McDonald’s success in India started with its very careful & calibrated approach and its adaptive ability. As it faces new challenges two decades hence, Ronald braces itself for another round of change.“If I had a brick for every time I’ve repeated the phrase Quality, Service, Cleanliness and Value, I think I’d probably be able to bridge the Atlantic Ocean with them.” — Ray KrocIt’s hard to match the kind of brand penetration that McDonald’s has managed globally. And the most interesting part of McDonald’s brand success has been its core value proposition – consistency in terms of products (with intelligent localisation to suit specific markets), quality, store design, amenities, services et al – multiplied several times over across around 32000 restaurants globally. Their consistency proposition even extended to price points to a large extent, which is why The Economist came out with the Big Mac Index – basically a seat-of-the-pants measure of calculating the purchasing power parity between two currencies by comparing the prices of the Big Mac burger (which is made globally using exactly the same process and material) in the nations whose currencies have to be compared.
As pointed out several times in the book Behind the Arches by journalist John F. Love, McDonald’s initially wasn’t the customer-centric company we know it today, and neither was it as growth-centric. Ray Kroc was the person who not only developed the blockbuster franchise model (by purchasing the original eatery model from brothers Roger and Maurice McDonald) to multiply restaurants at a huge pace, but also institutionalised processes to the extent that they became gospels. By the time investigative journalist Eric Schlosser brought out his bestseller Fast Food Nation (where he pointed out that wherever America’s fast food chains go, waistlines inevitably start expanding), McDonald’s had traversed a journey of more than six decades in US of A and also taken its business global at an astonishing pace. Over time, it has tackled numerous challenges and heartbreaks (the recent one in Iceland) in its global expansions, and proved resilient and resolute enough to move on.
In the same league, McDonald’s in India managed to combat the challenges, particularly the ‘beefy’ ones, and competition in this country. But unlike what it did in most other markets, McDonald’s forayed into India with a lot of focus on desi consumers. Promoters Vikram Bakshi and Amit Jatia, the JV partners of McDonald’s in India (north & east and west & south respectively) knew that catching the imagination of the Indian public, which was just getting acquainted to global brands & concepts was tough. When its contemporaries were going aggressive, McDonald’s followed a slow strategy. Yum Brands came to this country in 1996 and opened its store in the same year. But not McDonald’s! It launched the first outlet in same year with Pizza Hut but its initial entry was six years ago in 1990. With a steady approach, it tapped the Indian market and waited six long years. “The first challenge that McDonald’s faced was the lack of a cold chain facility. The initial years went into setting up a successful cold chain. It has immensely benefited farmers at one end and also enabled customers to get the highest quality food products,” says MD Amit Jatia.
Slowly and steadily, the Mac succeeded in building a cold chain around the country without facing the multifarious problems faced by its other American counterparts and stalwarts. The result is that today, all suppliers are an integral part of the McDonald’s cold chain. For instance, Trikaya Agriculture, a major supplier of iceberg lettuce to McDonald’s India, is one such enterprise that is an intrinsic part of the cold chain. Exposure to better agricultural management practices by McDonald’s has made Trikaya Agriculture extremely conscious of delivering its products with utmost care. Trikaya, with the help of McDonald’s, cultivates this winter vegetable throughout the year in Talegaon, Maharashtra. McDonald’s has provided assistance in the selection of high quality seeds and exposed several farms to advanced drip-irrigation technology, allowing small agri-business suppliers in Maharashtra to provide fresh, high-quality lettuce to its restaurant locations thousands of kilometers away.
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IIPM Editorial, 2012
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