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Apr, 01 2007

McDonald\'s to pick up speed on national highways

The golden arch is soon going to be a highway star. New retail development along the national highway will be a significant growth area for McDonald\'s.

The fast food retail chain expects its forthcoming highway outlets to contribute over one-fifth of its overall growth in the near future. McDonald's is in advance stages of discussions to strike alliances with real estate developers, oil companies and also the National Highway Authority of India to set up highway outlets, particularly along the golden quadrilateral. At present, McDonald's has six drive-through highway outlets. Real estate development across the highway network is likely to fuel a potential growth market for McDonald's. There are basic issues pertaining to electricity, water and security. To get a foothold on the country's highways, they are presently looking at premise-sharing models with oil companies. Development of infrastructure will see them getting a stronger foothold.
The company's management sees the move as a bridging arrangement for its other plan of foraying aggressively into the second tier metros. At present, these towns comprise half the fast food major's footprint countrywide. In north, 27 out of 54 McDonald's outlets are based outside Delhi. These markets are also a major focus of the company's expansion plans. The idea of the exercise is to provide consumers from smaller towns, outlets when they travel by road to Delhi and vice versa. Even among the secondary metros, McDonald's now plans an expansion beyond the 500 km around Delhi radius, which it had initially targeted.
The chain is now looking at relatively far off cities such as Allahabad, Varanasi and Jodhpur for a footprint expansion. It is also trying to achieve a different positioning for its NCR and other markets. McDonald's is being packaged as more of an aspirational product for tier two markets, whereas in larger cities, the packaging continues to be branded affordability. With all these expansion plans underway, McDonald's targets further increasing its growth trajectory from the present 40 per cent.

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