McDonald’s India completes 20 years of being local thinking global

McDonald’s (West & South) has crossed the 20-year milestone in India. According to Amit Jatia, Vice Chairman, Westlife Development Limited and owner, McDonald’s franchise for West and South India, says the experience has been about thinking global, but being local.

The initial challenges had all to do with the supply chain for the restaurant. Absolutely no cold chain existed at the time, due to which, the company had to examine every component of the McDonald’s burger and draw routes back to the farm to create a supply chain.

After that had been put in place, the burger’s ingredients had to be modified if possible to suit the tastes of Indians, among other measures, by creating a menu that excluded beef and pork. That was no mean task, as it turned out, with 90 per cent of the menu needing to be reinvented and separate kitchens having to be created for preparing vegetarian and non-vegetarian dishes. The same had to be communicated to the public as well.

Then, to establish the chain of restaurants in all the top cities, the very first requirement was of premium space. Finding that in a city like Mumbai, where the very first restaurant was opened, was easier said than done.

The third challenge was to find quality real estate in a market where real estate costs are enormous, especially in a city like Mumbai, where the first outlets were opened. A McDonald’s outlet requires as much as 2,500-3,000 square feet of space, with electricity and water being available 24X7.

Then, the last but not the least was curtailing costs. The overhead costs were naturally high as they are at the start of any business, plus sales were yet to pick up.

Amit Jatia recalls, "We decided to set the price, not keeping the cost structure in mind, but according to what the customers could pay." They continued opening restaurants even though they were losing money, until the customers became very familiar with the McDonald’s food and the restaurant itself. The rest, was history, as we all know today.

Soon, as the eating out at McDonald’s showed massive growth, tremendous growth in same-store sales was also witnessed.

The menu was the corner-stone of the success of McDonald’s India (West & South). In Jatia’s words, "Our menu evolved unbelievably in the last 20 years. We built a solid foundation with our menu and succeeded in building sub-brands like McSpicy and McAloo Tikki."

New strategies were also put in place to cut the costs. "We started localising our equipment to bring down costs of operating a McDonald’s restaurant by as much as 30-40 per cent. Then, by year 2003, we had succeeded in creating a model that could be extended to across the country," Jatia shares.

"Today, we serve 300 million-plus consumers and have 400-plus restaurants around the country," says Jatia, attributing his success to not going for blind growth but building retail intelligently.

If one had to choose the customers’ top favourite item on the menu, the McAloo Tikki burger wins hands down, even though the French Fries come a close second, especially as new flavours are being offered with the fries, like Piri Piri and Mexican Cheese flavours. Finally, McCafé is a huge success as well.

McAloo Tikki is not only the biggest brand for McDonald’s India, it has allowed new flavours like Mexican and Lebanese to enhance its success further. It is the people’s faith in the brand which makes them try out new menus, which then has a positive impact on same-store sales, explains Amit Jatia.

On the employee factor playing a role in McDonald’s success, he concludes, "Our top talent been with us for 10-15 years. They have seen all sorts of cycles. Therefore, we have both the breadth and depth of experience which allows us to face the future very well."

To know more about visit us now Food & Beverages