McDonald's shuts 43 Delhi outlets over ownership row
30 Jun 2017
A row over control of Connaught Plaza Restaurants (CPRL), the 50:50 local joint venture between Indian partner Vikram Bakshi and the US-based fast-food chain McDonald's that operates the fast food chain in north and east India, has resulted in temporary closure of 43 McDonald's restaurants in Delhi.
A statement issued by McDonald's India Pvt Ltd (MIPL) said the closure is temporary. ''The eating house licences of a number of McDonald's restaurants in Delhi have expired. The board of CPRL is working to obtain the required licences. Pending this, CPRL is temporarily suspending the operations of the affected restaurants. We apologise for the inconvenience,'' the statement read.
The decision to close down 43 of its 55 outlets from Thursday was taken during a board meeting via Skype on Wednesday morning, the unprecedented move by CRPL will render 1,700 jobless.
"It's unfortunate, but operation of 43 restaurants operated by CPRL has been temporarily suspended," said Vikram Bakshi, former managing director of CPRL, which operates 168 restaurants.
Bakshi is still on the CPRL board along with his wife. McDonald's has two representatives on the CPRL board.
While the estranged joint venture partner declined to share reasons for closure, sources close to the developments disclosed that CPRL failed to get the mandatory regulatory health licences renewed because of the infighting between Bakshi and McDonald's.
Bakshi, who was dramatically ousted in August 2013 as managing director of CPRL, has been embroiled in a protracted legal fight with McDonald's, dragging the global fast food chain to the Company Law Board (CLB), which is yet to announce its verdict.
McDonald's, meanwhile, has been pursuing arbitration against Bakshi in the London Court of International Arbitration.
Westlife Development Ltd, through subsidiary Hardcastle Restaurants Pvt Ltd (HRPL), owns the master rights for the west and south India operations of McDonald's and runs 242 restaurants.
A prolonged closure of the outlets will hurt McDonald's business in India, which has already been losing to pizza brand Domino's as the largest quick service restaurant (QSR) chain in the country.