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McDonald's Entry into India

© David H. Wells / Aurora Photos / Corbis

How McDonald’s broke into the lucrative Indian market.

In 1996, McDonald’s set up operations in India through a joint venture partnership with two local Indian companies—Hardcastle Restaurants Private Limited in the west and south region and Connaught Plaza Restaurants Private Limited in the north. Back then, the supply chain infrastructure, quality food suppliers and the retail environment as a whole were seriously underdeveloped, says Amit Jatia, vice chairman of McDonald’s India, West & South (HRPL). “Even prior to its entry into India, McDonald’s was committed to working with local suppliers and farmers to source all its requirements,” he says. “The company therefore spent six years and around $81.9 million to set up the food supply chain even before opening its first restaurant in the country.”

India, despite being the world’s second largest producer of food, loses nearly $9.1 billion worth of food produce due to wastage at various levels, especially the lack of proper infrastructure for storage and transportation, Jatia explains. “McDonald’s India has pioneered its unique cold chain management system that has been able to both cut down on its operational wastage and retain the freshness and nutritional value of raw and processed food products. This immensely benefited the farmers at one end and enabled customers to get the highest quality food products, absolutely fresh and at a great value.”

When the company entered India, it was quick to note that its biggest challenge would be to cater to the local tastes and preferences. In addition, most customers initially perceived McDonald’s to be an expensive restaurant that catered only to the youth. The challenge was to break that perception and gain acceptance as a family restaurant, which it did. “We made a commitment of not serving any beef or pork items to the customers, keeping in mind Indian sensitivities and our respect for them,” says Jatia. The company changed the global favorite—the Big Mac—to a chicken burger called the Maharaja Mac and started using eggless and completely vegetarian mayonnaise and cooking only in vegetable oil. It also introduced a uniquely Indian product—the McAloo Tikki—a first of its type in the McDonald’s system.

Jatia says that new businesses entering India need to remember that retail today has changed from selling a product or a service to selling a hope, an aspiration and, above all, an experience that a consumer would like to repeat. “As consumer behavior continues to evolve, so must the ways in which marketers and brands appeal to them.”

Mridu Khullar Relph is a freelance writer, based in Delhi. Her credits include Time magazine, The New York Times, the International Herald Tribune, GlobalPost, Elle (India edition), Ms. and The Christian Science Monitor.

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