Five Star Chicken Shuts Down Over 100 Outlets In 5 Months

Many Quick Service Restaurants (QSR) and coffee chains in India have either shut down or downsized operations in the past year and a half because of consumers scaling back expenduiture and increasing pressure on their profitability. Thailand-based restaurant chain Five Star Chicken is one such QSR that has had to shut 133 outlets in a span of only 5 months. Experts say India is a different market than the home markets of such overseas chains, which is why often such brands take time to adapt to the local requirements.

Five Star Chicken, which recently rebranded itself as Five Star, now has 220 outlets in Kerala, Tamil Nadu and Karnataka, and an outlet each in Hyderabad, Goa, Pune, and Mumbai, where it is testing the waters.

“We have shut down non-performing stores and slowed down our rate of expansion,” said Sanjeev Pant, senior vice president-food business. “While we were opening 10-15 stores in a month before, now it is down to three-four stores in a month,” he said.

They are now looking at new strategies to gain growth momentum as the Rs 6,000 crore quick service restaurant or QSR segment has been reporting single-digit or negative same-store sales growth for the past two years.

The company, which entered India in 2012, has tied up with supermarket store Spar, Tata-led Star Bazaar and a few local bakeries to open six shop-in-shop stores and are also introducing private label packaged drinks and expanding its menu offerings. These stores will entail lower real estate cost than standalone stores and are expected to have a healthier footfall. Known for its non-vegetarian offerings, the company has also revamped its menu from 100% non-vegetarian to 40% vegetarian and 60% non-vegetarian.

Besides, the slow growth in this segment is here to stay. According to a Goldman Sachs report, the QSR segment grew at 16% in the past decade and is estimated to grow over 20% annually over the next few years.