After consolidating its position in India since it opened its first store in 1996, McDonald's India is all set to make net profit this year and has lined up investments to the tune of Rs 400 crore (Rs 4 billion) for expansion in new cities.
"McDonald's has established itself as a respectable brand in the last few years and we will now be entering a new phase to establish a pan-India presence. For this, we will invest close to Rs 400 crore by 2006-end along with our suppliers," McDonald's India managing director and joint venture partner for North India Vikram Bakshi said.
McDonald's India is a locally-owned company, managed by two Indian joint venture partners. While restaurants in the Northern region are owned and managed by Bakshi under Connaught Plaza Restaurants, Amit Jatia has the JV for the Western region under Hardcastle Restaurants.
So far, the Indian venture has seen investments of Rs 800 crore (Rs 8 billion).
McDonald's currently has a total of 70 stores in India, apart from four express stores and six kiosks. "By end of 2006, we have planned to take the strength of full-menu restaurants to 100 while having 15 express stores and 18 kiosks," Bakshi said.
He said the investments will be made by both the joint venture partners as well as suppliers and partners of McDonald's India.
Bakshi said the Indian Quick Service Restaurant industry was growing at a rapid pace and McDonald's has planned to further consolidate its position.
"To leverage on this huge opportunity and establish ourselves as a volume-driven mass marketer, we are focusing on three key areas -- good quality product, affordability and increased penetration," Bakshi said.
The company has been aggressive on the price front from the very beginning and offers various combination of meals, including one priced as low as Rs 20. It had also taken competition head-on when it introduced a soft-serve cone for just Rs 7.
Bakshi said the new restaurants will be located in states like Uttar Pradesh, Uttaranchal, Punjab and Himachal Pradesh. Some of the non-metro towns, which are being targeted are Agra, Allahabad, Kanpur, Dehra Dun, Chandigarh and Shimla.
The company is also expanding presence on national highways, expressways, airports and railway stations.
Bakshi said McDonald's India had witnessed a continued growth at a CAGR of 38 per cent. "This year, we expect even higher growth at 50 per cent," he added.
"India has been somewhat different, rather experimental, market for McDonald's as it offers beef-less and pork-less menu for the first time. However, the numbers have been very encouraging and we are confident to post further growth," he said.
The uniqueness of the Indian market for McDonald's can be gauged by the fact that 70 per cent of the menu served in the country has been devised locally.
"Not only this, it has been so much of a success that many of the items we began here are now being exported abroad. This includes the McAloo Tikki burger which is exported to the Gulf region," Bakshi said.
