In a candid conversation with Restaurant India Ranjit Paliath – VP, Business Operations, Hardcastle Restaurants – McDonald’s India West and South spoke on expansion plans.
How Mc Donald’s is observing the change in consumer taste and behaviour?
Over the years, there has been a steady increase in the number of people eating out of home and experimenting with cuisines. They are receptive to new products and services and want to be able to customize their menu items. They have moved from a testing phase to an indulgence phase where they prefer more indulgent and exciting products. They tend to show a variety seeking behaviour in terms of outlets and variety of food. The transformation in Indian consumer lifestyles over the years has also tremendously helped the IEO (Informal Eating Out) industry to grow and expand. Indian consumers are increasingly spending large sums, eating out with family and friends on weekends and holidays, churning up a huge appetite for the QSR business, so clearly the food retail industry in the country is poised for exponential growth. We receive consumers across all age groups as our patrons ranging from families, working population to retired grandparents.
What are the different options of burger catching up with the appetite of the Indian foodies?
We have a variety of burgers out of which the McAlooTikki was a massive hit amongst our fans. Indians prefer their food to be spicy and to cater to that we came up with Mc Spicy Chicken, we have the Mc Maharaja Mac in both vegetarian and non-vegetarian options, and we have the McSpicy Paneer, Chicken McGrill along with the McEgg Burger, Egg and Cheese McMuffin, Veg Supreme McMuffin, Veg McMuffin and the Sausage McMuffin which are a part of the breakfast menu. We have an all-day menu suitable for customers walking in any time.
As many Indians are turning vegan; how the demand for Non-Veg burgers?
Our menu is balanced with a 50-50 split between veg and non-veg options to cater to our customers’ requirement and meet the diversity in India. We see a healthy consumption of our products across categories and will continue to expand our menu in both categories. Since India has a large segment of vegetarians, we have re-engineered our operations to address their special requirements.
Has the recent report by Centre for Science and Environment (CSE) regarding cancer causing chemicals (potassium bromate and potassium iodate) in ready-to-eat breads affected the business? How?
McDonald’s India does not use potassium bromate or potassium iodate in the flour and all other ingredients that goes into our buns. The claims made by CSE in their press release and report are completely baseless and have not seen any impact in our business.
How are you attempting to bring in health conscious consumers amid slowing sales?
We at McDonald’s are ensuring that our offerings are aligned to the nutritional benefits that customers seek. We have made nutritional improvements through reformulation of our sauces. There has been an overall 7 to 8 percent impact in the calorie count of our products as our menu management team has worked towards reducing the oil content in our sauces from 67 percent to 25 percent. This has also been instrumental in bringing down calories in our sauces by up to 40 percent. We have reduced sodium across our various sauces, buns and Mc Nuggets by 10 percent and in our fries by 20 percent since 2013. Furthermore, our dairy products such as the popular soft-serves have less than 3percent fat, and we use only 100 percent vegetable oil (Palmolein - which is naturally transfat free). We also offer wholesome and grilled products in our breakfast menu.
What is your current presence of QSR’s? And what are the future expansion plans?
We cater to around 185 million customers annually across west and south India through our 242 McDonald’s restaurants and 89 McCafés (as of June 30, 2016) across 10 States and 32 cities. Going forward, we plan to invest Rs 700- 750 crores to establish 175 - 250 new restaurants within 3-5 years. We will continue to increase our retail footprint and fortify our presence in both existing and new markets (60:40) and 80 percent of our capital will be deployed into building more restaurants. We plan to double the base of 89 McCafé in the next 12-18 months.
What was Mc Donald’s revenue for the last fiscal?
We have had revenue growth of 12.1 percent year-over-year to Rs 856.8 crore along with riding the strong performance of the subsidiary Hardcastle Restaurants Private Limited (HRPL). Our performance in the second half of the fiscal year 2016 was better than in the first half. Despite a challenging market environment we recorded the highest level of positive comparable sales of 8.4 percent after 13 quarters.