McDonald's focusing on value in India

28 September 2009

NEW DELHI: McDonald's is launching a range of low-cost meals in India, and will also increase the number of outlets it operates in the country, as the fast-food chain seeks to bolster its position in what it regards as a key future growth market.

At present, the US corporation has 166 restaurants spread throughout India, and it plans to boost this total to over 200 by the end of 2009, and to more than double it by 2015.

Delhi and Mumbai are currently among its biggest regional outposts, with Hyderabad and Bangalore also becoming areas of heightened focus.

Its sales in the Asian nation have improved by more than a third during 2009 to date, and also rose by 35% over the course of 2008 as a whole.

However, speaking during a conference call earlier this year, the company's president/coo, Ralph Alvarez, argued the country is currently "not a big enough market for us" given its potential.

In an effort to boost its sales, McDonald's has now introduced a range of Extra Value Meals, with a starting price of 85 rupees ($1.77; €1.21; £1.11).

The main rationale behind this strategy is to improve "its value proposition, which rests on quick service and affordability," it said in statement.

Vikram Bakshi, managing director of the firm's North & East unit in India, added that rising commodity prices are proving a challenge, but affordability has long been a "cornerstone" of the company's success.

As such, "we felt there was scope to build sales by giving compelling reasons to our customers to come to McDonald's more often," he said.

"Moreover, we see great opportunity in the growth of meals through this strategy. We are looking to increase our meals sale to 35% to 40%" of total sales, compared with 25% at present.

Other recent initiatives adopted by the quick-service specialist in India include offering a wider range of healthy and vegetarian options on its menu.

Sanjiv Katyal, director of marketing of McDonald's North & East, said "we are very well established in consumer minds, and have been testing menu options to take care of their needs across different day parts."

More specifically, Katyal suggested the new low-cost meals are "specifically targeted towards customers looking for a quick, hygienic and an affordable meal."

Data sourced from Economic Times; additional content by WARC staff