McDonalds to open 120 outlets in India

Fast-food chain, McDonalds, which serves five lakh people across India every day, plans to spend around Rs 400-500 crore (Rs 4-5 billion) over the next three-years to open 120 restaurants.

US-based McDonalds will set up 40 outlets ever year through its two equal joint ventures in the country -- Connaught Plaza Restaurant and Hardcastle Restaurants.

"McDonalds in India currently runs a total of 170 quick service restaurants. Between the two franchisees, we will be spending around Rs 400-500 crore (Rs 4-5 billion) over the next three years to open 120 outlets," Hardcastle Restaurants, managing director, Amit Jatia, told PTI.

While Delhi-based Connaught Plaza Restaurant operates 90-odd restaurants in the north and east of India, Mumbai-based Hardcastle Restaurants runs 78 outlets in the south and west.

The investment would be funded equally through debt and equity, Jatia said.

McDonalds serves 180-200 million people every year across India, which boils down to five lakh customers per day, he said.

"The food industry in India is very small. Informal eating out is a very small market, which shrank a bit in 2008 because of the recession, but there is enough room to grow," Jatia said.

McDonalds, too, had to bear the brunt of curtailed spending by consumers between September 2008 to March 2009.

"September (2009) same-store sales growth were closer to 20 per cent compared to single-digit growth last year," Jatia said.

The quick-service restaurant, which still has not broken-even in India, expects to start making profits in the next couple of years.

"We have always said we never make money. McDonalds took 14-years to break-even in Australia. In the UK, it took 12-years. We have been in India since 1996 and should break-even in a couple of years," Jatia said.

McDonalds India has introduced the 'extra value meal', which offers patrons meals at a price that is 25 per cent less than used to be.

"At a time when food prices are going through the roof, the 'extra value meals' are priced much lower. We manage to do this by working directly with the farmers. We have anticipated increased volumes of produce because we are pushing yield," Jatia said.

McDonalds sources 99 per cent of its products from within the country and has a strong backward integration right up to the farm level and a dedicated supply-chain.

The food retailer will also launch, across all restaurants, its 'breakfast meals' between 0700 hours and 1100 hours, which is presently available only at a few select outlets in the city.