NEW DELHI: Amid news that the American QSR has announced the termination of the franchise agreement with Connaught Plaza Restaurants in India’s North and East, McDonald’s is struggling to remain relevant in the globe’s second largest country.
According to the Economic Times, the US firm announced on Monday the termination of its agreement with Connaught, putting at risk its foothold and thousands across the country. Connaught is prohibited from using any of McDonald’s intellectual properties in any of its outlets across North and East India for 15 days.
McDonald’s told the paper that it remains “committed to finding the right ‘developmental licensee partner’ for North and East India and taking steps to do so”, yet industry watchers, speaking to the ET, argued that the 15 day window to find a new partner was optimistic.
“We have been compelled to take this step because CPRL has materially breached the terms of the respective franchise agreements relating to the affected restaurants, and has failed to remedy the breaches, despite being provided with an opportunity to do so in accordance with the agreements,” McDonald's said in a statement.
The development follows the temporary closure of McDonald’s restaurants across Delhi in June. As Mint reported at the time, few customers were bothered by the development.
“Quite simply, McDonald’s has ceased to matter,” said Sundeep Khanna, consulting editor at Mint, pointing out the range of international QSR options and home-grown alternatives to emerge 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 wrote. The closures in June were a result of a running disagreement between the US brand and Connaught Plaza Restaurants. However, others reported customer disappointment.
Meanwhile, the relationship with its franchise partner in the South and West of the country is still finding success. Hardcastle Restaurants claimed last month to be the only QSR brand in India that has returned positive same-store growth over the last eight quarters.
For McDonald’s, whose signature beef burger was at odds with the many Hindu consumers in India, the path to growth has involved extensive menu changes to suit the market, as well as an effort to convince Indians that a burger could be considered a meal.
According to the Economic Times, the US firm announced on Monday the termination of its agreement with Connaught, putting at risk its foothold and thousands across the country. Connaught is prohibited from using any of McDonald’s intellectual properties in any of its outlets across North and East India for 15 days.
McDonald’s told the paper that it remains “committed to finding the right ‘developmental licensee partner’ for North and East India and taking steps to do so”, yet industry watchers, speaking to the ET, argued that the 15 day window to find a new partner was optimistic.
“We have been compelled to take this step because CPRL has materially breached the terms of the respective franchise agreements relating to the affected restaurants, and has failed to remedy the breaches, despite being provided with an opportunity to do so in accordance with the agreements,” McDonald's said in a statement.
The development follows the temporary closure of McDonald’s restaurants across Delhi in June. As Mint reported at the time, few customers were bothered by the development.
“Quite simply, McDonald’s has ceased to matter,” said Sundeep Khanna, consulting editor at Mint, pointing out the range of international QSR options and home-grown alternatives to emerge 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 wrote. The closures in June were a result of a running disagreement between the US brand and Connaught Plaza Restaurants. However, others reported customer disappointment.
Meanwhile, the relationship with its franchise partner in the South and West of the country is still finding success. Hardcastle Restaurants claimed last month to be the only QSR brand in India that has returned positive same-store growth over the last eight quarters.
For McDonald’s, whose signature beef burger was at odds with the many Hindu consumers in India, the path to growth has involved extensive menu changes to suit the market, as well as an effort to convince Indians that a burger could be considered a meal.
Data sourced from the Economic Times, Mint, Times of India, BBC; additional content by WARC staff
