McDonald’s has been a big contributor in the revolution of India’s fast food industry by serving well-priced, high-quality, value-oriented products quickly and efficiently. In the view of industry experts, the key reason for its success was the ability to adapt to local tastes by reshaping its menu according to the preferences of Indian customers.
In the recent past, the company had been in news for the conflicts related to its franchisee in the northern and eastern parts of the country. The factors that led to this situation are:
1) Its long-running dispute with its franchisee, CPRL. It led to the closure of a number of McDonald’s outlets which impacted its visibility in the market. The statements made by Bakshi about the quality of the food served in the outlets and the NCLT ruling in his favour also impacted the company’s brand image significantly.
2) McDonald’s warning its customers that they could face a serious health hazard by eating at the unauthorised McDonald’s outlets operated by CPRL was no less than a suicidal statement. It was almost like an owner of the store warning its customers against the store’s own products.
3) Another factor that led to this situation is the competitors taking advantage of the above situations and gaining market share. Companies like Dominos and KFC began offering customers exciting meals that led to a greater loss of market share by McDonald’s.
An emerging market like India is not only hyper price-sensitive but also largely driven by values and perceptions. Of late, the overall brand image of McDonald’s has been tarnished and the impact is manifold.
1) The recent controversy of halal v/s jhatka meat has led to an overall distrust among the consumers and the hashtag #BoycottMcD is further spreading the negative waves.
2) Even after providing a customised menu, McDonald’s has to compete heavily with regional food stalls in terms of price and taste.
3) Despite including healthy meal options in the menu, McDonald’s is still perceived as a food joint that enables expanding obesity.
In order to revive its brand awareness, bring back customers and develop a successful franchising strategy in the North and East of the country McDonald’s should take these factors into consideration:
1) Visibility
As the outlets are have been closed for quite some time now, the company should try and increase its visibility in the market. By adapting a pay per click and search engine optimisation approach, McDonald’s India can make its presence felt on the Web. Active Web handles such as Twitter, Instagram, Facebook, along with promotional events like posting a selfie with the happy meal, My Burger Story, and similar initiatives, could also be developed.
2) Connect
McDonald’s should try to develop a connect with the society so as to reappear and regain its position as a family restaurant in the Indian community. Simple initiatives like joining hands with orphanages, and highlighting the power of nostalgia by bringing back the “toys are for kids of all ages” kinds of campaign should be undertaken.
3) Diversification
Since the Indian palate is highly diverse, McDonald’s should try and cater to regional flavours by customising recipes. The company should also focus on capturing the health-conscious market and diversify their food products by catering to “organic food customers” and by serving allergen-free items without gluten, lactose etc.
4) Expansion
For further expansion McDonald’s in India, VRIO framework should be applied.
5) Pricing
McDonald’s should continue to provide budget-friendly meals along with combos. They should invest more in creating technology people-friendly outlets with digitalised kiosks to place and deliver orders, separate takeaway sections, and engaging customers while the food is being prepared. The company should extensively promote its online delivery mechanism and forge strong tie-ups with Zomato, Swiggy, Uber Eats etc.
We see in the case that the company terminated the contract with CPRL because it felt that Vikram Bakshi was not devoting the required time to the company. Bakshi was seen to be taking up the role of director of many companies at once and hence was not doing justice to any company. Therefore, McDonald’s in order to make sure that the next franchisee owner does not do the same thing and does not use the stake of the company to take money from the bank and invest it in some other business, should add certain clauses to the contract with the franchisee. These clauses can be as follows:
1) The owner of the franchisee cannot take up the role of director in any other company. He has to devote his entire time to the business of McDonalds India.
2) The owner cannot use the stake of the company to raise money for personal use. The permission of the board is required for the same.
McDonalds should also make sure that there is a particular department to handle the social media handle of the company. The recent halal meat issue, discussed widely on Twitter, and the way the company handled the issue, shows that the social media handle of the company is immature and needs to be developed considerably.
In order to focus on long-term growth McDonald’s should follow a DMADV approach, explained in the graphic below.
(The Third Runners-Up are doing their Second Year PGDM at TA Pai Management Institute, Manipal.)