offering a 10% discount of up to Rs100 on orders above Rs499 only for delivery and for new users, 25% discount of up to Rs100 above Rs449.
• New launches: KFC has introduced its “Lunch Specials” in Jan’24 starting at Rs 149 only for dine-in/ takeaway customers; whereas Popeyes has not made new launches since analysts of IIFL Securities survey in Dec’23.

Burgers

• Price increases: Compared to analysts of IIFL Securities previous survey in Dec’23, both the burger players have not taken any price hike at the overall portfolio level.
• Promotions: On third-party platforms, McDonald’s is offering flat Rs125 discount on orders above Rs449. BK is not offering any cash discounts; however, it is offering deal of the day offers starting at Rs139. On McDonald’s app, offers are the same as analysts of IIFL Securities' last survey; while on the Burger King app, there are no cash discounts; other offers are similar vs the last survey.
• New launches: There have been no new launches by the both the burger players since analysts of IIFL Securities last survey in Dec’23.

Casual Dining

• Price increases: Barbeque took ~2% price hike in some of the SKUs, since analysts of IIFL Securities previous survey. In the buffet section, prices have been similar vs their last survey.
• Promotions: On Zomato, Barbeque is offering discount of flat Rs75, on the order value above Rs249 — flat Rs125 off on an order value above Rs749 and 15% off on minimum order value of Rs1,200. Minimum order value has increased since the last survey. On its app, Barbeque is offering Rs200 off on orders above 799 on Barbeque boxes