With increasing purchasing power, comes new lifestyle options

Written by Mona Mehta | Updated: Nov 4 2009, 02:18am hrs
Amidst retail revival growth, McDonalds has outlined vision for launching 17 to 20 Drive-Thru McDonalds restaurants in West and South India and 40 nationally in the next three years. It is also planning to promote the new breakfast meal concept, which is being currently tested at select McDonalds restaurants into a pan-Indias presence. Amit Jatia, managing director, West & South, McDonalds India spoke to FEs Mona Mehta on how the company is constantly working towards value offerings and meeting the evolving demands of young adults no kids (YANKS) group of audiences, who have developed a taste for global palate and contributed 75% of McDonalds footfalls in recent months.

Amidst retail revival growth, what will be your new offerings

The breakfast menu in India is still evolving and we see great potential in leveraging it to expand our customer base. With the breakfast menu we aim to reach out to a whole new customer segment while also offering existing customers a wider choice. We are testing the menu at select McDonalds outlets which includes new offerings such as Hash Browns, Cuppa corn, Veggie McMuffin, Egg & Cheese McMuffin, Spinach & Corn McMuffin, Sausage McMuffin, Egg McMuffin with Chicken Salami, Sausage McMuffin with Egg, Hot cakes with Maple syrup and butter, a vegetarian breakfast platter and a non vegetarian breakfast platter.

Will the above menu be part of the Drive-Thru concept as well Between September 2008 to March 2009, how has McDonalds Drive-Thru concept taken off

Drive-Thru is definitely unique to McDonalds as it is the only brand in the entire quick service restaurant (QSR) space in the country to offer this experience to its consumers. The breakfast menu will be available through this retail format as well. During the period of slowdown the retail format has come across as a boon as it acts as a convenience factor for the customers. We have added five new restaurants with Drive-Thru formats from September 2008 to March 2009.

How different will the Breakfast Meal concept be from the Extra Value Meals

Breakfast is a huge success globally and we intend to initiate a habit of consuming breakfast among our consumers in India as well. Breakfast meal will be an altogether new category offered by McDonalds during specific timings in morning only. Whereas our extra value meal is a meal combo offered throughout the day to cater to meal options and is aimed to position McDonalds as a dining out option.

Tell us as to how have the Drive-Thru restaurants taken off by McDonalds India

Drive-Thru is an integral part of McDonalds business plan both in India and internationally and McDonalds is well positioned to expand on Drive-Thru locations in major cities across the country. Drive-Thru, which is unique to McDonalds only contributes 18 to 20% of the total sales. Out of 82 restaurants by the company (West & South) 14 of them are Drive-Thru. The development of the Drive-Thru is a natural response to the changing lifestyles of the citys consumers. The purchasing power of the consumers have been growing rapidly in the country. And with this increased affluence also comes a faster pace of life, where people are looking for greater convenience and new lifestyle options. Keeping this in mind McDonalds will introduce close to 17-20 (approximately) Drive-Thru over next three years in West & South India and close to 40 (approx) nationally.

What are the challenges being faced by McDonalds in achieving profits and break even in the country in terms of retail, supply chain, raw material sourcing, pricing strategies and above all back-end integration How is the company planning to tackle the challenges

While McDonalds, globally was renowned for its Hamburgers, in India, when the company decided to launch, the biggest challenge was to be able to cater to the local tastes and preferences, while maintaining its international USP of Quality, Service, Cleanliness & Value and sustain the image of a family restaurant. In addition, when McDonalds entered the country, the QSR market was at a nascent stage. Customers were not certain of what to expect from QSR players in terms of price and were vary of consistent quality and service standards of the early players. Furthermore, there was lack of efficient supply chain in India at that point in time and there were no produce of essential components of a McBurger like lettuce.

McDonalds identified these challenges and established the brand as a familiar, comfortable place which provides convenience, quality and value. With respect to the cultural and traditional sentiments, McDonalds does not serve its most popular product the BIGMAC (a beef burger) in India. We have also developed an egg-less mayonnaise for the first time in the worldwide system. Additionally, to suit the Indian palette, the McAloo Tikki burger, Veg Pizza McPuff and Chicken McGrill burger were among other offerings that were formulated and introduced using spices favored by Indians.

One of the key reasons McDonalds has tasted success in the country is our supply chain. It acts as a backbone of our business. McDonalds invested Rs 1,000 crore in its backend integration and supply chain to offer its customer the best quality products at affordable price. McDonalds unique cold chain, on which we have spent more than six years setting up in India, has brought about a veritable revolution, immensely benefiting the farmers at one end and enabling customers at retail counters get the highest quality food products, absolutely fresh and at great value.

What are your customer-focused strategies

McDonalds as a part of its business strategy focuses on providing convenience to consumers. Hence it constantly works on formats that act as a means to reach out to the consumer. Today, from just attracting customers to the restaurant McDonalds has made every possible attempt to reach out to them and make their favourite meal available to them when and where they need it. From kiosks to petrol pump alliances, Drive-Thru to home delivery, the retail formats have been designed for customers satisfaction. Also, at the restaurant level, McDonalds provides formats like Made for You, which is a customised form of the restaurant which allows you to choose the ingredients of your burger and the burger is prepared only after receiving the order.

The constant innovation at retail format and menu level, dedicated supply chain and marketing efforts have lead McDonalds achieving break even at the store level for a few years now. The company have observed double-digit growth in the same store sales this year and the overall footfall has increased by 40-45% over the last year.

Tell us whether McDonalds is planning to enter into strategic marketing arrangement with any other food/beverage retailing company Is the company planning to phase out any existing products from the market Please explain in detail.

At McDonalds, it has always been a constant endeavor to work towards innovating and upgrading product offerings to appeal to the local appetite. In 2008 the company introduced wholesome multi-cereal bread and a salad mix to make the new wraps lighter choices for McDonalds customers. Early 2009 we introduced the New Chatpata McAloo Tikki Burger and Shake Shake Fries that offered a new experience and a more localised flavour to customers. Recently, McDonalds introduced the globally renowned and appreciated Chicken McNuggets. Product innovation is an ongoing process at McDonalds and we will see something innovative happening on that front regularly. Currently, there are no plans to enter into any strategic arrangement with any other food company.