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Has McDonald's ceased to matter in India?

News, 19 July 2017
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NEW DELHI: Three weeks after the majority of McDonald's restaurants in New Delhi shut because their operating licenses had been allowed to expire, the city’s consumers are unconcerned and have moved on to one of the many other choices available to them.

“Quite simply, McDonald’s has ceased to matter,” said Sundeep Khanna, consulting editor at Mint, pointing out the great range of international QSR options and home-grown alternatives that have emerged in recent years.

“It is possible for the customer to get an entire thali in the same time that it would take to get a burger and fries at a McDonald’s outlet,” he observed. “No surprise then that Haldiram’s turnover trumps that of McDonald’s and Dominos combined.”

The restaurant closures are the result of a long-running dispute between McDonald’s and the directors of Connaught Plaza Restaurants, the brand licensee for northern and eastern India.

That difficult relationship has now spilled over into the public domain where it is directly affecting the brand, although observers are divided on how serious the impact will be.

One school of thought, expressed by Khanna, is “that products like burgers and colas are at the end of their lifecycle and the dilemma for companies like PepsiCo Inc., The Coca-Cola Co. and McDonald’s is how to abandon what they have been best known for, while searching for their next winner”

Others point to the success of the McDonald’s licensee for south and west India: Hardcastle Restaurants claims to be the only brand in QSR that has returned positive same-store sales growth over the last eight quarters.

Speaking to the Times of India, vice chairman Amit Jatia said that progress hadn’t even been halted by demonetisation. “What that told me is, when you do foundational work, you are retaining customers. It told us consumers are resonating with our brand.”

That has been helped by a focus on the customer experience, which has included new stores with self-ordering kiosks and table service. “If you take away the golden arches, you won't recognise the store as a McDonald's,” he declared.

“Also, instead of building on promotions, we do brand advertising, along with work on the menu.”

Data sourced from Mint, Times of India, Economic Times; additional content by WARC staff

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