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Big Mac plans to pump in Rs 250 cr in next 2 years — Looking at franchisee route for future expansion

27-July-2004
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Big Mac plans to pump in Rs 250 cr in next 2 years — Looking at franchisee route for future expansion

Fast-Food chain McDonald's plans to pump in another Rs 250 crore in Indian operations over the next two years to take its total investment in the country to Rs 1,000 crore, according to the chain's Indian joint venture partner, Mr Vikram Bakshi.

McDonald's operations have broken even after eight years of Indian presence last fiscal and its future plans include opening eight new outlets in the North Indian markets.

The fast food chain is present in India as two separate joint ventures for the northern and western markets. Mr Bakshi is the Managing Director of the joint venture that operates in the North called Connaught Plaza Restaurants.

"We have broken even in 2003-04 despite making some heavy investments in brand building over recent months. Right now, McDonald's is serving 2,500 customers per day across its 53 restaurants in India. Total investment by the chain in India will go up to Rs 1,000 crore over the next two years," Mr Bakshi told Business Line.

Till date, each restaurant of the fast food chain is owned by the joint ventures, but Mr Bakshi said future expansion might need franchisee participation. "Right now, all the McDonald's outlets are owned by the joint venture but we are looking at the franchisee route. Involving franchisees means issues like whether they can provide our quality commitment and service standards need to be worked out."

Again, on the consumer satisfaction front, McDonald's has reworked its positioning to a friendlier brand towards young adults and children. "We realised that a reactive approach will not work. Consumer aspirations and needs are continuously changing and so are we. We have consciously decided to keep upgrading our image in the consumer's mind."

Besides putting the McDonald's brand on `branded affordability' plank, the image overhaul has also included launch of ice tea and cold coffee in collaboration with Coca-Cola India and small changes such as separating the dessert and beverages counters so that the eating experience is happier.

Also, in recent months, McDonald's has made Rs 20 the price benchmark for a whole range of its products, besides selective home delivery services available across select outlets.

Asked whether the home delivery option will hit the restaurant business, Mr Bakshi replied in the negative, but said that the business has boomed in outlets where this service has been introduced.

On the oft-repeated criticism that the brand is available only in select cities across the country, he said each outlet is company owned and "very careful" planning is needed in terms of market potential, supply chain dynamics and several other factors before a decision could be taken.

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