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RETAILING McIndia How combative pricing, a unique-to-the-world localisation strategy, and investments in the back-end have helped McDonald's make a rapid success of its fledgling fast-food empire in India. By Seema Shukla
It was 1994. Sanjiv Mediratta was in suburban London, trudging the streets of Southall, Ilford and Hounslow. Mediratta, McDonald's India's country quality assurance and product development manager, had a curious task. Shuttling from one McDonald's outlet to another, Mediratta was feeding the largely Asian population of these towns' veggie burgers. And checking how they responded to the first product that the Big M had developed for the Indian market. Remember, this was way back in 1994 and the American icon and the world's most famous purveyor of hamburgers, McDonald's, wouldn't open its first outlet in Delhi's Vasant Vihar till nearly two years later in October 1996. For the record, that veggie burger turned out to be a big hit in the Indian market. But what this anecdote underscores is the near religious commitment that McDonald's has taken to localisation of its strategy in India from the outset. Last September, during Navratras, when even normally non-vegetarian Hindus turn veggie with a vengeance, McDonald's promptly launched the Veg Surprise, a vegetable burger laced with Indian spices. And its normal menu includes adapted Indian food like Chatpaty potato wedges, mayonnaise laced with Indian mint chutney and even an aloo tikki burger. The Veg. Surprise, priced at just Rs 17, was part of McDonald's Shudh Shakahari offerings in the two religious months. With its price and relevance to the time of the year, it outdid expectations by selling 7.5 lakh burgers, between September 7 and October 31, 2001-40 per cent higher than what the company expected.
McDonald's has made a virtue out of the well-worn buzz phrase, 'think global, act local'. But cliché or not, whether it is for the products its restaurants sell, the supply chain it uses for its ingredients or the pricing strategy it adopts, the $40-billion US giant has made sure it has assiduously followed that strategy. Seven years into the Indian market, McDonald's has only 30 outlets in just two Indian cities-Mumbai and Delhi (each with a different local JV partner). Yet, from day one it has strived to integrate into the Indian ethos. Says Vikram Bakshi, managing director of McDonald's North India operations, which is a 50:50 JV between McDonald's International and Connaught Plaza Restaurants Pvt. Ltd: ''We do not want to be seen as an MNC. If we are to be successful, we have to have an acceptable face that attracts a larger portion of the population.'' Thus far, that's a strategy that seems to have worked. Although McDonald's is unwilling to divulge figures, the company's 30-outlet operation is estimated to have already notched up a turnover of Rs 100 crore (its total investments to date is Rs 450 crore). And although that's just a fraction of the estimated Rs 2,500-3,000 crore Quick Serve Restaurant business, it has fared far better than its peers. US major Tricon Resturants International's KFC chain, when it first entered the market in 1995, failed. And its second attempt now could take a leaf out of McDonald's 'glocal' strategy. Says Pankaj Batra, Marketing Director (Indian subcontinent), Tricon Restaurants International: ''We already have a lot of vegetarian products on the menu in Bangalore KFC and we are building up the menu further.'' Even McDonald's feisty Indian competitors admire the Big M's strategy. Says Gurreet Singh, General Manager, Nirulas Corner House: ''It is clearly working for the long haul in India. And, that is why for certain products they have been taking a hit in margins to get mass appeal. They are clearly playing a big stakes game here and investing big in the hope of future returns.'' Adds brand consultant Ramesh Jude Thomas, CEO, Equitor Consulting: ''It is clearly evident that McDonald's has been one of the classic, if rare, success stories of the MNC brigade in India. The success of McDonald's, has in fact, been their ability to integrate themselves into the attitude, behaviour and consumption habits of the Indian consumer.'' On its part, the company has made sure it walks the tightrope between its global and local mix. The international attributes associated with McDonald's: fun, quality, consistency, value, convenience, quick service and the USP of being a 'family restaurant' have been astutely followed. Says Amit Jatia, Western region JV partner and MD of Hardcastle Restaurants Private Ltd: ''We were clear from the start that we do not want to change what McDonald's stands for in India, but at the same time we had to be relevant to Indians.'' Thirty outlets, 3 crore customers and 4.3 crore burgers later, that strategy seems to be paying off. While competitors like Tricon's KFC and Domino's Pizza have had to shrink or shut down their outlets and branches in India, McDonald's has seen its customers grow. Explains Neeraj Garg, Manager, at Kearney: ''What is really big in India is the middle class. So, if products are not relevant to that group, which is the case for some of the other international chains, it makes no sense.'' 1 | 2 |
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