Adverse weather conditions and continued price inflation have caused temporary supply chain disruptions, especially for fresh tomatoes in India, as tomato is a feature ingredient in many menu items.
Key international QSR [quick service restaurant] chains such as Burger King, McDonald’s and Subway have responded to the price influx of tomatoes by taking the ingredient off the menu until prices and crop availability stabilise. This does maintain affordability perceptions but creates notable setbacks in quality, and possibly also taste change. In fact, the majority (65%) of Indian consumer food and drink product and service choices are always or often influenced by how enjoyable or unique it is. This demonstrates further that the Indian population is just as likely to be influenced by the product experience than the price. In terms of approach, it is vital for QSRs to maintain quality standards while maintaining its tomato portfolio.
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A solution to this may be introducing a range of affordable menu items with cheaper ingredients without compromising the taste, such as the Pizza Mania range from Domino’s. This range offers a regular-size pizza that consists of two toppings maximum. They are the lowest-costing seven-inch pizzas from Domino’s, starting at the price of 49Rs, equivalent to $0.60. This demonstrates an attempt by foodservice providers to align with price-sensitive consumers in India who can no longer afford to eat out regularly.
Primary research from GlobalData shows that 69% of Indian consumers are extremely or quite concerned about their personal financial situation, and 42% are keeping a strict household budget to cope with the rising prices. This indicates that the inflation crisis is affecting a large proportion of consumers in India, and maintaining an affordable portfolio is very important, especially for QSR providers. Expanding menu options with simpler, more affordable formulations would be preferable to maintain quality and affordability.
Meanwhile the Indian government seeks solutions to ensure the availability and affordability of tomatoes in the country. In June 2023, the Department of Consumer Affairs announced a hackathon inviting ideas for value chain innovations to improve shelf-life, packaging and storage. Until a long-term solution has been established, it is important for restaurants to adapt appropriately to these supply chain shortages and adjust their menu item range accordingly, which aligns closely with consumer expectations. Failure to meet these preferences can lead to decreased footfall, so it is crucial to maintain quality and affordability when targeting Indian consumer groups.
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By GlobalData
