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How McDonald's is combating slowdown through its expansive menu in India

"When we changed the conversation, we are realising there is nothing called a slowdown. Eating out has become a lifestyle," says Smita Jatia, MD, Westlife Development, which owns western and southern operations of McDonald's India

twitter-logo Ajita Shashidhar        Last Updated: February 12, 2020  | 22:19 IST
How McDonald's is combating slowdown through its expansive menu in India
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Every time the country has witnessed a slowdown, one of the most impacted categories are quick service restaurants. However, Westlife Development, which owns the western and southern operations of McDonald's India, says that it has mastered the recipe of countering slowdowns. Smita Jatia, MD, Westlife Development says that her company has given 18 quarters of consecutive same store sales growth (SSS), and even the average unit volume has grown substantially in the past few quarters. "We have not discounted. There is a 63 per cent increase in our average unit volume, which shows that we know how to swim and we also know how to dodge when a wave comes and yet come up on the surface."

The burger major's secret recipe of success in the past few years has been to look beyond burgers and create more occasions for consumers to visit its stores. The company, according to Jatia, has substantially widened it menu by focusing on its breakfast and snack menus as well as McCafe. It has till date rolled out 220 McCafes and Jatia claims that McDonald's is the second largest coffee player by units, even larger than Starbucks.

"For us the coffee occasion is an opportunity to attract a set of consumers who may not be coming to us. There may be two moms who want me-time and want to catch-up. They may not be frequenting McDonald's or they may be coming with their child. Now we are creating an occasion for this consumer to come and have coffee at McDonald's. Our cappuccino is priced lower than all our competitors," Jatia further explains.

The burger major has also been trying to generate footfalls into its stores for breakfast and with its round-the-clock snack menu. "We have changed our conversation. Earlier, it was all about educating a consumer what a burger was, today, it is all about making ourselves relevant to the millennial consumer by helping her ease her life by offering a healthy breakfast in the morning, a hot cup of coffee and snacks during the day, and also deliver a good meal that she could have with her family in the evening."

Jatia says that nobody in her organisation believes that there is a slowdown. "When we changed the conversation, we are realising there is nothing called a slowdown. Eating out has become a lifestyle. I don't see millennials stopping to eat out. They may stop themselves from buying a car or going for a holiday, but eating out hasn't stopped."

The company, claims Jatia, has also been focusing on cost-efficiency. "We have reduced our capex cost by 30 per cent. Every department has been set a target of taking away 10 per cent cost from the system. We have also introduced an energy management system where all our stores are being monitored remotely. They exactly know when a restaurant has to power up and power down."

The Rs 1,400-odd crore Westlife Development has set itself a target of clocking a revenue of Rs 2,500 crore by 2022. "Our same store sales will continue to be a consistent 7-8 per cent quarter on quarter. In the last two quarters we had a 200 basis point EBITDA improvement."

McDonald's India currently has over 300 restaurants and the plan is to have 400 restaurants, 350 McCafes and 350 delivery hubs by 2022.

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