Business Today

"We linked hikes to performance"

As a growth company, there was only that much you could do to squeeze wastage, expenditure and "must-dos" such as training.

Kushan Mitra | Print Edition: January 10, 2010

Everyone took tough decisions; what then did we do new? As a growth company, there was only that much you could do to squeeze wastage, expenditure and "must-dos" such as training. We took a call to not just stop new hiring but also to freeze salaries when we continued to grow.

One of the drivers behind these decisions which we took late last year was to make our organisation truly oriented towards great delivery. We achieved that by linking increments to performance and doing away with fixed increases. As we close the year, we see our employees, not just in the restaurants but also in the back-offices, going to walk away with an average of 17 per cent increments.

That was a big find, that one could move away completely from fixed 15-20 per cent salary increases. Still, we improved our bottomline 7.5 per cent and our outlets did not see any drops or flat samestore sales. Surprisingly, we realised that being a value brand, at a time when things are tough, helped us.

If we grew by 10 per cent last year, in this downturn year, same-store sales actually grew 14-15 per cent. We altered our menus, offering our customers more value choices to lure the "loyal" customer again and again. We found that this sort of customer who usually goes out four times a month only visited McDonald's twice, we wanted him or her in at least one more time; we were happy to eat into our margins.

We have added additional sales points—setting up kiosks by the street for people to buy ice-creams and beverages which gave us 7 per cent incremental sales. We expanded delivery in areas where we have sufficient penetration and that gave us 14 per cent incremental sales on a same-store basis. In Delhi, we are keeping some stores open till 1 a.m. and we have started a 24-hour drive-through at Manesar and Jalandhar as well as at New Delhi railway station. All of these add incremental sales with minimal additional cost.

— Vikram Bakshi, 54, Managing Director, McDonald's India (North and East)

As told to Kushan Mitra

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