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May 11, 2001
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Money > Business Headlines > Report May 11, 2001 |
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Big Mac getting bigger, to up investmentPartha Ghosh & Bhupesh Bhandari Big Mac is getting bigger. Buoyed by its growing popularity and soaring sales in India, despite recent controversies, the US fast food major McDonald's has charted out a major expansion plan for the country, which includes doubling its investment from Rs 4 to Rs 8 billion in the next two years and establishing 50 more restaurants. The move flies in the face of a growing controversy confronting Big Mac in the US and the Europe relating to the use of beef ingredients in its French fries, which has had reverberations in India with violent protests by religious organisations. A McDonald's spokesperson confirmed its plan to double investment from the existing Rs 4 billion made so far since its inception from 1996. "The investments will be used to increase the number of restaurants from 28 to 80 outlets in the next two years out of which 16 will be added this year," he said. McDonald's has so far proposed to invest Rs 1.11 billion as equity in India. Worldwide, McDonald's bottomline has been severely hit during the past year with sale of hamburgers being affected in key markets such as Latin America and Europe owing to the Mad Cow and Foot and Mouth cattle diseases. In a few other markets, franchise operations also reported declining returns. But in India, its story is one of a runaway success with annual growth of revenues of over 60 per cent. After its success in the north and western markets, McDonald's has now planned an entry into the southern markets this year, and the first outlet is expected to open shortly in Bangalore. The spokesperson said the fast food major has decided to open more outlets in smaller cities and towns with a large chunk with surveys showing a latent demand for the kind of food McDonald's sells. The brand equity and its recall value has also increased tremendously throughout the country. But Big Mac has to face some serious scrutiny despite its popularity. In Bombay, the Mumbai Municipal Corporation, together with the state health department, has picked up samples of the French fries for tests to check for any trace of beef and its report is being eagerly awaited. McDonald's, however, has already made a public statement that it does not use any beef ingredients in its food products in India. There is also more trouble for Ronald McDonald, the favourite icon of the fast food chain. According to McDonald's, a public interest litigation has been filed in Bombay seeking closure of McDonald's business and an immediate ban on the sale of French fries in their outlets in Bombay. The Bombay High Court which on Thursday heard the case decided not to grant an interim injunction on the PIL, but called the respondents to file their replies by June 21. Powered by YOU MAY ALSO WANT TO SEE:
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