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A big bite

The Rs 7000 crore fast food industry is set to see humongus change. Amit Jatia, Vice Chairman, Hardcastle Restaurants (HRPL), whose company operates and manages McDonalds restaurants in the West and South region of India, talks on these.

IE: How did you venture into Indian market and what’s your experience so far?

Amit Jatia(AJ): McDonald’s set up operations in India in 1996 through a JV partnership with two locally based companies that had sound knowledge and understanding of the regional markets. HRPL operates and manages all McDonalds India restaurants in the West and South while Connaught Plaza Restaurants Pvt Ltd managed by Vikram Bakshi operates McDonalds India restaurants in the North and East.

When McDonalds entered the market 15 years ago, the supply chain infrastructure, quality food suppliers and the retail environment was seriously under-developed.  Developing this area was important as this formed the base of our business. McDonalds team spent six years to set up a food supply chain in India. McDonald’s India pioneered the cold chain management system in the country.  


IE: What are the changes that you have witnessed in consumer behaviour during the past ten years?

AJ: For a nation that is particular about its food and significantly fond of home cooked and fresh food, the trend of dining out reflects the globalisation of India. In five years, the incidence of eating out has more than doubled and propelled the overall demand for food services in the country. Today, there is an increasing number of people eating out (from 3 times a month a few years back to eating out approximately 7 times a month today). The industry offers major opportunities to the players to capture a larger consumer base. This increasing affluence and exposure of consumers and their drive to experiment, along with the emergence of various domestic and international brands will continue to drive growth of the food services industry.


IE: Please elucidate on your supply chain.

AJ: While the supply chain of McDonald’s at first glance appears simple, its diverse components are both critical and multi-layered. A detailed methodology has been put in place that ensures that each component of the system works seamlessly with the others. The McDonald’s supply chain is a complex web of direct and indirect suppliers. We manage this complex system by working with direct suppliers who share our values and vision for sustainable supply and clear standards for quality, safety and efficiency and extend it to their suppliers. We envision a supply chain that profitably yields high-quality, safe products without supply interruption. The supply-chain of the fast food chain is in effect a hub-and-spoke model because the DCs act as hubs. The transportation of McDonald’s has been completely outsourced and since 80 per cent is refrigerated truck movement, the company has a dedicated fleet, which transports their goods.


IE: Please elucidate on the efforts taken to localise and to keep in tune with the general public.

AJ: When McDonald’s decided to launch in India, the biggest challenge was to be able to cater to the local tastes and preferences, while maintaining its global USP of Quality, Service, Cleanliness & Value(QSC&V) and sustain the image of a ‘Family Restaurant’. At McDonald’s, the customer is key to everything that we do and to suit the Indian palate we developed a menu which is unique to India with vegetarian selections. Care was also taken to ensure that our vegetarian menu is 100 per cent eggless.


IE: In three years, where do you foresee the Indian Fast Food market?

AJ: According to a Euromonitor report, the Indian eating out industry is estimated to be $64 billion. The organised QSR segment accounts for nearly $ 13 billion and is growing at a rapid scale of 25-30 per cent annually. The factors propelling this buoyancy are the changing economic and demographic profiles of consumers in India. Middle class has higher disposable incomes and greater exposure to multiple cuisines.

    

IE: The CRISIL report states that Indian Fast Food market will reach Rs 70 billion by 2015-16. Your comments?

AJ: We continue to see substantial long-term opportunities for McDonald’s and remain confident in the underlying strength, displaying the soundness and diversity of our business model.

We have a plan to invest more than Rs 500 crore for developing our business in the next 3 years. We plan to aggressively increase our retail footprint to fortify our presence in the existing market and enter into newer markets. 75-100 new restaurants will be opened by FY15. We will make full-scale deployment on brand extensions such as McCafe, McDelivery, Drive Thrus, Kiosks and 24x7 operations as also focus on re-imaging McDonald’s restaurants with fresh and contemporary designs to enhance customer experience and brand relevance. 

 

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