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McDonald’s forays into the coffee shop market in India through McCafe

09 October, 2013

The world’s second-largest fast-food chain McDonald’s has launched  McCafe brand in India and aims to have 100-150 McCafe outlets in the country in three to five years. Hardcastle Restaurants PVT Ltd, a master franchisee for the south India operations of McDonald’s announced the launch of the first McCafe restaurant at the McDonald’s outlet in Mumbai on Wednesday. The Café will start functioning from October 14, it mentioned in a BSE disclosure. 

“We believe McCafe will drive our beverage and food business to unparalleled heights and solidify McDonald’s in the Indian QSR restaurant arena. We plan to launch 100-150 more McCafe outlets in three to five years across key trading areas in metro cities of west and south India,” said Amit Jatia, vice chairman, Westlife Development Ltd.

BL Jatia Group runs the master franchisee for the QSR chain McDonald’s in southern and western India under public-listed Westlife Development. A subsidiary of the firm, Hardcastle Restaurants runs the McDonald’s franchisee. Hardcastle Restaurants is one of the two franchisees for the McDonald’s chain in India. The Jatias had acquired their foreign partner in the JV, making it their own venture with a development licence agreement. The other unit, which runs McDonald’s restaurants in northern and eastern regions, was managed by former MD of McDonald’s in India, Vikram Bakshi. He headed Connaught Plaza Restaurants Pvt Ltd (CPRL), which is still a joint venture with McDonald’s.

“We see huge potential in the Indian marketplace. Customers have a strong taste for coffee in India; the speciality segment is growing and we really believe we have found a great place for us to be able to offer quality espresso coffee. We see an opportunity to continue expanding our beverage platform and efforts to gain a greater share of the very sizable beverage market,” said Jatia.

According to Technopak Advisors, the organised café market in India, which grew almost six s in the last five years to $230 million currently, is likely to hit $410 million by 2017.

Worldwide, McCafe operates within McDonald’s stores, with a separate section dedicated for itself. Typically, the seating and menu are different from that for McDonald’s.

A cappuccino at McCafe will starts at Rs 90. Globally, McDonald’s has 10,000 McCafe outlets, with the company deriving significant revenues from the business. Coffee will be the third line extension for McDonald’s in India after it added breakfast and dessert items in the last two years.

Hardcastle Restaurants has the sole responsibility to get McCafe into India as of now. This could also be because of the  disputes between Bakshi and McDonald’s Global. Bakshi had submitted a petition to the Company Law Board (CLB) against the American fast food chain last month.

The petition alleges that McDonald’s is trying to take over the control of the equal equity joint venture CPRL in a coercive manner, according to media reports. Bakshi has demanded CLB to allow him to have exclusive management and control of the company. 

Bakshi’s term as managing director in the firm expired on July 17, 2013. Now the firm is run by the board, which includes Bakshi besides other representatives of McDonald’s. Bakshi had said he is looking at a legal recourse.

(Edited by Joby Puthuparampil Johnson)


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McDonald’s forays into the coffee shop market in India through McCafe

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