Small Towns in India: Food for thought

I recently read an interesting article in ET, “Small Towns, Big Appetite“, every business in India is looking at Tier-2 and Tier-3 cities to expand their business. MNCs were just not able to stay away from India and now they cannot afford to stay away from small towns in India.

  • Small towns like Kota, Shirdi, Allahabad & Kochi account for 25% of the business of multinational food chains
  • Almost half of the 70-odd new stores that Domino’s plans to open in this year will be in Tier-2 and Tier-3 towns.
  • KFC expects 30% of its sales to come from smaller markets in the next one year, up from about 25% now.
  • Results from smaller towns are exciting for Domino’s Pizza.
  • Interesting to see Pizzas are being marketed on the banks of Ganges! And even Shirdi!
  • The organized restaurant industry is expected to touch Rs 28,000 crore by 2015 from today’s Rs 8,500 crore. Much of this growth will come from smaller towns of India.
  • Smaller towns earlier ‘rescued’ FMCG industry, now restaurant chains are hoping for the same help from these smaller towns.

Dominos's Pizza

As usual most of us have a wrong perception of Tier-2 and Tier-3 towns of India. Restaurants have been surprised to see the appetite of smaller towns being a lot more than Tier-1 cities.

We have seen the same behavior in the mobile space, i.e. there has been a huge surge in mobile usage from Tier-2 and Tier-3 cities. The same can be expected for PC internet, at least for Tier-2 in the near future. With wireless broadband auction happening, the Tier-2 internet penetration will not be a distant dream.

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