Local suppliers, distributors to match international quality
Operations & training to match international quality and hygiene standards
Invested Rs 50 crore in setting up, before opening 1 st outlet
By 2000- Investment in supply chain – Rs 300 Crore
Integral to Supply Chain
Network- Food procurement, warehousing, transportation and retailing under controlled temperatures
Cold Chain cuts down on operational wastage
Necessary to maintain food temperatures to retain their freshness and nutritional value.
Products to be used on a daily basis, stored within a temperature range of –18ºC to 4ºC.
52% food products need to be stored under these conditions before they are used.
Trikaya Agriculture –
Supplier of Iceberg Lettuce
Advanced agricultural practices enabled specialty crops like iceberg lettuce, special herbs and many oriental vegetables.
Farm infrastructure - Specialised nursery, agricultural experts, pre-cooling room, cold room for handling, refrigerated truck for transportation.
Vista Processed Foods
JV of OSI Industries-US & McDonald's-India
Range of frozen chicken & vegetable foods at world class infrastructure plant at Taloja, Maharashtra.
Separate processing lines for chicken and vegetable foods
Capability to produce frozen foods even at -35 Degree C temperature to retain total freshness.
Dynamix Diary , Baramati
Supplier of Cheese
Capability to convert milk into cheese, butter/ghee, skimmed milk powder, lactose, casein, whey protein and humanised baby food
Supplier to McDonalds & Nestle
Milk and Milk Products for Frozen Desserts
Installed capacity of 6000 lit / hour for producing homogenised UHT (Ultra High Temperature) processed milk and milk products.
Distribution Centre- Specialises in handling large volumes, provide entire range of services like procurement, quality inspection, storage, inventory management, deliveries, data collection, recording & reporting.
Effective process control for minimum distribution cost
1-stop shop for food distribution management services.
Dry / cold storage facility to store/transport perishables at temperatures up to - 22 C
Cremica Industries , Philaur, Punjab-
Working with McDonald's European suppliers to develop technology & expertise allowed Cremica to expand businesses from baking to provide breading & batters to McDonald's India & other companies.
“ In some cases, Indian suppliers had the technology - but no market for the products they produced besides McDonalds”
Geographically diverse sourcing
Buns from North
Chicken & Cheese from West
Fish, Lettuce & Pickles from South
98% paper, locally sourced
French fries imported from Indonesia
40 suppliers in the chain
Committed to local sourcing from suppliers and farmers.
Restaurants constructed using local architects, contractors, labour and maximum local material content
Relationship mutually beneficial as supplier gets opportunity to expand business, access to latest technology, exposure to advanced practices and the ability to grow or export.
Matching supplier production with deliveries to meet schedules & restaurant needs
2 centralised distribution centers at Mumbai & Kochi, each capable of catering to 25 outlets
Aim to enhance quality of storage operations
Emphasis on economies of scale-storage volumes high
Interaction with suppliers & logistic firms to ensure optimum stocking
QIP (Quality Inspection Program)- Quality checks at 20 points in the supply chain movement
HACCP (Hazard Analysis Critical Control Point) Food safety standards emphasizing prevention of faults than detection thro inspection
“ With a Cold Chain in place, there is practically no need for a knife in the restaurant. Chopping & food processing is done in the plants. Restaurants are confined to only the actual cooking” Amit Jatia
Logistics to move RM to restaurants
AFL logistics- 50:50 JV between AirFreight & FX Coughlin of USA- McDonalds international logistics partner
AFL responsible for temperature-controlled movement of all products from suppliers to distribution centers
Inculcating a Service Orientation
Physical logistics important to retain food freshness
“ The truck drivers had to be explicitly and specifically conveyed not to switch off the truck’s ignition to save on fuel & electricity as the refrigeration system also automatically shuts off. We installed trapping devices to log temperature charts through the entire journey” Amit Jatia
An Employer Of Opportunity
Employer of opportunity, providing quality employment and long-term careers to the Indian people.
Average McDonald's restaurant employs 60-80 people from crew to restaurant manager.
World class-training inputs to 2000 employees in Mumbai and Delhi annually.
Indian Cheese & Lettuce exported- Sri Lanka, Hong Kong & UAE
Plans to export to Russia, EU, SE Asia
“ Things are becoming global in nature. Once you set up a supply chain in a strategic location, it can service other countries as well.” Amit Jatia
Past Performance 51 Nov 2003 46 Dec2000 13 Del, 10 Mum, Pune, Jaipur 25 Mid 2000 8 Del,6 Mum 14 End 1998
6 Million customers (2002)
3.5 Lacs Maharaja Macs
50% revenues from veg menu
40000 customers daily (2003)
No of transactions grow @ 15%
Average spend / customer Rs 45 (2002)
4 Del, 3 Mum 7 First 12 months Milestones Place Out lets Period
In 1997 consumers classified food as bland
By 2000, it was sought for its taste
Veg pizza Mcpuffs (Samosa + Pizza ingredients)
Chicken Mcgrill (with extra tangy Indian spices)
Increasing seating capacity
Adding Birthday party areas
Enter new ‘A’ cities- Ludhiana, Ahmedabad, Baroda- lower spending power , population density
ISBT terminal Delhi
Airport & Railway station- Mumbai & Jaipur
Highways & Petrol Pumps
Malls & Multiplexes- Lower outlet investment than traditional
Points to Ponder
Would customer profile on highways & railway stations be appropriate
Would they generate enough traffic
Dispersed outlets- effective catering?
Expanding too fast? Break even ?
Successful in developing supply chain & creating a satisfied customer base, opportune time to expand
“ Meticulous planning went in before opening a restaurant. It took us 6 years to open our first outlet because we carried out a detailed survey, then identified the local sources, closely studied the Indian food habits and tastes, before taking the plunge.”
“ We have been very careful with regard to our expansion plans. McDONALD’s currently operates 50 fast food restaurants in India. We are satisfied with the progress in India so far and want to take the total number of restaurants to 100 by 2006”
“ McDonald’s fits in neatly with the multiplex culture as our restaurants provide a bright and cheerful ambience and a pleasurable dining experience for the family.
McDonald’s has so far invested Rs 500 crore in its operations in India. This figure would be raised to Rs 800 crore by 2005.
“ McDonald’s products sold in India have been Indianised & produced in accordance with Indian tastes & preferences. Hugely popular products like aloo-tikki burger are now being exported to the Middle East where too they have proven to be a big hit. These evolved products are being studied closely in western countries”
“ On any given day, McDonald’s restaurant at Doraha near Ludhiana on NH 1, serves up to 2000 customers which is as good as a restaurant in Connaught Place”
“ We want the right location, right size for a 150 seat restaurant & the right deal which does not involve subletting of the premises. In Chandigarh, we find most commercial properties rented out or embroiled in disputes. We don’t want to get involved in any such deal”
MIPL- points to ponder
Investment / outlet excluding real estate- Rs 3 Cr
Jun 2003, 50 outlets, Planned- 80 outlets by end 2003
30 additional outlets = investment > 100 Cr
Area, Location, Size, Seating- Crucial but expensive
Scale back expansions by 20% to 64 outlets in India, close 250 outlets in emerging markets
Can lead to delayed Break-even as huge investments in supply chain, branding, infrastructure
Recent lackluster financial performance of parent
Critical juncture in evolution
Urban Indian Fast Food Market-03 (Estimated 1500 Cr)
“ We’ve established ourselves firmly in the mind of the consumer. Now is the time to expand and extend the brand in whatever manner we can” Vikram Bakshi
Gunning for volumes through home delivery
Extend reach at home, malls, food courts, multiplexes, highways , area with heavy footfalls (metro, stations, bus stands)
Kiosks stocked with beverages, desserts
Limited menu restaurants offering most popular fare
Consumer reach minus expenditure of a full restaurant
Home delivery in Mumbai & Delhi outlets to areas within 15 minutes
Extreme action for a company that prides itself on trashing anything that remains in the ‘ bin’ for longer than 8 minutes .
Slowly waking up to the fact that every player in the eating out sector in India door delivers .
McDonald’s only delivers in Indonesia & Egypt .
Traffic, parking issues deter consumers due to heavy traffic where McDonald’s are located as a matter of strategy.
Increasing Operational Excellence
Footfalls up 25% per outlet per day
“ We’ve reached a stage where operational excellence is going to drive the growth from now on. So the focus is back on training , which had taken a back seat due to the needs of rapid expansion in the last few years. We’ve increased the number of managers who are going back to training, and are sending more senior managers abroad to gain international exposure ,” Bakshi.
Performance Key Uncertainties Key Certainties
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