McDonald’s Vision 2022 aims to increase the brand McDonald’s revenues and market share to regain the number one position in the Indian QSR sector.
McDonalds’ India: pre-launch years (1990-1996)
During these years, McDonald’s India started working on building relationship with their suppliers and on development of cold chain. Approximately INR 450 crores was invested over the span of six years to build the cold chain. This chain enabled McDonald to have most efficient farm-to-fork models in the food consumption space. The company refrained from serving products such as beef in India and customized it as per Indian foods. They also thought of Indian culture and further segregated food into veg and non veg compartments everywhere whether it was in transportation or processing centers or in kitchens.
McDonald’s – the India brand (1997-2002)
McDonald followed the philosophy of “Think Global, Act Local and Sell like a Retailer” and focused on gaining acceptability in Indian Market. In 1998, a special team for development of Menu was formed which customized the menu to Indian taste, affordability so that it could cater to large number of people. McDonald wanted to see itself as a family restaurant so it barred smoking and alcohol. It also introduced “Happy Meal” which was a huge success. This led to instant growth of McDonalds as it became hub of children’s birthday parties. Drive through was also introduced in 2001 along with food whose value was below one dollar. This led to increase in sale of McDonald products.
The growth years (2003-2011)
Now that the base was ready for McDonald, they wanted to focus on growth. They believed in “value for money” product menu, accessible food and longer working hours. They also increased the varieties of food product from time to time and introduced relevant menus like premium burgers, limited time offers, everyday value products and all-time favourite products.
By 2004, new functions like McCafé, dessert kiosks and McDelivery were also introduced which created a brand differentiated portfolio. Delivery time was bought down to 29 minutes which was an operational excellence. By 2010, breakfast menu was also launched in some parts of the country which aimed at all day dining service as well as new range of food products. It also started to focus on making food healthier by decreasing the oil content by 25 per cent. Now the brand was not the kids brand but also a place for young adults to hangout.
Accelerated Operations (2012-mid-2017)
McDonald had become a household name by 2012. Everyone was comfortable with eating fast foods like burgers and fries alike Indian food. The restaurant operating margins as a per cent of total revenues stood at 12.5 per cent in 2013-2014 as compared with 14.2 per cent in 2012-2013. At the same time the frequency of eating out had not increased. McDonald’s website was launched in 2013 followed by the mobile app in 2014. This led to further increase in sale. McCafé was also introduced in 2013 in which INR 3 – 3.5 million per store was invested. The fact that margins on beverages were higher helped enhance the restaurant operating margins. In 2015, they relaunched the fast-food chain’s most expensive burger in India, the Maharaja Mac, priced between INR 176 and INR 194.
In 2015, McDonalds bettered their delivery applications by adopting more advanced UI and then in 2016, they launched the Restaurant Operating System 2.0, a model to reduce the cost of opening and operating new stores by 20-30 per cent. A new breakfast menu was again introduced in 2017 seeing the footfall. It was an amalgamation and blend between the classic continental and Indian offerings with an intention to lure consumers early in the day with new food variety, of which some were available only in the mornings. New adjustments were made to satisfy the new health conscious consumers.
The Way Forward
The obstacle that McDonald is currently facing that how could it recapture its number one position in Indian QSR segment. They have to overcome the increasing competition, their main competitor being the techie “food aggregators”. To address this issue, they started partnership with food aggregators such as Zomato and Swiggy. But this led to less profitability as the commissions are too high.
Now, McDonald believes that they can increase their growth by increasing their customer satisfaction and number of chains. To address service excellence and customer experience, in January 2017 they had opened “Experience of the Future” (EOFT) format store in an upscale locality of Mumbai. The main aim is to redefine all the customer experience touch-points, thereby enhancing the format relevance. This format leveraged technology to enhance the in-restaurant capabilities, accelerate service, quality, convenience and value and give the customer a new and world-class “experience”. Customers did not have to queue at the ordering counter but could use an electronic self-ordering kiosk; and have the option of paying digitally or by cash; and get the food delivered to their table.
McDonald plans to open such EOFT format outlets in other Indian cities over the next 2-3 years. The aim is to have 20 per cent of its outlets as EOFT outlets by end of 2020.