McDonald’s to double India operations as US sales slump
10 Sep 2014
American restaurants chain, McDonald's is expanding in India even as it is facing problem with millennials, who want food that is healthier and fresher than what the chain offers as Happy Meal.
But, in India, Hardcastle Restaurants Pvt Ltd (HRPL), the master franchise for the Western and Southern operations of McDonald's in India, is going ahead with plans to invest around Rs750 crore over the next 4-5 years to increase its presence in smaller towns and non-metro cities in India.
HRPL, a wholly owned subsidiary of Westlife Development Limited, plans to add about 175 to 250 new stores to its existing 189 restaurants in India, which will take the numbers to around 400 stores in next four-five years.
For McDonalds, higher disposable incomes at semi urban areas and people's aspirations to experience brands give momentum to its sales in India, the opposite is happening in the US and elsewhere.
While all fast-food chains have become less popular with families, McDonald's has fared worst. In 2011, families with a child aged 12 or under accounted for 18.6 per cent of McDonald's customers, according to research firm Technomic. By mid-2014, such families accounted for 14.6 per cent of McDonald's visitors.
The company's US sales at established stores have been falling for the past four months. In August they dropped 2.8 per cent, McDonald's said on Tuesday. The company also reported that global same-store sales fell 3.7 per cent, the worst decline in a decade.
However, in India, McDonads is rising, adding McCafe brand to offer beverages. McCafe is seen as an extension of the brand McDonald's which has been offering quick service foods.
The café would offer premium specialty coffee, including cappuccino, latte, iced mocha and frappe from 100 per cent premium Arabica coffee beans sourced from Chikmagalur.
The company quoted Technopak Advisors as saying that the organised café market in India, is currently $230 million (approx Rs1,380 crore) and is likely to hit $410 million (approx Rs2,460 crore) by 2017.
In Gujarat, McDonald's has 23 restaurants, which it plans to double in the next two years.
In the year 2013-14, the company had registered a total turnover of Rs74 crore, which is expected to grow at the industry growth rate of about 10-15 per cent in the current year.
