McDonald And Other International Brands Struggle In India

The fast food chain should come up with reinventions to have firm hold of the region.

Growth requires innovative steps and this is what McDonald Corp. had to do this year in India. The Golden Arches had to change its decades old recipe of the signature two-patty chicken burger. The change was inevitable in light of the company’s battle against the slumping sales.

Back in January, the Oakbrook, Illinois based fast food titan revamped the Indian Big Mac which is now dubbed as MaharajaMac, the burger had been the best sellers for as long as 20 years. The recipe change resulted in thicker chicken patties along with the addition of jalapenos and a habanero sauce. Moreover, the first ever meatless Big Mac also made a debut for the vegetarian consumers of India whose patties are made using cheese and corns.

The Vice Chairman of Westlife Development Ltd. which has the charge to run the Golden Arches outlets in southern and western India, Amit Jatia expressed, “Everyone needs to reinvent to stay relevant.” He also added that even though to perform outclass in the market is tough however initiatives can still be taken to go ahead.

What once was the hot spot for the fast food chains has now hit a wall at a lot of international established brands including KFC, McDonald’s, and Pizza Hut. This has brought down the hopes the brands have that the region will offset the declining growth in China and the West.

Although, generally, the market for eating out is expected to spread out however the rate of growth is at a snail’s pace. Moreover, once the pioneer in India, the international chains are not hoping for significance expansion. The London based market research firm, Euromonitor International had projected the India’s food-service industry sales to be around $116 billion –US equivalent of Indian 8 trillion rupees. In comparison to last year, this estimate has gone up by 11%. It is noteworthy, that in 2008, the industry grew by 16%.

The fast food giant moved in India around 15 years ago and now they are struggling to bring appropriate changes which can avert the possibility of the demand implosion due to which companies like Yum Brands Inc. which controls the popular brands like KFC, Taco Bell, and Pizza Hut to reconsider the China’s investment.

Major initiative has to be taken by the market leaders to bring the companies on the expansion trail. Mr. Jatia, therefore, has decided to double the store count of the McDonald’s in the upcoming three to five years reaching at the figure of around 400. Similarly, Domino’s looks forward to make around 150 new stores every year. Whereas Pizza Hut parent Yum envisions taking the store count to two thousand by the year 2020.

The major obstacles on the way of the companies’ growth are the poverty level of India as hundreds of millions of Indians are compelled to live below the international poverty line of $1.90 per day due to which the consumption of fast food is luxurious for an ample amount of majority.

One of the representatives of Pizza Hut said: “These are difficult times. People with staying power will withstand the short-term pressures. The ones who don’t will have to shut shop.”