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McDonald’s expanding menu, to serve new desserts, beverages

Tuesday, 5 October 2010 - 2:00am IST | Place: Mumbai | Agency: DNA
Will focus on premium products as well; sees 70% of stores selling breakfast range in three years; targets doubling of turnover every three years

McDonald’s India, wholly owned subsidiary of fast food chain McDonald’s International, isn’t happy selling just a handful of burgers and wraps in India and is fast expanding its menu across categories. In the offing are products in categories such
as desserts, beverages and products at premium price points.
Currently, McDonald’s is rolling out its breakfast offering, which it started testing in November 2008, in a phased manner across cities.

“After breakfast, we will look at launches in desserts and beverages. Indians have a great sweet-tooth and these are very exciting categories,” Abhijit Upadhye, senior director national supply chain, menu management and new business channels, McDonald’s India told DNA Money.

The company, which is strong at the entry price point in India, is looking at plugging gaps in the premium segment through newer launches, something it has already started with products like Chicken McNuggets.

“Overall, in the menu, we are analysing the gaps. We are strong in the entry price point. In other segments, we need to plug gaps, which you will see happening in the next year,” Upadhye said.
The company has made significant investments in the back-end and kitchens across stores for the breakfast category, which it started researching on in India in 2007.

At the restaurant level, the company has invested Rs10-15 lakh to bring in new equipment and changing the layout of the kitchens in order to include the breakfast category in business. About `1 crore was spent in order to establish a cold storage that would stock up supplies like eggs.

The burger major has so far invested Rs6 crore only to add ‘breakfast’ as a category to its business.

Globally, the breakfast menu contributes 25% to McDonald’s revenues. The breakfast offering, which starts at Rs20 and goes up to Rs72, offers products like Chicken Mexican wrap, Egg Muffin, Hash Browns, Sausage and Egg Muffin, Sausage Muffin, Veg McMuffin and others. The breakfast menu will also see addition of newer products, Upadhye said.

In three years, 70% of the company’s stores will sell breakfast items.

Also on the company’s agenda is doubling turnover every three years. Business in India is growing by 40% per annum Upadhye said, where McDelivery, the home delivery business, is growing twice the pace of the sit-down restaurant format business. Last year, the company started taking orders online through its McDelivery website in select cities, after about 6 years of taking delivery orders on telephone. It has now rolled out the option to other cities.

Upadhye said the online ordering business could easily grow 3-4 times in 3 years. “In Egypt and Turkey, about 20-25% of home delivery business happens through the web and we are hoping for similar numbers in India,” he said.

Also in the process is a mobile application that McDonald’s is testing and will launch next year. Consumers will be able to order food using the company’s mobile application on their mobile phones.

As for expansion, McDonald’s is looking at opening 40 stores this year and about 55-60 stores in the next year. Around 80% of the fast food major’s expansion over a year or two will be in the cities it already exists in, it will then start expanding to newer towns.
McDonald’s started India operations by launching its first store in 1996 and currently has 190 stores. It is also investing `100 crore in back-end infrastructure this year to set up a foods processing unit in north India.

McDonald’s has two joint ventures in India — one with Hardcastle Restaurants in south and west region and another with Connaught Plaza Restaurants for north and east region.

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