Case Study 11: Marketing of Services:

The McDonald’s Way

Rik Paul and Sanjit Kumar Roy

If you work just for money, you’ll never make it, but if you love
what you’re doing and you always put the customer first,
success will be yours.
—Ray Kroc, Founder, McDonald’s Corporation.

Introduction

For a lot of people, the name of McDonald’s instantly brings a smile. It is known
for its crispy burgers and its wide network of outlets. The company started its
business operations in India in 1996 as a 50:50 joint venture partnership between
the two businessmen Amit Jatia (Jatia)1 and Vikram Bakshi2 (Bakshi). India was a
challenging market, given local dietary preferences for vegetarian dishes. Tim
Fenton3 pointed out that India’s eat out market was about $128 billion a year
compared with $132 billion in China, but was growing faster than that of China.
Adding that McDonald’s India is planning to open 40 stores in the country soon,
Bakshi said, ‘‘Our comparable sales in metros have been nearly 20 % in 2010 and
as the fast food market continues to expand across the country and across various
consumer segments, there is tremendous scope for expansion [1]. With reference
to the age old saying ‘‘when in Rome, do as the Romans do’’ Bakshi also

1
Amit Jatia, the MD of Hardcastle Restaurants, joined the McDonald’s family as the youngest
JV Partner in 1995. He took hands on training for a year at McDonald’s in Jakarta (Indonesia) as
well as a degree in Hamburgerology from the Hamburger University, Oak Brook (Illinois, USA).
He was also nominated for ‘‘The Economic Times Awards for Corporate Excellence’’ as
‘‘Entrepreneur of the Year’’ in 2004 and 2005.
2
Vikram Bakshi became the MD, McDonald’s India (North and East) on September 28, 2006.
He was also nominated as the President of the National restaurant Association of India.
3
Tim Fenton was the president of Asia, Pacific, Middle East and Africa and was accountable for
the 38 countries and more than 8,200 McDonald’s restaurants in this region. He served as
president, East Division, for McDonald’s USA. He was responsible for more than 5,200
restaurants in the eastern United States, covering eight geographical regions in 21 states.

R. Paul (&)
IBS Hyderabad, Hyderabad, India
e-mail: rik.paul.iimt@gmail.com
S. K. Roy
Department of Marketing and Advertising, Coventry Business School, Coventry University,
Priory Street, Coventry CV1 5FB, UK

D. S. Mutum et al. (eds.), Marketing Cases from Emerging Markets, 99

DOI: 10.1007/978-3-642-36861-5_15, Ó Springer-Verlag Berlin Heidelberg 2014
100 R. Paul and S. K. Roy

commented on the USP of McDonald’s in India and the introduction of menu

dishes like McAloo Tikki Burger,4 Pizza McPuff,5 McVeggie6 keeping in view the
strong liking of north Indians towards spicy stuff [2].
From its India debut in 1996 with just one outlet at Basant Lok in Delhi,
McDonald’s had 211 restaurants in India by 2011, of which 105 were in North and East
India and 106 in West and South. Apart from the metros, McDonald’s also reached
rural areas as well, with 14 outlets in Haryana, 11 in Punjab and 28 in Uttar Pradesh [2].

The Fast Food Market in India

India, being a country of rich culture and heritage, its tradition is like a pearl
necklace where every beautifully white pearl expresses customs like respecting
elders, joint family tradition, and strong religious perspective that even extends to
their food habits and forms an extremely strong and integral part of their life.
Therefore Indian food completely differed from the food habits of the other people
of other origins. Indian people are mostly fond of their own regional Indian food
such as samosa,7 kababs,8 chola bhatura,9 pakoda,10 aloo-paratha,11 poori-bhaji,12

4
It is a vegetable burger, which includes a patty made out of potatoes, peas, and spices. It also
includes tomato slices, onions, and vegetarian mayonnaise.
5
It starts with a rectangular shaped crust, but instead of a creamy sauce, it is flavoured with a
tomato-based sauce and then is topped with carrots, beans, bell peppers, onions, peas and
mozzarella cheese.
6
It looks similar to McAloo Tikki Burger, but starts with the sesame seed bun. In between the
bread, there is a vegetarian patty made from peas, carrots, green beans, red bell pepper, potatoes,
onions, rice, and seasoning. It is garnished with lettuce, and has mayonnaise spread thickly on the
bread.
7
A samosa is a stuffed pastry and a popular snack in South and Southeast Asia. It generally
consists of a fried or baked triangular, semi-lunar or tetrahedral pastry shell with a savory filling,
which may include spiced potatoes, onions, peas, coriander, and lentils, or ground beef or
chicken.
8
Kababs are a wide variety of meat dishes originating in Persia and later on adopted by the
Middle East andTurkey, and now found worldwide.
9
Chole bhatura is a combination of spicy chick peas and fried bread called bhatura made of
flour.
10
Pakoda is a fried snack (fritter) found across South Asia. It is created by taking one or two
ingredients such as onion, eggplant, potato, spinach, plantain, cauliflower, tomato, chilli, or
occasionally bread or chicken and dipping them in a batter of gram flour and then deep-frying
them.
11
A paratha is an Indian flat-bread that originated in the Indian subcontinent. Parathas are
usually stuffed with vegetables such as boiled potatoes, leaf vegetables, radishes or cauliflower
and/or paneer (South Asian cheese). Aloo-paratha is the variety that is stuffed with boiled potato
and spices.
12
The bhaaji is a vegetarian dish made from a vegetable. A typical north Indian lunch or dinner
usually starts with Poori (flat bread), accompanied by one or more bhaaji(s).
Case Study 11: Marketing of Services: The McDonald’s Way 101

dosa,13 and sambar vada14 and these are available in both specialty and multi-
cuisine restaurants throughout India. Home cooked foods are not only a preference
but are also a matter of self esteem for most Indians. The Indian catering services
sector of which fast food is a part is estimated to be worth Rs.15 570 billion, of
which only Rs. 39.40 billion or 6.9 % is accounted for by the organized retail
market.16 While such restaurants were expensive, there was a large unorganized
sector consisting of roadside food vendors and dhabas17 which provided a wide
option for food within affordable price ranges. The local food business had their
own customers with distinct set of preferences [3]. There are 22,000 registered
restaurants in India. In addition, there are thousands of dhabas that sell a variety of
regional and regular foods in cities and on highways. Thus naturally it is a lot
tougher for the foreign food markets to survive in a country which is already
biased towards their own rich food habits and varieties. However, contrary to
expectations, the foreign food companies were welcomed into the periphery of the
Indian food circle and the problems that were considered fatal were erased and
foreign food products were rapidly accepted into the household of the Indians.
There was a sudden mushrooming of KFC, McDonald’s, Subway, Dominoes and
Pizza Hut outlets [4].
(Refer to Exhibit I for a brief profile of the major players in the Indian fast food
industry, Exhibit II for the percent share of the fast food market in India and
Exhibit III for percent share of fast food chains in India).
Organised food retailing in India had established north Indian and south Indian
style classic restaurants mostly in the metropolitan cities. The big Indian food
business companies were soon raging as they attempted to defend their strongholds
in the country.

13
Dosa is a fermented crepe or pancake made from rice batter and black lentils. It is indigenous
and is a staple dish in the southern Indian states of Andhra Pradesh, Karnataka, Kerala, and Tamil
Nadu.
14
Vada can vary in shape and size, but are usually either doughnut or disc shaped and are about
between 5 and 8 cm across. They are made from dal, lentil, gram flour or potato. Vadas are
preferably eaten freshly fried, while still hot and crunchy and is served with a variety of dip called
sambar.
15
Rs = Indian Rupee (s), Re. 1 = 100 paisa, In February 2011, US$1 = Rs. 45
(approximately).
16
V S Rama Rao, ‘‘Fast Food Retailing in India,’’ www.citeman.com, September 17, 2010.
17
In India, highways are dotted with local restaurants popularly known as dhabas (singular:
dhaba). They generally serve local cuisine. They are most commonly found next to petrol
stations, and are generally open 24 h a day.
102 R. Paul and S. K. Roy

Exhibit I Some Major Players in Indian Fast Food Industry

Company Profile
Domino’s Domino’s Pizza opened its first store in India in January 1996, at New Delhi. India
Pizza Retail Report 2009 indicated Domino’s as the largest Pizza chain in India and
the fastest growing multinational fast food chain between 2006–2007 and
2008–2009 in terms of number of stores. Over the period since 1996,
Domino’s Pizza India had focused on delivering great tasting pizzas and sides,
superior quality, exceptional customer service and value for money offerings.
Domino’s Pizza India had grown into a countrywide network of more than 300
stores with a team of over 9,000 people by 2011. They also had established a
reputation for being a home delivery specialist capable of delivering pizzas
within 30 min or else FREE to a community of loyal consumers from all our
stores around the country.
KFC KFC is the largest brand of Yum Restaurants, a company that owns other leading
brands like Pizza Hut, Taco Bell, A&W and Long John Silver. Renowned
worldwide for it’s finger licking good food, KFC offers its signature products
together with introduction of many specialized offerings for its growing
customer base in India. Its signature dishes include the ‘‘crispy outside, juicy
inside’’ Hot and Crispy Chicken, flavourful and juicy Original Recipe chicken,
the spicy, juicy & crunchy Zinger Burger, Toasted Twister, Chicken Bucket
and a host of beverages and desserts. For the vegetarians in India, KFC also
has great tasting vegetarian offerings that include the Veg Zinger and Veggie
Snacker. In India, KFC had grown rapidly and by 2011 it had presence in 21
cities with close to 107 restaurants.
Pizza Hut Pizza Hut is one of the flagship brands of Yum! Brands, Inc. Pizza Hut is said to
be the world’s largest pizza chain with over 12,500 restaurants across 91
countries. By 2011, in India, Pizza Hut had 140 restaurants across 34 cities,
including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Pune, and
Chandigarh amongst others. Yum! Also declared to be in the process of
opening Pizza Hut restaurants at many more locations to service a larger
customer base across the country.
Taco Bell The first Taco Bell in India was launched at Mantri Square Mall, Bangalore, in
March 2010. True to its brand promise of providing craveable tastes and
unbeatable value, Taco Bell offered a wide range of products to mesmerize the
Indian consumer. The menu in India included a variety of vegetarian and non
vegetarian Tacos, Burritos, Signature Quesadillas, Grilled Stuft Burritos,
Nachos, and other specialty items. Several combos to satisfy the craving for
Taco Bell food at lunch, snack and dinner were also offered. It also offered
unlimited refills on the entire Pepsi beverage range. Taco Bell focussed on a
unique dining experience with the vibrant restaurant ambience, dynamic, set of
activites, zest and contagious energy.
Nirula’s Nirula’s was India’s oldest fast food restaurant chain, based in north India and
most popular in Delhi. It started Delhi’s first fast food restaurant in Connaught
Place in 1977. In 2011 it had over 75 outlets in NCR Delhi, Punjab, Haryana,
Rajasthan, Madhya Pradesh and Uttar Pradesh states, which included family-
style restaurants. Nirula’s specialized in ‘‘Desi version’’ of western fast food as
well as offered Indian cuisine, casual dining, pastry shops and ice cream
parlours, and two hotels in Noida and Panipat. The company announced its
plans to venture into a large number of quick service restaurants in every
major city in India by the end of 2011. With an aggressive expansion strategy,
the organisation planned to have a national presence by opening 150 new units
in the next 2 years in high footfall locations.
(continued)
Case Study 11: Marketing of Services: The McDonald’s Way 103

Exhibit I (continued)
Company Profile
Subway Subway Systems India Pvt Ltd opened its very first restaurant in 2001 in New
Delhi and had swiftly grown its operations to 183 operating restaurants in 26
cities across India. Although it is a global brand with a menu that is relatively
the same around the world, Subway restaurants took great pride in honouring
and respecting local traditions and food preferences and had earned a
reputation for offering a healthier alternative to traditionally fatty and greasy
fast food. Subway restaurant’s in India served no beef or pork products and
had an expanded selection of vegetarian choices. Popular sandwiches, both
local and international favourites, included Veggie Patty, Paneer Tikka, Aloo
Patty, Chicken Meatball Marinara, Roasted Chicken, Chicken Teriyaki,
Turkey, and Tuna.
Haldiram’s Established in 1937 it took more than six decades for Haldiram’s to become the
leading manufacturer of Indian savoury snacks. Known for its unbeatable taste
in Mithais and Namkeen segment, Haldiram was an household name to urban
Indian consumers. Being a Rs. 1,200 crore company by 2011, Haldiram’s had
diversified to fast food industry with 28 restaurants in the domestic market
with an average size of 5,000 sq ft. the restaurants served assorted traditional
vegetarian recipes together with the availability of a wide selection of chats
and namkeens.
Bikanervala Bikanervala was one of India’s most prominent families in the business of
traditional hospitality products like Sweets and Namkeens. As of 2011
Bikanervala Foods Pvt. Ltd. was an ISO 9001:2000, HACCP and SQF
2000 cm certified company with four modern manufacturing units in the
National Capital Region and a chain of 88 outlets in India and abroad, serving
vegetarian north Indian, south Indian, continental, Chinese cuisine and fast
food along with a vast variety of traditional Indian sweets and snacks.
Sagar Ratna ‘Sagar Ratna’ is a well known brand of restaurant chain in northern India serving
vegetarian cuisine with a speciality in south Indian delicacies. As of 2011 the
company had more than 24 outlets and 29 franchisees and was still looking to
grow more in the near future.
Source Compiled from respective company websites

Exhibit II Percentage share of food market in India (2010), Source Technopak Advisors
104 R. Paul and S. K. Roy

Exhibit III Percentage share of fast food chains in India (2010), Source www.budding
markets.com

McDonald’s India Entry

Multinational company (MNC) restaurant chain owners had struggled consistently

to adapt to the needs of India’s many markets from their earliest investments in
India. Some even pulled out of the country after ventures that did not work out and
had failed miserably. However, consolidation of the hugely fragmented Indian
retail sector had also slowly begun, and there was a raw hesitation that Indians
would prefer the foreign foods like burgers and fries to local food offerings. When
McDonald’s India first launched in 1996, Indians in Mumbai and Delhi ate out
three to five times a month.
However, in the intervening decade, McDonald’s continued to open brand new
outlets in the country, and evolved their marketing strategies through their
impressive endeavours even though there were minor protests from existing political
parties [5]. After the first Indian McDonald’s outlet in Mumbai in 1996, outlets had
begun trading in metropolitan and Tier II towns across the country. By September
2008, it had premises in Mumbai, Bangalore, Baroda, Pune, Indore, Nasik, Chennai,
Hyderabad, Surat and Ahmedabad. ‘‘The past decade has witnessed a marked
change in Indian consumption patterns, especially in terms of food. Households in
middle, upper, and high-income categories now have higher disposable income per
member and a propensity to spend more,’’ said Amit Jatia in 2000. He further added
that ‘‘Our growth plan for the next 3 years is more a function of getting our logistics
and cold chain right rather than going too far off places [6].
By September 2008, McDonald’s had completed 12 years of its operations in
India and had its presence in Mumbai, Delhi, Bangalore, Chennai, Hyderabad,
Ahmedabad, Baroda, Nasik, Pune, Indore, Surat and other tier I and tier II cities
[7]. Meanwhile, there had been a significant increase in the Indian eating out habit.
Analysts expected the Indian quick service restaurant market to be US$6.3 billion
by 2011.
Case Study 11: Marketing of Services: The McDonald’s Way 105

Marketing Strategies

Promotional Campaigns

In 2000, McDonald’s India came out with their first television ad campaign. It
featured a child who suffers stage fright and is not able to recite a poem. On
entering McDonald’s, he properly recites it in the store’s familiar and easy envi-
ronment without any reluctance. A similar campaign featured a child and his
family moving into a new unknown place. The child misses his previous sur-
roundings until they see McDonald’s which provides something familiar and.18
Singhal said that the first TV commercial, Stage Fright, attempted to establish an
emotional connection between the (Indian) family and the brand together with the
aim of establishing McDonald’s as a familiar place. These storylines of the
campaigns were all supported by other creative initiatives. The company promoted
1 min service guarantee which attempted to reinforce its reputation for quick,
friendly and accurate service and it also ran in-store events for mothers and little
children.
K.V. Sridhar (Sridhar), National Creative Director, Leo Burnett,19 McDonald’s
agency in India, said ‘‘In the launch phase, the communication focused solely on
building brand and product relevance. The brand’s scores on relevance to families
and kids were very high.’’ Furthermore the introduction of the toys and other little
gimmicks that came along to with the meals appealed to the children and they all
craved for more [6].
In 2004, McDonald’s realized the strong potential in the youth audience, but
they considered McDonald’s to be expensive and pocket burning and were mainly
for children. Thus the Happy Price Menu with a value message for a younger
audience was launched and for the first time McDonald’s India saw an upsurge of
young people entering the restaurants [8].
In 2008, the latest impressive campaign from the McDonalds-Leo Burnett
stable used father-son duos from Bollywood20 to rejuvenate the theme of ‘‘Yes-
teryear’s Prices’’. It featured Bollywood stars from past decades along with their
sons with the message that prices of the fast food had not risen in line with the
onslaught of time [9].

18
‘‘The Burger Story’’ www.tonicpanel.com.
19
Leo Burnett Worldwide is an American advertising company, created in 1935 by Leo Burnett.
The company was opened in Chicago in 1935. In 1950 the company started its two first major
advertising projects, for Kellogg’s and P&G.
20
Bollywood is the informal term popularly used for the Hindi-language film industry based in
Mumbai, Maharashtra, India. The term is often incorrectly used to refer to the whole of Indian
cinema; it is only a part of the total Indian film industry, which includes several regional film
industries sorted by language.
106 R. Paul and S. K. Roy

McDonald’s has also explored strategic tie-ups with Indian sport events in the
country such as the IPL21 cricket tournament, where it was one of the events food
managers. Jatia remarked, ‘‘The eating out market in India is very large and has
huge potential fuelled by rising disposable incomes. There are many Indian and
international players who have entered in the market since the last decade and
unbranded food chains have also grown significantly. The Indian consumer has
seen value in what we have to offer at our restaurants which is a testament to our
model’’ [10].

Products, Pricing and Distribution

In the initial days, McDonald’s India made efforts to completely change Indian
consumers’ perceptions, which related it with being ‘foreign’ or often ‘American’.
Consumers typically had the feeling of ‘not knowing what to expect’ which made
India a more challenging market due to the local dietary preferences for nonmeat
dishes. India was the world’s vegetarian paradise with nearly one billion people
who eat meat only occasionally or never at all [11].
McDonald’s India thus invested time and effort to develop a customised menu
for India, a menu that reflected both the taste and beliefs of the natives. In the
words of Bakshi, ‘‘It really doesn’t make sense to sell beef in a country where
85 % of the population doesn’t eat it or will even shun a restaurant where beef is
served’’. The second largest community, the Muslims, did not eat pork. To
establish a market in India, McDonald’s managed to design a menu that included
only chicken, fish and mutton products he added. McDonald’s in India also
devised a comprehensive range of vegetarian products with the addition of Indian
spices as a large population in north India preferred Vedic style of eating, which
propagated vegetarian food [12].
McDonald’s used the most creative forms of innovations to make their efforts
palatable and catchy so that even the kids would love their endeavours. The names
of the Mac Burgers namely the Maharaja Mac had an Indian connotation, therefore
was more acceptable to the customers of the country. Jatia revealed that the
products like McAloo Tikki burger, Veg Pizza McPuff and Chicken McGrill
burger were formulated and introduced using spices favoured by Indians. He added
that the menu development team was responsible for special sauces which used
local spices that did not contain beef and pork. Other products too did not contain
eggs and were 100 % vegetarian. ‘‘The Indianised products have been so well
received that we even export McAloo Tikki burger and Veg. Pizza McPuff to the

21
The Indian Premier League (IPL) is a professional league for Twenty20 cricket competition in
India. It was initiated by the Board of Control for Cricket in India (BCCI) headquartered in
Mumbai, India.
Case Study 11: Marketing of Services: The McDonald’s Way 107

Middle East’’ exclaimed Jatia though certain flagship items like Mac Nuggets were
served both in US as well as in India [3].
Sridhar, remarked that, ‘‘When McDonald’s launched we took a conscious call
of not introducing any beef or pork in our products. Thus, when controversies
around McDonald’s products started during the early and growth stages of the
Indian business, we reacted quickly. We educated our customers about the build of
our products and did extensive kitchen tours for our customers. We showed them
how we use separate vegetarian and non-vegetarian platforms for cooking—a first
in any market for McDonald’s [13].
McDonald’s kept the prices of its products low which was made possible by as
a result of its strategies like bulk buying, manufacturing efficiencies and long-term
vendor contracts. In 2004, McDonald’s India launched the ‘‘Happy Price Menu’’
under which products were priced as low as Rs. 20 [13]. For their individual
products they adopted value pricing strategies and went for bundling strategies for
the combo meals which typically consisted of a burger, french fries and coke.
Apart from typical first food restaurant set ups all across India, McDonald’ also
launched home delivery services. ‘‘The key idea is convenience. We are a quick
service restaurant available at high-traffic locations. But there is a large number of
people who find it difficult to travel. By offering home delivery we can reach out to
them and increase our penetration,’’ said Jatia. There were no restrictions on the
minimum order for home delivery, but a flat fee of Rs. 10 was charged per order as
delivery charges, irrespective of the size of the order, Jatia added [14]. McDon-
ald’s India also started a single nationwide McDelivery no: 66-000-666, in an
effort to upgrade its home delivery service [15].
McDonald’s wanted to be recognised as ‘Indian’ and a promoter of ‘family
values and culture’, and as being ‘comfortable and easy’. Operationally, it was
committed to maintaining a good quality service, cleanliness and offering com-
plete value for money.

Intensifying Competition

Assocham22 reports that the consumer spending on processed food in India

increased at an average rate of 7.6 % annually from 2008 to 2010 and this was
expected to rise at an average of around 8.6 % until 2012. The report also indi-
cated the major shift in food habits in metropolitan cities was about 86 % of
respondent households preferring to have instant food due to steep rise in dual-
income levels, standard of living, convenience and influence of Western countries.
Mona Sharma, a 24 years old BPO employee, remarked that due to odd working

22
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) is the umbrella
body of chambers of commerce in India. The organisation represents the interests of trade and
commerce in India, and interacting with the Government of India on policy issues, and liaisoning
with their international counterparts to promote trade between India and other nations.
108 R. Paul and S. K. Roy

hours and work pressure it was very difficult to get out and eat. ‘‘We normally
place group orders from our office to outlets which serve ‘ready to eat’ food like
burger and pizzas. It saves our working time,’’ she added [1].
Sales at fast-food chains were growing at a rate of 28 % in India. As a result,
American fast-food companies voraciously tried to expand their markets. Ajay
Kaul, CEO of Jubilant Food Works, the master franchise for Domino’s Pizza in
India expressed his desire to open more than 60 new outlets every year. At a
growth rate of nearly 42 % for the last 5 years, the India operations of Domino’s
Pizza was its fastest in the world. At the opening of its 300th outlet in Delhi,
Patrick Doyle, the global CEO of Domino’s Pizza Inc, remarked, ‘‘Our teams in
India and Louisiana, USA, are two of the largest and best franchisees [16].
The Food Franchising Report23 2009 depicted that the eating out market is on an
upswing in India due to the rising number of working women and nuclear house-
holds, and an increase in general affluence which in turn have led to higher dis-
cretionary spending on food. The report also points out that, 30 % of working singles
ate out at least once a month, with a majority of them spending at least Rs. 101–150
per outing. On similar note Technopak Advisors24 reported the spending on eating
out at 11 % to be the second only to groceries for Indian households and urban
Indians had repast outdoor eating six times a month compared to 2.7 times in 2003.
Thus, whether it was multinational chains like McDonald’s, Pizza Hut, KFC or
indigenous ones like Sagar Ratna,25 Yo! China,26 Haldiram’s,27 Bikanervala28 or
Nirula’s,29 they were all participants in the expansion game. Yum! Brand, owner
of the KFC and Pizza Hut, planned to add 15 and 20 outlets respectively in the
year 2010 [16]. Nirula’s which already had 80 outlets (company owned and
franchised) in 7 cities across Delhi, Uttar Pradesh, Uttaranchal, Haryana, Rajas-
than and Punjab planned to open 70 more till 2012 [2]. Sagar Ratna planned 35
new outlets by December, 2011. Bikanervala and Haldiram’s too announced their
expansion plans of four to five new outlets every year. ‘‘An Indian is only

23
India’s first Food Franchising Report by Franchise India and CIFTI-FICCI. The primary
objective of the report is to provide a snapshot of current trends in Food Franchising vis-a-vis
expert analysis of various elements having implications on it.
24
Established in 1991 by Arvind Singhal, Technopak Advisors is a Management Consulting
firm in India, offering strategic advice, start up assistance, performance enhancement impetus,
consumer insights and capital advisory to Indian and International companies.
25
Sagar Ratna is a well known brand of restaurant chain in northern India serving vegetarian
cuisine with a speciality in south Indian delicacies.
26
Yo! China is India’s first and largest chain offering Indian Chinese cuisine in almost all
corners of the country. It offers a trendy casual dining atmosphere and has 43 points of presence
in trendy locations across India.
27
Haldiram’s is one of India’s largest sweets and snacks manufacturers, based in Delhi, India.
28
Bikanervala is a chain of traditional restaurant in India which specializes in ethnic Indian food
specially sweets and snacks.
29
Nirula’s is India’s oldest fast food restaurant chain, based in North India and most popular in
NCR Delhi. It specialized in ‘‘Desi (local) version’’ of western fast food as well as offered Indian
cuisine and casual dining.
Case Study 11: Marketing of Services: The McDonald’s Way 109

ultimately satisfied by desi food, no matter how many pizzas or burgers he eats.’’
commented Shyam Sunder Aggarwal, MD, Bikanervala [16]. Even traditional
entities like the Bangalore based MTR Restaurant30 and the Chennai based
Murugan Idli Shop31 (MIS) were looking at Delhi and Mumbai, ‘‘for the first time
in 80 years’’, according to Hemamalini Maiya, managing partner, MTR
Restaurants.
The scramble by global food companies into India’s fast food sector intensified
as several U.S. chains announced their plans to enter the country, in the hope of
tapping the surging spending power in Asia’s third largest economy. William
Edwards (Edwards), chief executive of EGS, which handled Denny’s Corp’s32
international expansion announced the plans to make an Indian foray in 2012, and
their constant effort to set up a supply chain network that would help them cus-
tomise the offering to suit local palates with menus stripped free of beef and pork
but focused on fish and vegetarian dishes instead. ‘‘In India we are planning to
have regional licensees with 10, 25 or 50 units,’’ Edwards said, adding that every
10 units required an investment of about $5 million. Pollo Tropical of Carrols
Restaurant,33 known for Caribbean flavored chicken, Applebee’s and Johnny
Rockets,34 known for its hamburgers, were also looking to cash into the Indian
quick service restaurant market worth $13 billion. Others wanting a foothold
included Wendy’s,35 Arby’s International,36 CKE Restaurants with Carl’s Jr37 and

30
Mavalli Tiffin Room (commonly known as MTR) is the brand name of a food related
enterprise located in India. It is famous for the MTR restaurant located on the Lal Bagh Road in
Bangalore and also for the pre-packed food articles which are sold in packets having the MTR
brand. MTR also claims to be the inventor of the popular South-Indian breakfast item, Rava idli.
31
Murugan idli shop is considered among the best to taste South Indian dishes. Idly, Dosai and
Meals are enjoying the prominent positions among the menu of a south Indian.
32
Denny’s Corp is a full-service coffee shop/family restaurant chain. It operates over 1,500
restaurants in the United States. Denny’s is known for always being open, serving breakfast,
lunch, dinner, and dessert around the clock. .
33
Pollo Tropical is a fast food restaurant chain specializing in the Floribbean cuisine of South
Florida (a fusion of Florida cuisine and Caribbean food). Pollo Tropical is owned and operated by
Carrols Corporation. The chain has its headquarters in Kendall, unincorporated Miami-Dade
County, Florida.
34
Johnny Rockets is an American restaurant franchise whose concept is to create a classic
American restaurant atmosphere. The theme is the diner-style restaurant that had become a
common sight by the 1950s.
35
Wendy’s Old Fashioned Hamburgers is an international fast food chain restaurant founded by
Dave Thomas. As of March 2010, Wendy’s was the world’s third largest hamburger fast food
chain with approximately 6,650 locations.
36
Arby’s is a fast food restaurant chain in the United States and Canada that is a wholly owned
subsidiary of Wendy’s/Arby’s Group. It is primarily known for selling roast beef sandwiches and
curly fries. The company’s target market attempts to be more adult-oriented than other fast food
restaurants.
37
CKE Restaurants, Inc. is the parent company of the Carl’s Jr., Hardee’s, Green Burrito, and
Red Burrito restaurant chains.
110 R. Paul and S. K. Roy

Focus Brands with Schlotzsky’s Deli,38 all known for sandwiches and burgers.
BannaStrow’s Crepes and Coffee,39 Moe’s Southwest Grill40 and Carvel Ice
Cream41 were also in line [19]. President of Franchise India, Gaurav Marya,
comments that ‘‘India is the biggest consumption market in the world. Even chains
like Dunkin’ Donuts,42 Popeyes Chicken,43 Pizza & Co,44 Swensen’s45 and Burger
King46 are in talks with local partners to enter India’’ [16].
Growth and expansion plans from the competitors were not the only hurdles, B.
Narayanaswamy, president, Ipsos Indica Research47 commented that, ‘‘One of the
biggest questions is whether restaurants can localize as every region of India has a
different taste.’’ Thus even the selling ethnic food on a national scale hadn’t been
easy in a country which was historically used to a variety of dishes. Indian con-
sumers are price conscious as well. Therefore compared to a basic burger, say a
thali was available for Rs. 50. To counter such an issue, Domino’s re-launched its
‘Pizza Mania’ offer, serving pizzas at Rs. 35 [17] Not only did Domino’s get into
price reduction, so were McDonalds and other players.
The changing lifestyles of young Indians also posed difficult problems as well
as opportunities for growth. Trying to reach to customers even when they are
travelling, fast food chains had opened their outlets on a variety of locations
including highways, malls, airports and metro stations. ‘‘With limited time, cus-
tomers need to be tapped wherever they go,’’ says Niren Choudhary, MD, Yum!
Restaurants India adding that the company had set up express delivery counters at
airports. Even Sagar Ratna CFO K.S. Suresh expressed his desire of exploring an

38
Schlotzsky’s is a privately held franchise chain of restaurants, specializing in sandwiches,
headquartered in Downtown Austin, Texas. As of November 20, 2006, Schlotzsky’s has nearly
380 franchised and company-owned locations in 36 states in the United States and in six other
countries around the world, generating $210 million in systemwide revenue.
39
BannaStrow’s is a franchise concept that focuses on a menu of Crepes and Waffles, cooked to
order in front of its customers for a wonderful show.
40
Moe’s Southwest Grill is an American chain of fast casual style Tex-Mex restaurants
headquartered in Atlanta, Georgia.
41
Carvel is an ice cream franchise owned by Focus Brands. Carvel is best known for its ice
cream cakes, which feature a layer of distinctive ‘crunchies’. It also sells a variety of novelty ice
cream bars, ice cream sandwiches and soft serve ice cream.
42
Dunkin’ Donuts is an international doughnut and coffee retailer founded in 1950 in Quincy,
Massachusetts by William Rosenberg.
43
Popeyes Chicken & Biscuits (sometimes named Popeyes Louisiana Kitchen or Popeyes
Chicken & Seafood; often referred to as just Popeyes) is a chain of fried chicken fast food
restaurants, owned since 1993 by the Sandy Springs, Georgia-based AFC Enterprises.
44
The Pizza Company is a restaurant chain and international franchise based in Bangkok,
Thailand.
45
Swensen’s is a global chain of ice cream restaurants that started in San Francisco, California.
46
Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants
headquartered in unincorporated Miami-Dade County, Florida, United States.
47
Ipsos Indica Research is an independent company which ranks fifth among global research
companies.
Case Study 11: Marketing of Services: The McDonald’s Way 111

express model by next year 201. ‘‘Currently two people spend an average 30 min
in the restaurant. This will reduce the time to 12 min approximately,’’ Suresh said,
highlighting that home delivery is another big area, growing at 15 to 20 % [16].
The problems were aggravated with the high cost of real estate. Added to the
rising input costs; companies claimed that their margins were getting squeezed.
Expert reports indicated that, while the global standards were 10 to 15 % of sales
as rentals, in India it went as high as 20 to 25 % [16].

Road Ahead

By 2011, most fast food brands had moved into the phase II of their expansion in
India, which is penetration. Phase III was marked by the saturation point, where
companies were required to overhaul menus, at least partially, and innovate. Much
of the second phase growth came from tier II and III cities where eating out was
still an occasion, experts said.48 But, Bakshi, said otherwise, ‘‘We don’t plan to
tweak our menu too much. Now we will grow to new areas and increase our
concentration in areas where we are less spread.’’ The response from tier II and III
cities was overwhelming he added. In 2010 McDonald’s India opened an outlet in
Amritsar. Consultants said it was a city which loved Punjabi food, so the company
opted for a smaller, 100 cover set up. Six months later, Bakshi felt a second
restaurant was needed [18].

Questions

1. Traditional fast food retailers dominated the market when McDonalds entered
India. What made it so challenging for them to change the consumer
perception?
2. Why do you think that McDonald’s makes a constant effort to train their
employees and also to educate customers?
3. Wherever McDonald’s went, they tried to localise their products and services.
Do you think that it is a good strategy in India given the competitive scenario
and the varied tastes and preferences of the customers?
4. What is more important to customers? The service products or the service
experience at McDonald’s? Discuss.

48
indiafranchiseblog.blogspot.com.
112 R. Paul and S. K. Roy

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