CP Foods bets on TS, AP

Its India chief says Telangana, AP should establish more food parks to encourage food processing industry

Charoen Pokphand Group (CP) is the Thailand’s largest business conglomerate, with an annual turnover in excess of $45 billion and operations across several countries, including India. It is into food processing, quick service restaurants (QSRs), poultry farming, retailing and a host of other businesses. Presently, it has embarked on rapid expansion of its quick service restaurants under Five Star Chicken brand in Telangana and Andhra Pradesh.

The company has over 260 Five Star Chicken outlets across Tamil Nadu, Karnataka and Kerala. And it entered into Hyderabad a month ago and established three outlets in the city till now. “We are gearing up to double our Five Star Chicken outlets to 500 in next few years and a significant number of them will come up in AP and TS as the states offer huge growth opportunities. Besides, we will also set up a processing plant in Rayalaseema region,” Sanjeev Pant, Sr Vice-President, Food Business, CPF (India) Private Limited, tells P Madhusudhan Reddy in an exclusive interview

What kind of businesses CP has in India?

CP Foods is a part of Bangkok, Thailand-based MNC, the Charoen Pokphand Group. It’s a 100 year old group with operations in agriculture, foods, telecom, retail, etc. The global turnover of the group is $45 billion and CP Foods accounts for $14 billion. CP India, established 22 years ago, is a wholly-owned subsidiary of CP Foods Thailand. In India, we initially had two divisions – sea food and poultry divisions. However, we have started food division two years ago and launched Five Star Chicken brand which is already present in several other countries. Under this, we opened 260 Five Star Chicken small format restaurants in Tamil Nadu, Karnataka and Kerala. Most of them are third-party owned. We entered into Hyderabad market a month ago.

What kind of growth opportunities AP and TS offer for you?

We have already established three outlets in Hyderabad. We want to expand our restaurant chain in both Telangana and Andhra Pradesh which offer immense growth opportunities. So, our focus areas for next two years are AP and TS. Our plan is to encourage local entrepreneurs. So, nearly 90 per cent of our outlets are franchises. We want to double outlets to 500 from present 260 in next three to four years. A lot of the new outlets will come up in the two states and we expect to open over 100 outlets in Hyderabad. Besides, we will focus on cities like Warangal, Vijayawada, Visakhapatnam, Nellore and Guntur. People here love eating outside and so there is enormous potential for food business in Andhra and Telangana. After establishing our network in the two states, we will foray into western part of the country and cities like Pune and Mumbai. Thereafter, we will focus on other parts of the country.

Do you have any plans to set up new processing plants?

At present, we have a food processing plant on the outskirts of Bangalore. We are planning to set up second factory in Rayalaseema or coastal Andhra area. The second plant will be very important infrastructure for us. However, we will rope in third party logistics providers for distribution. So far, we have invested close to $25 million in the past three years and major chunk of that has gone into the Bangalore factory. We will make similar investment in the next four years and some of it will go into in the new processing plant we are planning in AP. We have already approached Andhra Pradesh government. We will acquire requisite land for setting set up the plant. We are looking at industrial areas and food parks to identify location for the new plant.

What should Andhra Pradesh, Telangana do to attract investments into food processing sector?

To encourage food processing sector, the two states should establish more number of food parks. Each food park should have world class infrastructure, cold storage facilities and logistics support. The most important part of the food processing sector is the cold chain and so two states should establish world class cold chain facilities, in addition to efficient road network for faster transportation. Then only, they can attract investments. So far, I have come across only one food park here. They need to have more.

With presence of MNCs such as KFC and McDonalds in the market, how does Five Star Chicken brand differentiates itself?

Our outlets offer multiple types of fried chicken including Thai, Indian and smoked chicken. We also have several types of snacks, vegetarian and non-veg rolls, burgers, French fries, in addition to beverages and fruit juices. Our outlets serve whatever young people like. But there is no dining area in the restaurants as our sole focus is on take-away and home delivery space. The store area ranges from 100 sft to 300 sft and the typical investment for a 200-sft outlet is around Rs 12 lakh.Though we have to compete with players like KFC and McDonald, ours is a unique business model as we only focus on take-away segment. We also enjoy a cost advantage because we are present in farming, poultry as well as processing.