McDonald’s India West and South is expanding rapidly with the goal to launch 630 new restaurants over the next five years. The McCafé format and drive-throughs will propel this growth, says Akshay Jatia, executive director, Westlife Foodworld. Its wholly owned subsidiary Hardcastle Restaurants holds the master franchise for McDonald’s in western India and South India. In this interview to Geetika Srivastava he explains why there is no conflict in McDonald’s being both aspirational as well as value for money. Excerpts:
Has McDonald’s been late in entering the cafe space? How would you differentiate McCafés from other coffee chains?
As far as competition is concerned, McCafé stands for what the parent brand does — being value for money. So you have Mcdonald’s as a very strong brand with a strong customer pull. When people enter the chain they see a McCafé, which looks premium, and since they themselves look at coffee as a premium product, they want to try it. It is great handcrafted coffee available even in tier-II and tier-III cities, where retail coffee shops are not easily found.
So who is your ideal consumer? How has the rising health consciousness affected them?
Our target customer is anyone who associates with our value-for-money offering. Even though our country’s per capita GDP is low, it is growing. As it’s growing, disposable incomes are also rising. People are looking for new experiences at reasonable price points. We consider ourselves as an aspirational brand that is value for money.As far as health consciousness is concerned, we have acknowledged it recently but have been embracing it for a long time. We’ve been talking about how a lot of menu items are free from artificial colours and preservatives. We also provide calorie and allergen content on our McDelivery app as well as in our restaurants. We offer indulgence to our customers, but we also want to ensure that the food is nutritious and wholesome.
How has food inflation affected the business? McDonald’s had to drop tomatoes from its burgers some months back…
Food inflation has always been a reality for our business and has almost always been high in a country like India. We have always monitored the situation well and managed it to ensure that it doesn’t impact us. Even during the first quarter of this year, we delivered great gross margins despite high food inflation due to a strong supply chain, product mix strategy and cost optimisation.On the tomato crisis, there was no issue regarding tomatoes in our region or at our restaurants. It is a seasonal problem that crops up due to quality-related factors during the monsoon season. When we don’t have tomatoes in our burgers, it is only due to quality worries.
You’ve established the first 24×7 drive-through restaurant at the Mumbai airport. How feasible are drive-throughs in India?
Drive-throughs are already part of our strategy. Globally, McDonald’s has been a leader in drive-throughs. In most of our successful regions, drive-throughs constitute a large portion of sales as it is such a convenient way to grab a bite. We have about 70 drive-throughs in our region and we are seeing more adoption because of the need for convenience.Trends mostly flow from the West, and since the model has been so successful globally, it’s catching up in our country as well. It is a competitive advantage for us because we are the only brand that does drive-throughs at scale. The first 24×7 one has been opened in Mumbai outside the T2 airport to strengthen our commitment to offer convenience, value for money, and great experience to our customers. In the next 4-5 years, around 30% of our new restaurants will be drive-throughs.
Please take us through your expansion plans.
We have laid out a five-year vision where we plan to open almost double the number of restaurants from where we are today. We plan to have a total of 580-630 restaurants by 2027. We are a little underpenetrated in South India, and we will double down on our growth there as we have the right product-market fit and our brand relevance has really increased there. Tier-II and tier-III towns are also on our list and we have seen that our drive-through model works very well here. We will also expand our omnichannel format and launch loyalty programmes in a couple of months.
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