In an exclusive interview for WARC Marketer’s Toolkit, Arvind RP – Chief marketing officer, McDonald’s India (West and South) – spoke to WARC’s Biprorshee Das about localizing an iconic global brand, the impact of sports on its delivery business, the brand’s experiments with AI and machine learning, and much more.
How is the economic slowdown or cost volatility affecting your business?
Over the past two to three quarters, there has been a softening of consumer sentiments and one can see the impact on the overall QSR industry toplines. A part of that is due to inflation, which is much more manageable now than it was a year back. There was also the impact of the prevalent economic conditions.
Consumer spend is much tighter than what it was a year back. Having said that, we are in the middle of the festive season. One is optimistic. Also, there is the (ICC Cricket) World Cup happening in India. Cricket is like a religion in India that has its own impact on consumer purchases, especially on our delivery channel.
While these blips continue, the long-term growth story of India remains intact. We play the long game. We are investing not only today but for the future. That story remains intact.
The Cricket World Cup must have been a much-needed shot in the arm.
There's evidence from the past that during Cricket World Cup, sales go up. That is something we had anticipated.
The great thing about this World Cup is that the matches are so tight. There's a huge amount of excitement among the public. When most of the matches are exciting, it augurs well for the whole delivery business.
Which societal/technological/business/policy issue has had the biggest impact on your marketing strategy?
From a technology perspective, the biggest impact in the last two, three years has been the rise in delivery. Compared to pre COVID, the one thing very clear about today's QSR business is that it is an omnichannel one. The consumer is truly omnichannel whether ordering at home or office or ordering ahead for a takeaway. Of course, dining at the restaurant has always been there. These proliferations are all backed by technology.
Even within our stores, we have something called ‘experience of the future’ where we have a store ordering kiosks. So a consumer no longer has to go to the front counter and order. They can just go to a kiosk, order, pay, go to the table, and food will be served.
Technology has in a way liberated the consumer and brought in the whole angle of convenience in a much more powerful way than it has been pre COVID. So, one way the whole business has changed for the QSR industry, for McDonald's is how we have, as a brand, embraced omnichannel and digital technology at all touchpoints, not just delivery, but also dining. This has taken our digital sales to the next level.
What are you looking forward to in 2024?
One of our big growth plans has been scaling up of new stores, scaling up our footprint. As we speak, we are adding a whole load of stores this year, much higher than what we have been doing in the past. All of that will come into play next year. So, that's something we are looking forward to.
Also, we have a fantastic momentum in South (India). To offer a business context, while McDonald's has been very strong in the western region, it is in the south, where we have been lagging relatively. So, we have invested a lot in the southern market, be it in terms of the introduction of fried chicken, a completely new product for McDonald's, or, for that matter, celebrity endorsements.
One aims to do more going forward. So, continuing to grow in the south is something we are looking forward to.
While there's a temporary blip in terms of sentiment impacting overall sales, but next year, there's a lot planned in terms of store expansion, new product launches, and so on and so forth.
How are you planning your budgeting and adspend next year?
We are bullish about the spends. Because ours is a brand-led business, investments in marketing are paramount, be it in terms of new product launches or celebrity endorsements etc. We are going to be seeing continued investments next year as well.
What have been the learnings from COVID for the long-term for McDonald’s? What consumer behaviours have become permanent?
The importance of delivery channels, using our digital channels within the store or apps was the immediate beneficiary I would say post COVID as the markets opened. But if I just take a snapshot of now versus pre COVID, digital channels are at a much-elevated levels in terms of consumer usage and adoption. So that I would say has been a permanent change in the way consumers are behaving today.
You can't say 2023 and not talk about AI. How are you using generative AI internally in your marketing marketing team?
There are a few applications of Gen AI which will transform marketing. We are doing various pilots of using Gen AI specifically, be it SEO, be it creatives for performance marketing, and digital content development. With Gen AI, you can do these things at scale versus the way these things are done traditionally. And digital content development. It's still in a nascent stage though, but we are doing various pilots to kind of understand the cost benefit.
These initiatives at the lower end of the value-added scale are something that Gen AI could be a real viable option for in the years to come. We are gearing up for that.
How do you expect AI to change the shape of your team's skill requirements in the coming years?
Significantly. Because to adopt this technology very quickly, you need the right talent at your end. As things progress, when I see my counterparts, I also realise that probably in technology-oriented industries this kind of disruption is a little more significant.
I am also looking at the implications of this in terms of resourcing internally, agency requirement, what it will mean for the future as Gen AI adoption grows.
Is AI helping you, you know, look at media planning, and audience targeting better?
Definitely. We do use a lot of machine learning. We have a CDP in our marketing automation setup for the past few years, where we look at omnichannel consumer journeys and how to orchestrate those consumer journeys and aim to conduct improve consumer metrics.
Machine learning plays a big role, be it in cohort development or planning and optimising campaigns and so on and so forth. While we are still in early stages, we see immense potential in the adoption of machine learning in this space.
What about engagement with customers? Are you using AI to do that?
Not at the moment. But there are interesting case studies of brands having used AI in consumer engagement. Going forward, we’ll be doing some pilots.
Do you think it's true that brands can no longer avoid getting pulled into controversies in the current times?
There are definitely ways you can. You can try your best to avoid controversies. The idea of marketing and advertising is not to be drawn into controversies that distract from the main agenda of winning the love of consumers.
You do whatever it takes to make sure that controversies are not triggered.
What do you think is the best strategy for brands in a polarised environment?
If one is looking deeply into social conversations, and let's say, one has a social listening tool, and you know the kind of social conversations that are going on, and you know the trigger points or the hot buttons then you get a sense of what to avoid.
You do develop a kind of playbook. And it's not a static playbook. It's a playbook developed over time. Obviously, brands don't want to offend any sensibilities. As long as one develops a viewpoint very quickly based on social conversations and makes sure the right path is followed, I don’t think we have anything to worry about.
Has your brand been involved in any activities that ended up proving polarising? How would you handle it?
Unintentionally, it has happened. It happens to all brands. And it's something that CMOs are much more aware of today than ever.
There are two things. One is advertising guidelines. I am very happy to see ASCI (The Advertising Standards Council of India) being very active nowadays. So, do the right thing as far as advertising and brand guidelines go. That's one part of the picture.
The other thing is, despite your best intentions, you could spark some conversations and controversy. And as you know, food is as close to religion and culture as it can get. And somewhere the hot buttons are there itself.
The key thing, when such a controversy erupts despite your best efforts, is to make sure you're not provoking anyone because that's not the intent. So, the playbook becomes how do we make sure we are not offending any sensibilities because McDonald’s is for everyone. And how do we make sure that feelings are not hurt. We make sure that we follow that narrow path.
And many of these controversies typically last for a few days. What you do in those few days is very crucial.
How would you describe McDonald's India’s approach to diversity and inclusion?
For us, one of the biggest platforms of inclusivity has been “EatQual”, which is a three-year-old initiative. Our view of EatQual has been that McDonald's is for everyone. As the name implies, it's for everyone to access the brand equally on their own terms. The first campaign was launched in 2020 during COVID. We worked together with DDB on a packaging that made consumers with upper limb disability access the burger, open the packaging and eat it very easily. Otherwise, for them, regular packaging made it really cumbersome to experience their McDonald's favourites.
Earlier this October on the occasion of World Sight Day, we launched EatQual Colours. One of the most common problems people face is that of colour blindness. If I am not mistaken, one in 10 men have colour blindness, and many of them don't know about it.
And you eat food with your eyes first, right? Let's say you are colour blind. Imagine the struggle one has to go through when ordering food from the app. Even the veg and non-veg button, which is very important for making a food choice for many consumers, is difficult to use. As an industry-first initiative, we introduced EatQual Colours, a technology solution on our app, wherein colour blind people can see the burgers for what they are and not struggle to order.
Where we are going with this is building a truly inclusive platform, embracing consumers for who they are, and breaking down barriers to access the brand. To us, it’s emphasising that McDonald's is for all. This is now a three-year journey. We remain committed to this. Of course, we do more than EatQual when it comes to the space. It's a journey for us.
Diversity and inclusion are very important to us across the globe. Of course, different countries approach this in different ways given their own cultural contexts. And there are a huge number of inspirations across the globe as far as McDonald's is concerned of how they approach diversity and inclusion.
From a people perspective, we are driving the women leadership agenda at McDonald's. Our vice chairperson, Smita Jatia, who was our erstwhile MD has been leading this initiative as far as our company is concerned. This is an issue close to our heart – how to develop more women leaders at McDonald's India.
Also, in a typical cultural context, there are many inequalities in India. There are many barriers to access. Some of those barriers are obvious, some aren’t. How can we creatively tackle those inequalities, break down those barriers and make the brand easier to access?
For example, the Jain menu (a lacto-vegetarian cuisine for followers of Jainism that excludes even root and underground vegetables). We always hear from the community that they (Jains) are very hesitant to enter any QSR, not just McDonald's because they are not sure they'll get the food of their choice. A few months back, we introduced the No Onion, No Garlic and No Roots menu, which was specially curated for this community.
What has the brand’s stand been on sustainability?
There has been a lot of efforts put in over time. For example, one of our restaurants in Kolhapur is completely net zero. It is completely solar-powered. It’s a showpiece restaurant for us.
We are also evaluating other things. For example, one of the steps we took about two years back was in packaging, wherein we introduced reusable packaging for all our beverages on delivery. We were one of the first brands to move on from plastic straws.
It’s a long journey of sustainability that is a big agenda for us globally as well.
What are the different factors or contexts that brands need to be mindful of when implementing sustainability programmes?
From an Indian context, definitely regulation and how to be abreast with them. At McDonald’s, we like to be ahead of the regulations and not just reacting to them. Regulations definitely shape the sustainability strategy.
Among other factors is economics. For example, the cost of power, which is so important to run a restaurant. Our kitchen is quite complex with many equipment. The cost of power really changes from state to state in the country. Such realities need to be taken into account. right?
The larger one though is having many pilots in play at the same time. We are big believers in that, because the only way we can scale up is looking at the pilots, which ones are working, how we can scale it up from one restaurant to 10 restaurants. That's the philosophy we have of proving solutions and then scaling it up and that has been our approach to sustainability.
What are the key challenges that McDonald's has in adapting to local market realities or varying consumer segments?
This is a huge thing. At the end of the day, this is the core to the success of the brand in markets across the globe and not just India.
I was talking to a few students recently about how McDonald's across the globe has not only developed products for the local market, but also, in terms of brand building and advertising has made it relevant to the local culture. If there are two dimensions – product market fit and brand culture fit – the whole toolkit of McDonald's is how to make them very relevant to an Indian context.
For example, the McAloo Tikki Burger. Especially in West India, aloo (potato) is a very significant part of the cuisine. In Mumbai, particularly, the vada pav is a very popular snack item. The McAloo Tikki Burger has been inspired by vada pav. It has been over 20 years and is an iconic burger here.
Then, there is the McCafe. It has been more than a decade and you will find our coffee tailored to the Indian palate unlike some of the other brands. We made it the way Indians love their coffee, and that's why it sells so well.
And now, fried chicken! We did a lot of market studies. Fried chicken has a very big market in the south of India. So, we launched fried chicken for South India only with its own marketing campaign.
The fact that different markets need different product solutions is a reality that we have been embracing over time.
And it must be quite challenging in a country as diverse as India.
Complex? Yes. But interesting, even more. In the end, that's how McDonald's becomes such a successful brand across the globe. There is a McDonald's-ness that is obvious in every product that we put out there and then we adapt it to the local palate.
Then, there are some products that cut across geographies. Today, you'll find paneer (cottage cheese) in a dish across the length and breadth of India. How to be relevant to all consumers is definitely a big opportunity for us.
How important is understanding the local cultural context?
Very important! According to me, that goes into the heart of what we do as a brand. I'll give you one specific example. McDonald's is all about memories and moments. When we talk to consumers, they place back those moments. It could be a first date, or someone getting a job and treating his mother at McDonald's. It could be a child’s birthday party at McDonald's. So, McDonald's is all about such memories. And if you look at all those consumption occasions, I will say festivals are a huge consumption occasion.
Dussehra-Diwali has always been big in terms of eating out. We released a Diwali ad last year to integrate the brand better into these occasions over time. This year we call our campaign “for your other Diwalis”. This campaign brings alive the relevance of Diwali to McDonald’s India and illustrates my point in response to your question. “For your other Diwali” – the insight is that while there is the core festival you celebrate with your immediate family wherein a lot of traditional foods dominate the menu, it isn’t always about just that one Diwali. There are many others. There is Diwali with your friends in office when you return to work, Diwali with friends at home, there is taash waali Diwali (playing cards on Diwali) and some such. There are many such Diwali moments and we position McDonald’s for all of them. This campaign is insight-based work coming from the consumers themselves.
This is but just one example. We have been doing Ramzan advertising too, for instance, for the past two years. So, a lot of our advertising is centred around making the brand culturally relevant and part of the consumers’ everyday lives.