McDonald's, India
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Connaught Plaza Restaurants vs. McDonald’s
John Sarkar, December 22, 2018: The Times of India
From: John Sarkar, December 22, 2018: The Times of India
The partnership between McDonald’s and Vikram Bakshi-led Connaught Plaza Restaurants (CPRL) was signed in 1995 for a period of 25 years
It had led to the birth of CPRL. McDonald’s had terminated CPRL’s franchise agreement in August last year, citing non-payment of royalties. Despite that, Bakshi has kept around 165 McDonald’s-branded outlets operational in the north and the east of India. In the south and west, McDonald’s outlets are run by Amit Jatia-led Westlife Development.
“It’s a valuation game,” said a person aware of the development. “Bakshi had wanted settlement earlier, even in 2017, after matters went to court. But McDonald’s was not ready to pay as it thought the valuation was too high. In the melee, the McDonald’s brand became the real victim, as other QSR chains such as KFC and Burger King gained market share in the north.”
Trouble between the two partners started brewing in 2008 when McDonald’s first tried to buy out Bakshi. Things took an ugly turn five years later when McDonald’s voted against the re-election of Bakshi as the MD of CPRL and accused him of financial mismanagement. It saw Bakshi turn to the NCLT, which reinstated him as the MD of CPRL last year. It was all downhill from that point onwards as both parties locked horns in NCLT, NCLAT and in Delhi high court.
McDonald’s buys out Connaught Plaza/ 2019, May
John Sarkar, May 10, 2019: The Times of India
From: John Sarkar, May 10, 2019: The Times of India
McDonald’s has decided to temporarily shut down 165 of its outlets in north and east India after finally ending its six-year-long bitter battle with its Indian franchise partner, Vikram Bakshi, to take over the 50:50 joint venture, Connaught Plaza Restaurants (CPRL).
While the terms of the deal, including the settlement of the contentious $330 million claim by CPRL, were not disclosed by the two estranged partners, Bakshi, who exited the nearly 25-year-old JV, is padding up for a second innings in the domestic fastfood market with another global brand. Credited for introducing and setting up McDonald’s in India, the 64-year-old entrepreneur is in talks with its rival, US burger chain Wendy’s for franchise rights, sources said. Bakshi said, “I have yet to take any decision about my future.” McDonald’s and Bakshi have opted for an out-of-court settlement to end their differences. CPRL is now wholly owned by McDonald’s India Private Limited (MIPL) and its affiliate, McDonald’s Global Markets LLC (MGM). “With the transfer of ownership and management today, Mr. and Mrs. Bakshi end their association with CPRL and McDonald’s,” McDonald’s said in a statement. The settlement marks the end of the uncertainty for the staff at these McDonald’s outlets and is good news for consumers of the Big Mac burgers.
Certified suppliers may return to McDonald’s
During the transition, the Chicago-headquartered burger giant will focus on two areas – providing employees with clarity regarding their future and revamping the quality of the food being served at the restaurants. McDonald’s-certified suppliers, who stopped supplying to CPRL after McDonald’s had cancelled its franchise agreement, may make a comeback, a global spokesperson for McDonald’s told TOI.
The McDonald’s outlets will reopen in a couple of weeks. “Our top priority is to deliver the highest quality restaurant experience to our customers. We will be working around the clock during this process and anticipate our restaurants will start to progressively open over the next two weeks or so. While we are confident this will result in the best possible experience for our customers, we sincerely regret any inconvenience the temporary restaurant closures may cause,” said Robert Hunghanfoo, who has been appointed head of CPRL after Bakshi’s exit.
Bakshi, who was locked in a bitter battle with Mcdonalds over control of the business is now plotting to take on his former partner teaming up with Wendy’s which so far has had a dismal run in the India, a booming market for quick service restaurants. If Bakshi parners with Wendy’s he would bring to the table his enormous experience in this segment and help revive Wendy’s floundering fortunes in Asia’s third largest economy.
When asked about Bakshi’s interest in Wendy’s, a global spokesperson for the Ohio-headquartered burger chain, told TOI that The Wendy’s Company is focused on “building a stronger brand across the globe”. “At Wendy’s, we are focused on sustained long-term growth,” she said in an email without elaborating.
Wendy’s, which operates more than 6,600 restaurants globally, currently runs less than 10 outlets in India and has shelved plans of opening 40-50 outlets as planned earlier. In India, its franchise rights are owned by Sierra Nevada Restaurants, which is owned by UK-based International Market Management (IMM). The 50:50 joint venture, Sierra Nevada Restaurants, was formed between Amtek Group company’s Rollatainers and IMM, which brought the Wendy’s brand to India in 2015. Rollatainers recently exited the JV by selling its 50% stake in Wendy’s to IMM, whose head Jasper Reid refused to comment on Bakshi’s interest in Wendy’s.
Prices
Indian Big Mac among cheapest/ 2017
The Times of India
See graphic:
The price of a Big Mac in India, Pakistan and other countries in 2017
