McDonald's plans to franchise outlets

Hardcastle Restaurants Pvt Ltd, one of the two companies managing McDonald's India, plans to expanad its outlets through a franchisee model. It will first be introduced in Bangalore and later extended to other parts of south India.

"So far we have been operating only our own outlets. We now plan to open outlets in major cities through franchisees who will be connected with our cold supply chain. The first such franchisee model outlet will be opened in Bangalore in a couple of months. The concept may be introduced in other parts of southern India in the near future," said Amit Jatia, managing director of Hardcastle Restaurants.

The company, which owns 48 McDonald's outlets across the country including 10 in Mumbai, has decided to add 12 new restaurants by December, 2004. Of these, three restaurants will be opened in Gujarat and two in Mumbai.

"In the expansion strategy, we will be focusing more on opening new restaurants in Gujarat. We have two outlets, one in Ahmedabad and the other one was recently opened in Vadodara. We will be opening two more outlets in Ahmedabad while another one will be opened during the year in Vadodara. We are also surveying the potential in cities like Surat, Rajkot and Jamnagar and may, in the second phase of our expansion, open outlets in these cities too," Jatia said.

Pointing out that, besides southern India, McDonald's will focus on the markets in western India, Jatia said: "Though we feel that opening outlets in eastern India cities like Kolkata, Guwahati or Silliguri may bring us good revenue, because of the distance from the base of our supplies through the existing cold chain, it will be difficult for us to offer fresh products."

"Till we can open a new cold chain which may link eastern India with our supply base in Maharashtra, we are not interested in taking our products to Kolkata or any other eastern India cities," he added.

McDonald's sources food products from companies located near its stores. Its cold chains are located in northern India, western India and in Hyderabad.

"The fresh lettuce we serve with our products for customers in northern India are served by companies based in Delhi, Nainital and Ooty while we source our lettuce from Pune for western India. Similarly, we get fresh cheese from Dynamix Dairies in Baramati for western India outlets. We do not have a similar source for eastern India and fresh supplies may be difficult to get in this part of the country," added Jatia.