Prices to be down 5-7% from August; in north, east markets initially

Here?s some comfort (food) in an age of high inflation. McDonald?s India is set to reduce its prices by 5-7% beginning August. Though it will be taking a hit of 30-40 basis points on its gross margins, Vikram Bakshi, MD, McDonald?s India (north and east), told FE, ?Consumers are tightening their purse strings due to inflationary pressures and prices of just about everything are going up. We want to stimulate demand by cutting prices of our products.?

The price cut will initially be for north and east India markets. ?The price sensitivity study that we conduct revealed that it was time to rationalise prices. We believe it is important to retain customers at a time when all other retailers are hiking prices,? he said, adding, ?Even though we will be taking a hit on our margins, we will still be profitable.?

While come August, the popular McDonald?s Happy Meal will cost R14 less, the cost of McVeggie meal will come down by R6. Similarly, dessert McFlurry?s price will be dropped by R10 and the breakfast meal will also be cheaper by R4-6. ?The price sensitivity study that we conducted also revealed that we could bring more costumers to try our breakfast menu if the prices were dropped and also we could sell more desserts if they were cheaper,? said Bakshi. McDonald?s will be hiking prices of a few products such as beverages.

McDonald?s India will also launch the ?egg burger? next month. ?This is an India-specific product that we are launching to create a new category of ?eggetarians?. We are pricing it attractively, again because in the current scenario only items that are value-for-money will do well,? said Bakshi. The burger will be priced at R25 (excluding taxes).

By 2015, McDonald?s India is looking at doubling the number of its outlets. It will be adding 250 new stores with an investment of around R1,000 crore in the next three to five years across India.

It will also double its headcount from 13,000 to 25,000 by 2015. US-based McDonald?s has an equal joint venture with Vikram Bakshi?s Connaught Plaza Restaurants that operates McDonald?s in north and east India. In south and west India, McDonald?s is operated by Hardcastle Restaurants owned by Amit Jatia.