Coffee with BS: Amit Jatia

Still Lovin' It

The boyish charm and plain speak sets at rest any suspicions about his alleged culpability in the current no-holds-barred battle raging between McDonald's Corp and Vikram Bakshi, Big Mac's joint-venture partner for North & East India. Over coffee at Oberoi Delhi's Belvedere I try, twice, to get the 46-year-old Amit Jatia to speak on the controversy. Instead, all I get is a disarming I-got-nothing-to-do-with-it kind of smile and officialese; "It's not my issue to comment on. It's their [McDonald's and Connaught Plaza] internal matter."

Realising that he has come prepared to stone-wall this query, I move on. So how does he see the current downturn, where even the business he runs - over 170 McDonald's restaurants in West and South of the country - witnessed falling footfalls and dip in profits for the quarter ending September? On this one, Jatia opens up. He is candid that the business indeed is facing its toughest time of the last decade. Same store sales, a measure of retail health, is down around six per cent, admits Jatia. And that for all the talk of the economy and the consumer sentiment bottoming out, he hasn't felt the spring, yet! "We'll be the first one to know as we are in direct touch with consumers," he adds.

So why are they not coming to the golden arches? Bored with burgers, I dare to ask. Jatia, like all aggressive marketers, is quick to dismiss the perception forthwith. "Burgers, as a category within eating out, is too small to be impacted yet. I believe we're at the start of the quick service restaurant [QSR] cycle in India, with the incidence of eating out, even in a big city like Mumbai at just nine times a month." And few tough quarters in a 10-year cycle is okay in any business, he suggests. "Ours is an impulse business, and if the consumer decides to skip that movie or shopping outing, we too feel the pinch," he adds.

But why such profit decline, 88 per cent for the quarter ending September? Jatia is tentative here though he tries to explain how it takes three to five years for a restaurant to stabilise and almost half of his restaurants are under that age, and how this is investment time for the business, with focus on the breakfast menu, home delivery and a new to India beverage line in McCafe.

Our cappuccino is served and I nibble a cookie and decide to wade into family history. So how did the family come into wealth? After all, the Jatias weren't really into big bracket businesses in the past. Hailing from Bishau in Rajasthan, it turns out that the Jatias made their fortune in trading in Burma, now Myanmar, before relocating to Mumbai in the 1960s once the junta made things difficult for Indians there. The then united Jatia family dabbled in textiles, paper pulp, Kota stones and hard-board making. A family split in early 1990s landed Hardcastle Board with the lubricants business into the senior Jatia's lap. Amit, just back from America with a bachelors in business administration from the University of South California, dove into the family business.

So how did McDonald's happen? "We were looking at investing, and a family friend, adman Walter Saldhana, told us that McDonald's was looking for partners in India, and would we be interested," says Jatia. As staunch Marwari vegetarians, the family wasn't sure whether aligning with the world's biggest hamburger chain was the right thing to do. "But during our initial meetings, McDonald's was clear on separate kitchens for veg and non-veg, and beef and pork were a complete no-no in India," says Jatia on what won him over. Starting out as McDonald's equal joint-venture partner for West and South India in 1995, Jatia was elevated into a franchisee in 2010 and McDonald's Corp sold its stake in the JV to him to develop the market. Hardcastle Restaurants, Jatia's vehicle for the McDonald's business, is controlled by his listed firm Westlife.

Sensing that our interaction is getting too business focused, I try to digress. He looks fit for his age - a father of 20-something twin boys to boot. "Well, I used to play squash earlier, but nowadays I jog at the Mahalaxmi Race Course," he adds. Though he loves discovering new places, he's a self-styled city boy. "I like the hustle bustle of a city, great restaurants, good night life." So where is he headed next? "Looking forward to the World Cup Football in Brazil next year," pat comes the reply.

He's been with McDonald's for nearly two decades now, and says he's given it all he had during the time. He may have run the business well, impressed the Oakbrook-based $ 27.6 billion giant to reward him with the franchisee for half of India, but deep down does he ever miss building a brand of his own? True to form, Jatia skirts the question, and instead launches, yet again, into a tirade. "I have a 20-plus-10 year franchisee with them. I have seen third-generation franchisees in US and second in Philippines and Macau, so, if we do the right things with integrity, why should it not be the same here?" But will his sons like to continue in the business? "I have told them do what you will but make sure it serves the lifestyle you choose. I clearly see one of them taking on this legacy," Jatia sounds like a patriarch.

At under Rs 1,000 crore currently, what vision does Jatia have for Westlife, whose only business, ever, according to Jatia, will be McDonald's. "The QSR business is billions of dollars and thousands of restaurants in India is not unrealistic." Currently, the count of all McDonald's restaurants in the country will be under 300. In comparison, China has over 2,000 and Japan over 4,000. And, on an average the world's biggest hamburger chain serves 69 million customers a day. "I see no reason why we should not clock billion of dollars in sales in India." Sensing Jatia in an expansive mood, I slip in my McDonald's fight query one last time. If he's offered franchisee for whole of India, will he take it up? Jatia relapses into "no comment" mode.