McDonald's in India

McDonald’s Corporation, established in 1955, owns one of the world’s most well-known and valuable brands and holds a leading share in the global branded quick service restaurant segment. The Corporation has more than 30,000 restaurants in 119 countries serving 47 million customers each day.

McDonald’s entered India in 1996 through joint ventures with two Indian entities, Hardcastle Restaurants Pvt. Ltd. and Connaught Plaza Restaurants Ltd .Hardcastle Restaurants Pvt. Ltd. owns and operates McDonald’s restaurants in western India through a 50-50 joint venture with the parent company. Through a similar partnership, Connaught Plaza Restaurants Pvt. Ltd owns and operates McDonald’s operations in northern India. There are 60 McDonald’s restaurants in India employing over 2,000 people who serve more than 1.5 lakh customers across the country every day.

India challenges

• Indians do not consume beef and there is a significant population which is strictly vegetarian.

• Prior to McDonald’s entering India there was no concept of such a food category. This meant low product awareness and absence of the infrastructure (cold chain) and supply chain needed for such a business to be successful. Indian agriculture was tuned to producing for households and not for the processed food industry.

• While all this necessitated high investments in infrastructure creation, the consumer could not afford to pay high prices.

• Availability of real estate is crucial for success in the retail business. Getting quality real estate was an issue. McDonald’s either does outright purchase or enters into long lease of 25 years. Rent control laws, housing societies unwilling to enter into long term leases and required clearances from multiple authorities made acquisition of real estate a difficult proposition.

Factors for Success

McDonald’s India overcame all these challenges by focusing on its core values of delivering quality products, served in a friendly environment, in a clean place, at affordable prices, to set up its growing network of outlets. Several factors contributed to

this:

 Global support with local management

McDonald’s India is a joint-venture company managed by Indians with complete flexibility to run the business.The India team brought local knowledge into the JV.The Indian team also brought in entrepreneurial driveto makes the busin...

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...ced with beef extracts .This caused a huge uproar in India , where some McDonalds restaurants where completely vandalized by Hindu activists.

Future Plans

While India is viewed as a tough market with limited scale (McDonald’s is opening 150 stores a year in China against 15- 20 in India), India’s outlook is positive and is considered a growth market. Currently, McDonald’s has 60 outlets in more than 10 cities in India. The company plans to add 15 outlets a year at an investment of US$ 8.7 million (per 15 outlets).McDonald’s is expected to double its investments from US$ 87 million that it has already invested to US$ 174 million by 2006. Fresh investments will be for expansion of McDonald’s India’s supply chain, refurbishing its cold chain, and setting up more outlets. McDonald’s is planning tie-ups with oil marketing companies for setting up McDonald’s outlets at gas stations. Currently, there is one McDonald’s outlet at a BPCL gas station and it is aiming at more such outlets with alliances with other companies as well. McDonald’s is also eager to set up more outlets at places like railway stations, and is working on new product offerings like a fruit drink and desserts.