Vikram Bakshi, MD, North & East, McDonald’s India, on the chain’s aggressive strategies to meet its 2015 goals amidst intensifying competition among QSRs
B&E: What has been the core strategy responsible for McDonald’s good show over the last few years?
Vikram Bakshi (VB): Our main strategy has been to get closer to customers in a meaningful way. So we have been experimenting with formats like drive-thru’s. Since we can’t operate all these formats in cities, we have opened on national highways and satellite towns. Then we have been very successful in working in tandem with retail development. We ensure that we get the corner space in big malls, and it has worked really well for us. Also, we are moving into newer places with our brand extensions. Like opening our restaurants at gas stations, at Metros and cinema halls. We’re also getting aggressive with home deliveries; it’s doing very well for us. Then we have 24-hour open format restaurants on national highways. So for every standalone restaurant, we are doing three brand extensions, which can be anything from a 24-hour format on national highway to a kiosk, a delivery or a drive thru.
B&E: So what is your expansion target over the next three years?
VB: Currently we are doing about 257 restaurants. In three years we will reach about 500 restaurants, and another 700 brand extensions, which we are not counting as separate restaurants. So I would say I will have over 1,000 customer touch points.
B&E: You have cut down prices of some products. What’s the strategy behind it considering that almost every FMCG company is hiking prices due to rising input costs?
VB: It’s a very clear strategy aimed at attracting more consumers to our restaurants. So I would not say it’s cutting down prices, but more of a rationalization of prices of some items. What we are doing is what any smart brand will do in a market like this. We want to sell more at a time when people are pulling back on spending due to rising inflation. So we’re making our products affordable for them. I never look at money in percentage terms (e.g. bottom line or profit) but more in the absolute value of it, as we are still in a growth and expansion phase here. Next year is important for us, as we plan to grow far more aggressively than we have grown this year.
B&E: What has been your growth rate in the last fiscal and what’s your target for the ongoing one?
VB: We have grown in excess of 40%, and expect to grow by more than 50% in this fiscal year. We have doubled the number of restaurants in the last three years, and our target it to double it again in the next three and a half years, by the end of 2015. If you look at it, this means we aim to achieve by 2015, what we have achieved in the last 15 years. It’s a tough target and we need to stay focused and on course.
B&E: What has been the core strategy responsible for McDonald’s good show over the last few years?
Vikram Bakshi (VB): Our main strategy has been to get closer to customers in a meaningful way. So we have been experimenting with formats like drive-thru’s. Since we can’t operate all these formats in cities, we have opened on national highways and satellite towns. Then we have been very successful in working in tandem with retail development. We ensure that we get the corner space in big malls, and it has worked really well for us. Also, we are moving into newer places with our brand extensions. Like opening our restaurants at gas stations, at Metros and cinema halls. We’re also getting aggressive with home deliveries; it’s doing very well for us. Then we have 24-hour open format restaurants on national highways. So for every standalone restaurant, we are doing three brand extensions, which can be anything from a 24-hour format on national highway to a kiosk, a delivery or a drive thru.
B&E: So what is your expansion target over the next three years?
VB: Currently we are doing about 257 restaurants. In three years we will reach about 500 restaurants, and another 700 brand extensions, which we are not counting as separate restaurants. So I would say I will have over 1,000 customer touch points.
B&E: You have cut down prices of some products. What’s the strategy behind it considering that almost every FMCG company is hiking prices due to rising input costs?
VB: It’s a very clear strategy aimed at attracting more consumers to our restaurants. So I would not say it’s cutting down prices, but more of a rationalization of prices of some items. What we are doing is what any smart brand will do in a market like this. We want to sell more at a time when people are pulling back on spending due to rising inflation. So we’re making our products affordable for them. I never look at money in percentage terms (e.g. bottom line or profit) but more in the absolute value of it, as we are still in a growth and expansion phase here. Next year is important for us, as we plan to grow far more aggressively than we have grown this year.
B&E: What has been your growth rate in the last fiscal and what’s your target for the ongoing one?
VB: We have grown in excess of 40%, and expect to grow by more than 50% in this fiscal year. We have doubled the number of restaurants in the last three years, and our target it to double it again in the next three and a half years, by the end of 2015. If you look at it, this means we aim to achieve by 2015, what we have achieved in the last 15 years. It’s a tough target and we need to stay focused and on course.
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