McDonald’s, the largest restaurant chain in the world by revenue with presence in more than 100 countries, entered the Indian market in 1995. The company has 37,855 outlets across the world, serves 69 million (6.9 crores) customers daily and is the world’s second largest employer with 2.1 lakh employees. One of the most successful enterprises in the world, McDonald’s in on a downward spiral in India.
The company entered the Indian market in partnership with Vikram Bakshi led Connaught Plaza Restaurants in a 25-year deal. The company’s partnership with Bakshi met with many ups and downs and finally, the global food chain acquired full ownership of Connaught Plaza Restaurants. Bakshi had exclusive right over the north and east Indian businesses of McDonald’s and the tussle between them led to the downfall of the company’s business in India. Many of its outlets had been closed in the last few years.
Bakshi and McDonald’s ran the business in north and east India in 50:50 partnerships for almost one and a half decades when the first relationship turned sour. In 2008, the American food chain company tried to buy Bakshi’s 50 percent stake in the partnership firm. The relationship became bitter when in 2013, the company removed him from the Managing Director position of Connaught Plaza. In the same year, Domino’s took over McDonald’s as the largest food chain store in India. The battle between the owners and closure of a large number of outlets had led to a confidence crisis among employees.
Bakshi took the case to National Company Law Tribunal and it ruled in his favor. He was reinstated as MD of Connaught Plaza in 2017 and McDonald’s was banned from interfering in the company’s operations.
However, in the same year, McDonald’s accused him not non-payment of royalties and banned the partnership firm from using brand name, trademark, and recipes of the company. But Bakshi continued to run the 169 outlets in north and east India like before and this led to once again both parties landing in NCLT, NCLAT and Delhi High Court.
The company has been able to push Bakshi out this year and plans to open new outlets in a phased manner. Robert Hunghanfoo has been appointed as the new head of Connaught Plaza Restaurants. The outlets in north and east India has been closed for some time to “relook into the company’s protocols and employee training.” The two companies- RP-Sanjiv Goenka Group and Moon Beverages are in talks to be new domestic partners of McDonald’s.
India is among the fastest growing food markets in the world and the American giant is looking for a comeback. However, experts doubt that the comeback would be possible. “It is not easy for an FMCG brand to make a comeback if it has been out of consumer’s reckoning for some time,” said brand strategist and founder of brandbuilding.com, Ambi Parameswaran. “You cannot just bank on residual consumer salience to create new demand,” he added.
It will be interesting to see whether McDonald’s will be able to make a comeback like Nestle’s Maggi noodles or fails in revival attempts like Liril and Cinthol.