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Case Study: McDonald’s Business Strategies in India

The modest beginnings of McDonald’s at Illinois in USA, turned out to be among the main brand names in the international scene.  It has been synonymous to what is widely-accepted the fast-food concept. The company operates over thirty one thousand stores all over the world to date. It was one of the first to perfect the concept of fast service in the food industry in its early days of operations in 1955. Given that the products of the company are mainly western in character; its operations have also expanded to the Asian region. The first Indian McDonald’s outlet opened in Mumbai in 1996.  In the rest of the globe, it operates thousands of store franchises that functions autonomously.

mcdonald's business model in india

McDonald’s in India

Around the world, McDonald’s traditionally operates with local partners or local management. In India too, McDonald’s purchases from local suppliers. McDonald’s constructs its restaurants using local architects, contractors, labour and – where possible — local materials. McDonald’s hires local personnel for all positions within the restaurants and contributes a portion of its success to communities in the form of municipal taxes and reinvestment.

Six years prior to the opening of the first McDonald’s restaurant in India, McDonald’s and its international supplier partners worked together with local Indian Companies to develop products that meet McDonald’s rigorous quality standards. Part of this development involves the transfer of state-of-the-art food processing technology, which has enabled Indian businesses to grow by improving their ability to compete in today’s international markets.

McDonald’s worldwide is well known for the high degree of respect to the local culture. McDonald’s has developed a menu especially for India with vegetarian selections to suit Indian tasted and culture. Keeping in line with this McDonald’s does not offer any beef and pork items in India. McDonald’s has also re-engineered its operations to address the special requirements ofa vegetarian menu. The cheese and cold sauces used in India is 100% vegetarian. Vegetable products are prepared separately, using dedicated equipment and utensils. Also in India, only vegetable oil is used as a cooking medium. This separation of vegetarian and non-vegetarian food products is maintained throughout the various stages of procurement,    cooking    and serving.

The  McDonald’s  philosophy  of  Quality,  Service,  Cleanliness  and  Value (QSC&V) is  the   guiding  force  behind its service to the customers. McDonald’s India serves only the highest quality products. All McDonald’s suppliers adhere to Indian Government regulations on food, health and hygiene while continuously maintaining their own recognized standards. All McDonald’s products are prepared using the most current state-of-the-art cooking equipment to ensure quality and safety. At McDonald’s, the customer always comes first. McDonald’s India provides fast friendly service- the hallmark of McDonald’s that sets its restaurants apart from others. McDonald’s restaurants provide a clean, comfortable environment especially suited for families. This is achieved through McDonald’s stringent cleaning standards, carefully adhered to McDonald’s menu is priced at a value that the largest segment of the Indian consumers can afford. McDonald’s does not sacrifice quality for value — rather McDonald’s leverages economies to minimize costs while maximizing value to customers. The company has invested Rs 450 crore so far in its India operations out of its total planned investment of Rs 850 crore till 2007.

McDonald’s India Pvt. Ltd. has moved an application to the government seeking permission for payment and remittance of the initial franchise fee and royalty to Mc Donald’s Corporation. The permission has been sought on two grounds: McDonald’s India would pay an initial franchise fee of $45,000 on each of the McDonald’s restaurants already franchised or to be franchised, in the future, in India; and a royalty equal to 5 per cent of the gross sales from the operations of all its Indian restaurants on a monthly basis to McDonald’s International. They currently serve around 5 million customers a day and hope to grow at the rate of 50% to 70% a year.

Business Model

  • Franchise Model — Only 15% of the total number of restaurants are owned by the Company. The remaining 85% is operated by franchisees. The company follows a comprehensive framework of training and monitoring of its franchises to ensure that they adhere to the Quality, Service, Cleanliness and Value propositions offered by the company to its customers.
  • Product Consistency — By developing a sophisticated supplier networked operation and distribution system, the company has been able to achieve consistent product taste and quality across geographies.
  • Act like a retailer and think like a brand — McDonald’s focuses not only on delivering sales for the immediate present, but also protecting its long term brand reputation.

Challenges in Entering Indian Markets

  • Regiocentricism: Re-engineering the menu – McDonald’s has continually adapted to the customer’s tastes, value systems, lifestyle, language and perception. Globally McDonald’s was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion not to consume beef or pork. To survive, the company had to be responsive to the Indian sensitivities. So McDonald’s came up with chicken, lamb and fish burgers to suite the Indian palate.
  • The vegetarian customer — India has a huge population of vegetarians. To cater to this customer segment, the company came up with a completely new line of vegetarian items like Mc Veggie burger and Mc Aloo Tikki. The separation of vegetarian and non-vegetarian sections is maintained throughout the various stages.

Product Positioning

“Mc Donald’s mein hai kuch baat” projects McDonald’s as a place for the whole family to enjoy. When McDonald’s entered in India it was mainly perceived as targeting the urban upper class people. Today it positions itself as an affordable place to eat without compromising on the quality of food, service and hygiene. The outlet ambience and mild background music highlight the comfort that McDonald’s promises in slogans like “You deserve a Break Today” & “Feed your inner child”. This commitment of quality of food and service in a clean, hygienic and relaxing atmosphere has ensured that McDonald’s maintains a positive relationship with the customers.

Source: Docstoc.com

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mcdonald's business model in india

Navigating the Challenges: McDonald's Success Story in India's Booming Mark

Author: LSC Editors

Date: 23rd January 2023

McDonald's, the world's largest fast food chain, has been expanding its global footprint for decades. Its entry into India in 1996 marked a significant milestone in its international growth strategy and has since become one of the company's largest and fastest-growing markets. In this article, we will examine the factors that contributed to McDonald's success in India and the challenges it faced in expanding into this dynamic and complex market.

Market analysis

Before entering any new market, it is crucial for companies to conduct a thorough market analysis. This involves understanding the local culture, consumer preferences, and regulations, as well as the competitive landscape. In the case of McDonald's, India presented a unique set of challenges. The country has a predominantly vegetarian population, and it was crucial for the company to adapt its menu offerings to meet the specific dietary restrictions of this market. Additionally, India has a highly competitive fast food market, with a variety of local and international players. In order to succeed, McDonald's had to carefully analyze the market and develop a strategy that would differentiate it from its competitors.

Adapting to local tastes

One of the key factors in McDonald's success in India has been its ability to adapt its menu offerings to meet the local tastes and preferences of Indian consumers. This includes offering a range of vegetarian menu options, including the hugely popular "McAloo Tikki" burger, made with a vegetarian patty made from potatoes and spices. The company also adapted its cooking processes to meet the strict Hindu ban on the consumption of beef and pork, which are popular ingredients in many of its menu offerings in other markets. By offering a menu that appeals to Indian consumers, McDonald's has been able to differentiate itself from its competitors and establish a strong reputation in the market.

Partnering with local suppliers

Another important factor in McDonald's success in India has been its strategy of partnering with local suppliers. This not only helps the company reduce costs but also supports the local economy and boosts its reputation as a responsible corporate citizen. In India, McDonald's has partnered with local suppliers to source ingredients, including potatoes, bread, and condiments. This strategy has not only helped the company reduce costs but has also enabled it to offer fresher and more authentic products to its customers. By establishing strong relationships with local suppliers, McDonald's has been able to gain a competitive advantage and further differentiate itself from its competitors.

Franchising model

McDonald's has a franchising model, where local franchisees operate the restaurants. In India, this model has proven to be highly effective, as local franchisees have a deep understanding of the local market and are able to adapt the company's offerings to meet the specific needs of Indian consumers. This has helped the company expand rapidly and efficiently, and has also enabled it to maintain high quality standards and consistency across its restaurants in India. The franchising model has been a key factor in McDonald's success in India, as it has allowed the company to expand quickly while retaining control over its brand and operations.

Overcoming regulatory challenges

Expanding into a new market also involves overcoming regulatory challenges, and India is no exception. For example, the Indian government has strict regulations regarding the sourcing of ingredients, particularly with regards to meat products. This has required McDonald's to make significant investments in its supply chain to ensure it complies with these regulations and can continue to offer its menu offerings in India. In addition, there are also regulations related to land acquisition and restaurant operations, which have required McDonald's to navigate a complex regulatory environment in order to succeed in the market. Despite these challenges, McDonald's has been able to navigate the regulatory landscape and establish a strong presence in India through its commitment to compliance and its ability to adapt its operations to meet the specific requirements of the Indian market.

McDonald's success in India is a testament to the company's ability to adapt to new markets and overcome the challenges that come with expanding into new territories. By understanding the local culture and consumer preferences, partnering with local suppliers, using a franchising model, and navigating the regulatory landscape, McDonald's has been able to establish itself as a leading fast food chain in India. The company's success in India serves as a valuable lesson for other companies looking to expand into new markets and highlights the importance of market analysis, adaptation, and strategic partnerships in achieving success in a complex and dynamic global marketplace.

In conclusion, McDonald's expansion into India is a success story that demonstrates the company's ability to navigate the challenges of expanding into a new market and adapt its offerings to meet the specific needs of local consumers. Through its commitment to understanding the local market and its focus on quality, McDonald's has been able to establish itself as a leading brand in India and continues to grow in this dynamic and rapidly expanding market.

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McDonald’s is reinventing itself so that India can start lovin’ it as much as before

India isn’t what it used to be, and mcdonald’s is finally taking note..

McDonald’s is reinventing itself so that India can start lovin’ it as much as before

After over two decades of operating fast-food restaurants across Asia’s third-largest economy – over 400 at last count – the American chain has realised that low-priced burgers and lacklustre stores just won’t cut it anymore.

With growing incomes and a greater choice of both fast-food and fine dining, Indians are becoming more demanding when they eat out, favouring more exciting options, such as tacos and waffles, over the plain old McAloo Tikki burger. And the spread of chains such as Starbucks and Dunkin’ Donuts has lured millennial consumers outside of lunch and dinner timings, ramping up the competition even further.

As a result, a local franchise partner of the world’s largest fast-food company has been forced to step up its game in India by investing in upgraded stores and expanding the menu to include more burgers and breakfast options. That’s in line with its global strategy to adapt to changing food habits . But its evolution in India shows that things have really changed since the early days of fast-food in the country when the primary focus was finding a way to get locals to try out burgers and fries for the first time.

Change is constant

When McDonald’s opened its first Indian store in New Delhi in 1996, it took a lot of convincing to get customers. “Western fast-food chains were seen as a novelty back then,” explained Ankur Bisen, senior vice-president, retail and consumer products, at the consultancy Technopak. That’s why McDonald’s promoted low-priced options, such as the Happy Price Menu (burgers priced at Rs 20), and Indianised the burgers with ingredients familiar to locals, such as potato patties instead of meat.

The strategy paid off, spurring the transformation of India’s food industry. Today, the overall fast-food market is estimated at around $1.12 billion . American chains such as Burger King, Domino’s, and Dunkin’ Donuts are a common sight in cities big and small. Indian customers can’t get enough of the foreign fare.

For all this growth, the amount of money Indians actually spend on eating out still trails that of their counterparts in other markets. Per capita expenditure on meals outside the home in urban India is just $110 , according to a 2016 food services report by the National Restaurant Association of India. Brazilians spend $745 and the Chinese $750; in the US, the figure is much higher at $1,870.

What’s more, the frequency of dining out hasn’t changed in India since 2011.

Amit Jatia, vice-chairman of Westlife Development, which owns the master franchise rights for over 240 McDonald’s outlets in South and West India, recalls that same-store sales growth, a metric used to measure sales at stores open for at least a year, remained negative for eight quarters between mid-2013 and September 2015, a result of the slump in the eating-out market.

Jatia knew he had to do more to bring in new customers and push them to spend more. “In 2012-13 we started recognising that it is going to get tough over the next three-to-four years. The first sign we got was that the frequency of eating-out was not rising,” Jatia told Quartz .

Some tough questions led to Jatia making some tough decisions. He said, “We asked ourselves, if we were to enter India today what would our cost structure look like? What would the consumer want today? What would the operating environment look like?”

And that prompted the beginning of what he calls a complete reinvention for the chain in parts of India.

McDonald’s 2.0

For many years, McDonald’s did brisk business in India by relying on low prices, offering burgers at around Rs 20. By 2012-’13, though, this value-based strategy had become much less effective as rivals such as Domino’s and KFC , too, added low-priced options to their menus. Moreover, rising input costs pushed up prices from Rs 20 to slightly over Rs 30 now.

“We thought value will carry us forward but competition had caught up…and, therefore, we needed to reinvent ourselves,” Jatia said, noting that many of McDonald’s rivals also abandoned the value approach eventually.

As a result, in 2013, Westlife decided to change tack, investing in revamped restaurants, new upholstery, and lighting, besides an expanded menu with prices and flavours designed to appeal to younger consumers. In 2015, it also relaunched the fast-food chain’s most expensive burger in India, the Maharaja Mac, priced between Rs 176 and Rs 194. Over the past few years, the company has been spending more marketing money on pricier burgers and new flavours.

The other part of the strategy was to convince Indians to visit McDonald’s outlets even outside of the usual lunch and dinner timings.

So the company began testing out the McCafe format , starting out with Mumbai in 2013. This was as an attempt to capitalise on India’s booming café culture and lure locals away from Starbucks with beverages that cost anywhere between Rs 100 and Rs 200. Over the next few years, the McCafe concept gradually spread to over 100 McDonald’s outlets across south and west India, selling coffee, muffins, and cookies that Jatia says are now adding significantly to the company’s revenue. For the fiscal year ending March 31, 2016, Westlife Development reported revenues of Rs 856.83 crore , up 12.1% from the previous year, and net profit of Rs 2.8 crore.

In 2016, McDonald’s India launched the Restaurant Operating System 2.0, a model to reduce the cost of opening and operating new stores by 20-30%.

The company also made its breakfast menu (launched in 2010) available all day long in certain outlets, offering its signature waffles and Egg McMuffins at all hours to draw customers even during outside of typical mealtimes. Earlier this year, more local flavours – a masala dosa-inspired burger and scrambled masala eggs – were added to this menu.

Technopak’s Bisen said the strategy to upgrade restaurants was much needed to shore up margins. “The price proposition helped built mass and volume; these new initiatives will help the company with higher margins,” he said.

For Jatia, the upgraded McDonald’s is ready for a future in which more Indians will be eating out. The company plans to launch restaurants with a completely new look and feel this year, and lots more lie in store for customers.

“I believe in something called positive paranoia; be positively paranoid if you want to make a change,” he said.

This article first appeared on Quartz .

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McDonald's @ 25: A peek into its ambitious India plans

McDonald's success menu will see the quick-service restaurant expand its ever-hungry 'foodprint' by doubling the number of joints and increasing its average unit volume by 35-40 per cent in five years.

mcdonald's business model in india

When Amit Jatia, vice-chairman of Westlife Development (WLDL), which operates fast-food chain McDonald’s in West and South India, wanted to become the American fast-food giant's local partner in 1995, he had to first convince his family he would remain a staunch vegetarian.

As McDonald's - home of the iconic Big Mac - completes 25 years in India, being one of the largest operators in the quick-service restaurant (QSR) segment in the country with over 300 outlets, Jatia has held on to the promise he made to his family.

Not one to sit back and watch anyone flip the Big Mac, he gets straight to the meat of the matter when he says McDonald's success menu will see the QSR expand its ever-hungry 'foodprint' by doubling the number of joints and increasing its average unit volume by 35-40 per cent in five years.

It was in October 1996 that India saw its first McDonald’s restaurant in New Delhi's Vasant Vihar. At first, the brand had two partners in India - Connaught Plaza Restaurants (CPRL), led by Vikram Bakshi looking after the North and East; and Jatia’s Hardcastle Restaurants (HRPL), focusing on the West and South, with whom a deal was signed in 1995.

HRPL is a wholly-owned subsidiary of WLDL.

There are around 480 McDonald’s outlets across the country now, of which 305 are managed by HRPL alone.

With regard to outlets and revenue, Domino's is the leader in the QSR space in India, contributing to 19 per cent of the total QSR outlets and 21 per cent of revenue.

In terms of outlets, Subway dominates an 8 per cent chunk, followed by McDonald’s at 7 per cent.

As far as revenue goes, McDonald’s is still No. 2, with 11 per cent market share, followed closely by Kentucky Fried Chicken (KFC), at 10 per cent.

When asked about the expanding girth of competition, Jatia says, “I believe in brand recall. Our average unit volume is one of the highest in the world.

"The number of restaurants does not bother us. We are not chasing numbers, but top-line growth in India.”

The other major brands in the segment include Café Coffee Day, Pizza Hut, Burger King, Starbucks, Dunkin' Donuts, Costa Coffee, Subway, Taco Bell, Wendy's, Wow! Momo, Jumbo King, Nirula's, and Wat-a-Burger!

Based on a report by Motilal Oswal, the QSR segment in India is expected to grow at a compound annual growth rate of 19 per cent between 2019-20 and 2024-25, moving in line with pre-Covid estimates of Rs 82,500 crore, from Rs 34,800 crore in 2020.

Of this, international fast food brands like Domino’s, McDonald’s, Burger King, KFC, and Subway together account for 45 per cent of the total chains in India.

Jatia says the major challenges McDonald’s faced in India included ensuring the availability of quality raw material (including potatoes), setting up cold chains, and ensuring supply chain during the initial years.

Till 2007, the brand had only 50 outlets in India.

“Pace did not bother us. However, between 2000 and 2002, we did a rethink,” he adds.

The brand has also been never short of controversies as it faced the heat from Hindu nationalist organisations like the Bajrang Dal and the Bharatiya Janata Party for alleged use of beef flavouring in the chain’s French fries.

Activists even ransacked an outlet in Thane.

However, the most recent blowout, which might have had a knock-on effect on the brand's expansion plans in the West and North, was the feud between McDonald’s and Bakshi that kicked off in 2008, when it tried to buy out Bakshi's 50-per cent stake.

Later, it took a legal turn in 2013, when Oak Brook, an Illinois-based company, removed him as managing director of CPRL.

After the dust settled on the legal run-in, McDonald’s bought out its stake in CPRL.

In February last year, Sanjeev Agrawal, chairman of MMG Group, was named partner for North and East India.

Talking about the legal fracas, Jatia says, “Both were two different markets; it had nothing to do with us.

"There was no stake or involvement with us. It had absolutely no impact from our point of view.”

He, however, concedes that growth in the North and West was indeed ‘near zero’ because of the fallout.

Photograph: Hilary Russ/Reuters

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McDonald's in India: Not a Happy Meal

By: Paul W. Beamish, Pooja Gupta, Madhvi Sethi

In September 2017, news spread of McDonald's India terminating its franchise arrangement with its joint venture (JV) in India. The termination notice was the newest step in the saga of the conflict…

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In September 2017, news spread of McDonald's India terminating its franchise arrangement with its joint venture (JV) in India. The termination notice was the newest step in the saga of the conflict between the two JV partners-US-based McDonald's and the Indian partner Vikram Bakshi of Connaught Plaza Restaurants Limited (CPRL). McDonald's entered India in 1996 through a JV that was originally seen as the perfect combination to share investments, reduce risks, and succeed. The events between 2013 and 2017 showed that this was not true, and many reasons were suggested in the media for the problems-strategy, team, resources, and a mismatched value system. Did the former franchise holder CPRL have a legal right to use the McDonald's name anymore? Could the partners resolve their differences?

Pooja Gupta and Madhvi Sethi are affiliated with Symbiosis Institute of Business Management Bengaluru, Symbiosis International (Deemed University), Pune, India.

Learning Objectives

This case can be taught in both undergraduate- and graduate-level courses on organizational behaviour (OB) or human resources (HR) management. It can also be used as part of an international HR management course or conflicts and negotiation course to understand the HR issues involved in a cross-border joint-venture deal. It can also be used to emphasize the ways of resolving conflicts in such deals. This case can also be used to focus on JVs and alliances. By working through the case and assignment questions, students will have the opportunity to learn the following: Different HR issues in JVs formed across international borders. The role of conflict, culture, and communication in a cross-border JV. The implications of these issues and how they might lead to the failure of a JV deal.

Oct 25, 2019 (Revised: Sep 27, 2020)

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  • A tale of McDonald’s two franchise partners in India

McDonald’s entered India in 1995 via two partners. It played ball with Amit Jatia, but is playing hardball with Vikram Bakshi. The way the two partnerships have unravelled—financially, structurally, behaviourally—are as different as chalk and cheese.

mcdonald's business model in india

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mcdonald's business model in india

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McDonald’s ‘Franchising Fast Food’: Business Model and Marketing Strategies Explained

The branded fast food joints such as KFC, Domino’s, or Burger King have successfully resided in one’s heart. People trust the quality of their food a lot and also appreciate their ability to serve dine-in and provide drive-throughs as well. Lately, emerging digitization including online food ordering and delivery has encouraged people’s favorite brands to serve them food at their homes, hot and fresh! 

What’s better than our favorite food from trusted brands coming straight onto our doorsteps? Nothing else, do you agree? One of such kind is McDonald’s, which has never failed to satisfy its customers. Let’s read about the McDonald’s business model to know how this franchise is prospering notably in the online sector.

McDonald's business model

About McDonald’s

History of mcdonald’s, franchise business model of mcdonald’s, mcdonald’s business model: segments.

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McDonald’s Response to Covid-19

McDonald’s is an American fast-food company, founded in 1940 in San Bernardino, California, United States. Previously, it had its headquarters in Oak Brook, Illinois, but moved to Chicago in June 2018. As of 2018, McDonald’s served over 69 million customers daily across 37,855 locations in over 100 countries around the world, making it the world’s largest restaurant chain by revenue. With over 1.7 million employees, McDonald’s ranks second in the world’s private employers (behind Walmart with 2.3 million employees). As of 2020, McDonald’s has the ninth-largest brand value in the world.

Richard and Maurice McDonald moved to California from New England in search of opportunities. In 1948, these brothers launched a Speed Service System with burgers that would cost 15 cents each. Having gained popularity over time, they were then able to franchise their concept.

Ray Kroc was a native Chicagoan and a salesman who visited the McDonald brothers in 1954. Kroc was deeply impressed with the way the McDonald brothers conducted business. This led him to become the first McDonald’s franchisee. He opened the first restaurant for McDonald’s System Inc. In 1961, he purchased the rights from the McDonald brothers for $2.7 million.

McDonald’s follows a three-structured franchise model . The company’s franchisees own and operate 90% of its restaurants. Franchisees operate their restaurants with oversight from the company and act as their employer. They have significant control over the pricing, the sale, and the operation of their restaurants. McDonald’s business model centers on a master plan, titled “Plan To Win,” which is implemented across the globe. According to McDonald’s mission statement, “Quality, Service, Cleanliness, and Value,” the company adheres to each of these qualities.

  • In 2020, McDonald’s generated total revenue of 19.21 billion U.S. dollars.
  • In a 2021 ranking of brands based on their value, McDonald’s ranked ninth with almost 155 billion U.S. dollars, an increase of 20% from the previous year.

McDonald's business model

Qualitatively, the segments can be divided into four categories:

  • The U.S ., which as of 2018 continues to be still the most significant market.
  • International Lead Markets include Australia, Canada, France, Germany, the U.K., and related markets.
  • High Growth Markets that comprise markets with significant growth potential include China, Italy, Korea, the Netherlands, Poland, Russia, Spain, Switzerland, and related markets.
  • Foundational Markets & Corporate , the remaining markets in the McDonald’s system, most of which operate under a heavily franchised model.

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McDonald’s Business Model : Marketing Strategies

  • 5 P’s: McDonald’s works on enhancing the customer experience by focusing on the 5 Ps. These 5 Ps include people, products, place, price, and promotion.
  • McDonaldization: McDonald’s success in the international forum is often described as a ‘McDonaldization’. Due to its organizational structure, it has been successful in more than 120 countries. Localization is the main focus of the central organization.
  • Employee Relationship: McDonald’s supports its employees, unlike any other company. Business growth is fostered by career opportunities, a positive work environment, and strong relationships.

McDonald’s: Growth Plan and Accelerators

The Velocity Growth Plan, introduced in 2017, is McDonald’s business model and customer-centric strategy that focuses on three key components of the business: food, value, and customer experience.

  • Retaining existing customers: Emphasizing areas where it already has a strong foothold, such as family occasions and food-oriented breakfasts.
  • Regaining customers who visit less often: Recommitting to its historic strengths, such as taste, quality, convenience, and quality of the product: food.
  • Converting casual to committed customers: Building lasting relationships with customers so they visit more often, by strengthening and expanding the McCafé coffee brand and enhancing snack and treat offerings.

McDonald's business model

McDonald’s remains committed to continuing its aggressive deployment of the three growth accelerators in 2019 and beyond:

  • Experience of the Future (“EOTF”): A modernization and technological upgrade that improves the restaurant experience and enhances the customer’s perception of the brand.
  • Digital: McDonald’s is enhancing its technology platform to give customers more choices in how they order, pay, and are served, which includes increased functionality on its global mobile app, self-service kiosks, and technologies that facilitate curbside and table service.
  • Delivery: McDonald’s has gradually started offering delivery to more than 50% of its global restaurant system in 2018. In 2017, McDonald’s announced it would partner with Uber Eats for home delivery for the first time in the U.S and followed that up by adding Doordash and GrubHub in 2019. As part of a strategy to remain relevant, these partnerships focus on the newer generation of people who prefer home delivery to pickup.

McDonald’s entered the pandemic well-positioned to operate in an environment where diners are looking to minimize contact with others. Nearly 95% of McDonald’s U.S. restaurants have a drive-thru, and the company expects digital sales that come through its online ordering app , a kiosk, or via delivery to surpass $10 billion, or nearly 20% of its sales, across its top six markets.

McDonald's business model

As a result of the change in customer behavior in COVID-19, McDonald’s has a competitive edge. Delivery is booming and the use of the McDonald’s food ordering app has surged as more and more customers are ordering and paying for their food on mobile devices.

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Yelo can help you create a franchise-based ordering platform. While Yelo lets you create an online food delivery application for your customers, Tookan will help you manage your deliveries in the best way possible (just like McDonald’s India is using). With the aid of its all-encompassing range of features, Yelo can help you cater to your wide and varied customers in the easiest and most efficient manner possible.

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Achieving extraordinary growth: Myths and realities

As India anticipates a century of independence in 2047, it is committing to sustainable and inclusive growth in its goal of becoming a developed economy. This ambition is likely to see 600 million jobs created, income rising sixfold to over $12,000 per capita and GDP growing to $19 trillion. 1 India’s century—achieving sustainable, inclusive growth , a joint report from McKinsey and the Federation of Indian Chambers of Commerce and Industry, December 2022. In realizing this goal, the private sector is an indispensable partner.

We set out to understand how Indian enterprises can achieve the extraordinary growth necessary for them to propel India towards its centennial aspirations. We analyzed the performance of 837 Indian publicly traded companies between 2012 and 2022. 2 We looked at companies with revenue exceeding INR 750 crore (approximately $90 million) in 2022. The results of the research were clear. Most companies performed in line with national economic growth, over the period. 3 McKinsey analysis. However, what’s impressive is that one in every five companies (top quintile) were able to double their revenue every five years and quadruple it in ten, achieving revenue growth of 15 percent or more, compounded annually. This extraordinary growth rate is more than two and a half times 4 The nominal GDP growth rate for India during the same period was around 10 percent and therefore revenue growth would be 1.5 times higher when compared with nominal GDP growth. the GDP growth rate during the same period, and it has the potential to act as a GDP growth catalyst (Exhibit 1).

Our research clearly indicated that extraordinary growth rates such as these are achievable for Indian enterprises, but persistent myths abound that deter companies from pursuing such growth. This article debunks those myths and proposes enablers for companies aspiring to such growth.

The top quintile companies also delivered nearly double the total shareholder returns (30 percent) over five years compared to the Nifty 50 benchmark index of 14 percent total shareholder returns. 5 McKinsey analysis. Total shareholder returns includes both dividends and higher stock prices. The Nifty 50 index is the Indian stock exchange index of the 50 largest companies in India by market cap. We deem this as extraordinary growth, and companies achieving this as “growth champions.” Higher returns are important because when compounded over a ten-year period, this increase could create ten times more wealth for shareholders compared to the benchmark index.

Our analysis identifies common misconceptions surrounding growth champions, providing a roadmap for others to follow. A more nuanced understanding of sustained high growth could help to recognize champions, identify best practices, and provide both a benchmark to measure progress and a roadmap for others to follow.

Myths about growth can prevent companies from aiming high

While most companies aspire to growth, misperceptions of leaders can keep them from setting high growth targets. Leaders may believe growth depends on size, on being in the right industry, that growth comes at the expense of profit, or that a low-growth company cannot dramatically turn around performance. Lessons learned from the companies in our sample shed light on these four common myths around growth outperformance:

Myth 1: Size matters. Only large companies can outperform in uncertain times

Indian companies have had to overcome considerable uncertainty over the past few years, such as the impact of COVID-19, supply chain disruptions, and severe weather events—and it’s likely that uncertainty will continue. In this environment, business leaders could well believe that success is the domain of large, established companies. However, our study revealed that 36 percent of smaller companies, with revenue less than INR 1,500 crore (approximately $180 million) in 2022, were classed as growth champions. 6 Crore is a unit of measurement denoting ten million. Only 10 percent of mid-sized firms (revenue between INR 1,500—4,000 crore) and 11 percent of large firms (revenue greater than INR 4,000 crore) showed similar growth (Exhibit 2). While it is true that some of this high growth can be attributed to the low base effect, the difference in average growth rate between these categories is too significant to overlook.

Myth 2: Companies must either choose growth or profits, not both

Many firms may consider growth and profitability as trade-offs. After all, growth plans frequently incur sizeable costs as companies expand capacities, enter new markets, introduce new product lines, or invest in brands. But our research confirms that revenue growth and profit growth have a high correlation coefficient of 0.95, which shows a strong relationship between the two variables (Exhibit 3). Companies with extraordinary growth in revenue also saw gross profit increasing in parallel, with an average of 20 percent profit growth compounded annually, compared to less than 9 percent profit growth for peers over the same period.

Growth provides scale benefits, but that only explains part of this correlation. Growth champions reduce costs and pursue value engineering to open new markets and create surplus profits for investing in future growth. 7 Value engineering refers to prioritizing cost optimization. This may include investing in distribution networks that increase their access to customers, investing in their brand and marketing, or tightly managing their pricing strategy.

Would you like to learn more about our Growth, Marketing & Sales Practice ?

Myth 3: extraordinary growth is only possible in high-growth industries with tailwinds.

Higher revenue is easier to unlock when companies are fortunate enough to be in high-growth industries. Financial services, IT, and healthcare companies in our sample have all grown revenue at double-digit rates over the past decade (Exhibit 4). But it’s also true that while tailwinds matter, extraordinary growth is possible in almost every industry. Hence, a company in an industry facing headwinds should not be limited by the belief that growth is beyond reach.

In almost all sectors, the top quintile of our sample has grown revenue by more than 15 percent over the past decade, indicating consistent outperformance. The only exception was the energy sector.

Myth 4: Once a low-growth company, always a low-growth company

Companies that trail their peers can turn around performance. In fact, companies can stage a significant recovery within a ten-year horizon. When we analyzed the performance of sample firms between the first and second half of the past decade, we found that one in two trailing companies were able to leapfrog from the bottom two quartiles into the top.

Performance turnaround is much more prevalent in high-growth sectors. Almost 50 percent of companies who ended the decade in the top quintile for the financial and real estate industries were not in this position in the first half of the past decade (Exhibit 5). This figure was much lower in slow-growing industries, where less than half of the companies had overturned performance to gain a top-quintile position.

Extraordinary growth, while challenging, has been achieved by companies across industries, regardless of size and even their performance relative to their peers. Understanding how these companies have outperformed is interesting—but will be truly valuable only if other companies follow suit. What, then, can we offer as a roadmap?

Extraordinary growth demands bold choices

Fast-growing companies typically make the explicit choice to grow, and follow that up with bold, deliberate actions. The core elements are an ambitious mindset, the right internal enablers, and clear pathways for action founded on growing revenue .

Previous McKinsey research identified a consistent growth framework for companies with success indicators. Analyzing the growth patterns within the sample allowed us to recognize seven levers for high growth that may apply to Indian companies. Organizations can pull these levers to accelerate their core, through digital technology and data, agile resource reallocation, and investing in leadership capabilities. Additionally, four more levers encourage companies to diversify beyond core business, including the pursuit of adjacent opportunities, the creation of new breakout businesses, global ambitions, and a strategic approach to acquisitions. Research has found that high-growth companies execute along not just one, but several, distinct growth levers (Exhibit 6).

Accelerating the core

While pursuing sustained growth, outperforming companies also recognize the need to fortify their core operations. Here, companies have three paths for higher growth, including the adoption of digital technologies and data, agile resource allocation for the highest returns, and investing in leadership development. 8 McKinsey analysis. By investing in both systems and people, companies can enhance their overall potential.

Unleashing the full potential of digital and data

In financial services, IT, and healthcare, around 40 percent of companies studied were growth champions—and digital transformations were a common accelerator. Using data and advanced analytics can streamline processes and enhance capabilities across the board, including pricing, marketing, and decision making. An Indian multinational electrical equipment company deployed digital technologies in fulfilment, pricing, and marketing functions to deliver triple growth in e-commerce sales in a few months.

In another example, a leading commercial vehicle manufacturer seized the opportunity to build a breakout business by recognizing that overall lifetime spending on a commercial vehicle is ten times the cost of the vehicle itself. It launched a full stack solution for customers, which included driver skilling, vehicle health monitoring, and fuel monitoring. The driver skilling module alone accounted for between 7 and 10 percent of fuel savings for the customer.

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Courageous growth: Six strategies for continuous growth outperformance

Reallocating resources with agility.

Companies that expand by maintaining or increasing their exposure to fast-growing, profitable segments can outperform their peers. And organizations facing market headwinds may need to reallocate their resources aggressively. This reallocation could include segments, geographies, channels, or timing. Growth champions often assess opportunities with a microscopic view of neighborhoods at a pin-code or district-level, rather than a macro state-level lens. 9 McKinsey analysis.

A decade ago, newer channels such as e-commerce and social media commerce had limited penetration in India. 10 “Retail & E-commerce,” Invest India, accessed December 2023. With the Indian e-commerce market estimated at over $55 billion in gross merchandise value in 2021, it is forecast to reach $350 billion by 2030, growing at a 23 percent rate compounded annually. 11 “Retail & E-commerce,” Invest India, accessed December 2023. Large companies would therefore need to think differently in terms of resource allocation as they build their presence and capabilities in these channels.

To expand its geographical footprint, a leading cement brand in India reassigned technical officers from other regions to prioritize newer markets, as well as markets where it wanted to improve its brand. This reallocation helped it to achieve its objectives quickly and effectively.

Investing in the next line of leaders

Empowering leadership throughout the organization can enhance operational efficiency as top executives are better able to focus on strategic initiatives, propelling the organization towards innovation and growth. Previous analysis has shown that investing in culture and leadership can contribute to overall organizational health and performance within six to 12 months.

An Indian construction conglomerate invested in a multiyear, next-generation leadership program for 45 leaders. The program focused on building leadership skills and business acumen through a combination of in-class modules and on-job trainings. Following this program, the company realized significant incremental revenue through over 200 breakthrough projects in one year.

The key lies in fostering a consistent strategic direction by leadership, with an emphasis on supportive and consultative leadership styles, and developing and deploying strong leaders at all levels. Organizations that do this may be more likely to improve overall health, establishing a robust foundation for continuous growth and success.

Looking beyond core business

Our research found growth champions frequently choose to grow competencies beyond their core business, transferring the skills, expertise, and market knowledge acquired in one sphere to new markets and geographies. There are four key growth drivers that high-growth companies typically pursue as they look beyond their core businesses, including the pursuit of adjacent opportunities, creating new breakout businesses, pursuing global expansion, and mergers and acquisitions. 12 McKinsey analysis. Diversifying beyond the core can be a valuable growth strategy for any company, regardless of industry. Fast-growing businesses can consolidate their position, with opportunities for slow cultivators too.

Pursuing adjacent opportunities

Firms can use their existing assets and capabilities to venture into adjacencies. For example, a longtime industrial switchgear producer used its technical expertise and distribution network to expand into an adjacent market segment—consumer durables such as kitchen appliances, fans, and water purifiers. By 2022, 20 percent of its revenues came from this work (from 15 percent in 2017), and it is now one of the largest incumbents in the sector.

Creating new breakout businesses

New breakout businesses offer a pathway to growth that involves both disruptive innovation and the establishment of newer categories . This dynamic approach requires a firm commitment to innovation, a deep understanding of customer needs, and the willingness to make big bets. It goes beyond simply creating unique products, to paying careful attention to customer centricity and operational capabilities, and a willingness to embrace change through the fail-fast model, where failures are quickly identified and learned from.

One of India’s largest healthcare organizations followed this route to growth. Starting with a single hospital, the company strategically expanded into pharmacy, insurance, and retail healthcare while continuing to grow its hospitals offering. It now has over 10,000 beds, alongside thousands of pharmacies across India. Its retail healthcare offering includes several different revenue categories from diagnostics labs, dialysis centers, and dental clinics to specialized care centers for maternity and neonatal, day surgery, and diabetes, among others.

Building new export markets worldwide

Companies that demonstrate strong growth locally could find similar success internationally if they have a clear competitive advantage. India’s exports were forecast to reach $770 billion in 2023 with a target of $2 trillion by 2030. 13 Adrija Chatterjee and Anup Roy, “India seeks $2 trillion exports by 2030 in supply chain push,” Bloomberg, March 31, 2023. Commodities, healthcare, and IT service sectors, in particular, have seen exports soar. 14 Adrija Chatterjee and Anup Roy, “India seeks $2 trillion exports by 2030 in supply chain push,” Bloomberg, March 31, 2023. Growth champions in these sectors have benefited from lower production costs and higher availability of skilled labor. 15 Adrija Chatterjee and Anup Roy, “India seeks $2 trillion exports by 2030 in supply chain push,” Bloomberg, March 31, 2023. One of the largest diversified Indian conglomerates has tripled exports as a share of total sales, from 4 percent in 2012 to 13 percent in 2023.

Strategic mergers and acquisitions

Mergers and acquisitions (M&A) are powerful tools for growth, and 30 percent of growth champions in our sample have undertaken substantial M&A activity. Strategic acquirers build organizational capabilities and best practices across all stages of the M&A process to successfully integrate the two businesses. A leading chemical company has made more than 40 successful acquisitions in the last 25 years. By acquiring businesses that already have a significant presence, it has increased market share from approximately 15 percent to 25 percent, growing revenue by 20 percent compounded annually over the last ten years.

Strategic acquirers often execute acquisitions systematically which enables them to better navigate industry headwinds, possibly because of their agile organizational culture. They also outperform peers that focused on organic growth, delivering total shareholder returns that were almost four percent higher.

As India aspires towards its centennial ambition of becoming a $19 trillion economy by 2047, companies across all sectors can build their own recipe for growth outperformance. The seven growth levers we described could help create superior value for shareholders and drive broader economic prosperity for the nation. Ultimately, it is up to company leaders to decide whether they wish to pursue extraordinary growth. If they do, these levers may provide the direction they seek.

Jaidit Brar is a senior partner in McKinsey’s Gurugram office, Raunak Shah is an associate partner in the Mumbai office, and Shivanand Sinha is a partner in the Mumbai office.

The authors wish to thank Harsh Agrawal, Oorvi Batra, Shourya Gupta, Anamika Mukharji, and Rishabh Sinha for their contributions to this article.

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McDonald's Caught Using Fake Cheese in India

mcdonald's business model in india

The cheese substitutes that McDonald's used replicate the taste and texture of traditional dairy cheese by replacing milk or dairy fat with vegetable oil.

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Maharashtra FDA has taken action against fast food giant McDonald's for allegedly using cheese substitutes in their products. It has suspended a McDonald's outlet license in Ahmednagar, leading the chain to remove the term "cheese" from multiple items.

According to The Times of India , McDonald's was reportedly caught using cheese analogs in burgers and nuggets instead of real cheese. These substitutes replicate the taste and texture of traditional dairy cheese by replacing milk or dairy fat with vegetable oil.

The FDA urged the chain to expand this corrective measure statewide and possibly nationwide.

Consumer Reaction and Brand Trust

MSN reported that public response to the FDA's findings has been swift and critical. Patrons of the fast-food chain, already wary of product quality in the industry, are expressing their disappointment and feeling deceived. This incident has sparked a larger conversation about transparency and trust between consumers and the food industry.

McDonald's faces a pivotal moment in addressing these concerns and restoring confidence in its brand commitment to quality.

Legal Implications and Corporate Accountability

The allegations against McDonald's could have significant legal implications, including potential fines and the enforcement of stricter labeling and food safety standards. Moreover, the situation highlights the broader issue of corporate accountability in the food industry—companies must ensure that their products are safe for consumption and accurately reflected in their marketing and packaging to maintain consumer trust.

Corporate Response and Strategy Moving Forward

In light of the allegations, McDonald's has issued a statement affirming their commitment to quality and adherence to local regulations. They have promised a thorough internal investigation and are prepared to cooperate fully with Maharashtra FDA's inquiries.

McDonald's may also review its supply chain management to prevent such issues and launch a campaign to regain consumer trust. This scenario underscores the importance of robust regulatory compliance systems and transparent communication with both authorities and customers in the food service industry.

As the McDonald's case unfolds, it presents an opportunity for the company to scrutinize and reform its supply chain and engage more openly with customers and advocacy groups. A dialogue that incorporates consumer concerns into corporate practice could become a cornerstone of McDonald's strategy to rebuild trust and demonstrate that they genuinely value customer satisfaction and safety.

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Indian researchers pioneer accurate pregnancy dating model for second and third trimesters

The newly devised garbhini-ga2 model is a breakthrough in late-trimester ga estimation, harnessing three routinely measured fetal ultrasound parameters, the developers claimed..

Neetu Chandra Sharma

  • Updated Feb 26, 2024, 8:24 PM IST

Developed using data from the GARBH-Ini cohort at Gurugram Civil Hospital, Haryana, the model underwent initial validation in an independent South Indian cohort.

A groundbreaking collaboration between the Biotechnology Research and Innovation Council (BRIC) - Translational Health Science and Technology Institute (THSTI) in Faridabad and the Indian Institute of Technology Madras (IIT Madras) has resulted in the development of a pioneering model for precisely estimating fetal gestational age (GA) during the second and third trimesters of pregnancy. This innovative model, tailored specifically for the Indian population, addresses the limitations of current methods that rely on Western data.

The newly devised Garbhini-GA2 model is a breakthrough in late-trimester GA estimation, harnessing three routinely measured fetal ultrasound parameters, the developers claimed. Developed using data from the GARBH-Ini cohort at Gurugram Civil Hospital, Haryana, the model underwent initial validation in an independent South Indian cohort.

Published in the Lancet Regional Health Southeast Asia on February 13, 2024, the research showcases the effectiveness of Garbhini-GA2, which significantly outperforms current models. In fact, it reduces GA estimation median errors by over threefold compared to the Hadlock model.

Dr. Shinjini Bhatnagar, principal investigator of the GARBH-Ini program and distinguished professor at THSTI, emphasized the pivotal role of accurate GA estimation in mitigating adverse pregnancy outcomes. She stressed the importance of integrating advanced data science tools with clinical requirements for optimal results.

In India, GA estimation traditionally relies on formulas designed for Western populations, leading to inaccuracies due to differing fetal growth patterns. The utilization of Indian population-specific GA formulas like Garbhini-GA2 holds immense potential to enhance pregnancy care outcomes, especially for women undergoing their first ultrasound in the second and third trimesters. This precision not only enhances patient care but also refines epidemiological estimates for pregnancy outcomes nationwide.

Conducted in collaboration with esteemed medical institutions including Gurugram Civil Hospital, Safdarjung Hospital, Christian Medical College Vellore, and Pondicherry Institute of Medical Sciences, this study forms a part of the flagship GARBH-Ini program supported by the Department of Biotechnology (DBT), Government of India.

Funding for the data science research was provided by the Grand Challenges India program of the Biotechnology Industry Research Assistance Council (BIRAC), DBT, Government of India, with additional support from the Robert Bosch Centre for Data Science and Artificial Intelligence (RBCDSAI) and the Centre for Integrative Biology and Systems Medicine (IBSE) at IIT Madras. Once validated in pan-India cohorts, Garbhini-GA2 holds the potential to be widely deployed in clinics across the country, contributing to improved maternal and infant healthcare outcomes and reducing mortality rates, stated the government.

Dr. Rajesh Gokhale, Secretary, DBT, highlighted that these models are currently undergoing validation across the country.

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Google suspends Gemini from making AI images of people after a backlash complaining it was 'woke'

  • Google says it plans to fix issues flagged with its AI model, Gemini.
  • Users complained Gemini generated historically inaccurate images of people of color.
  • The company will pause Gemini's image-generating feature of people while making the changes, it said.

Insider Today

Google says it will fix Gemini , its answer to OpenAI's GPT-4 , after people complained the multi-modal AI model's image-generating feature was "woke."

On Thursday, the company said in a statement sent to Business Insider that it was pausing Gemini from generating AI images of people while it makes the changes.

Social media users have complained that Gemini was producing images of people of color in historically inaccurate contexts.

BBC News was one of the first outlets to report this.

New game: Try to get Google Gemini to make an image of a Caucasian male. I have not been successful so far. pic.twitter.com/1LAzZM2pXF — Frank J. Fleming (@IMAO_) February 21, 2024

For example, software engineer Mike Wacker posted on X that a prompt to generate images of the Founding Fathers produced an image of a woman of color and, later, a man of color wearing a turban.

"Can you generate images of the Founding Fathers?" It's a difficult question for Gemini, Google's DEI-powered AI tool. Ironically, asking for more historically accurate images made the results even more historically inaccurate. pic.twitter.com/LtbuIWsHSU — Mike Wacker (@m_wacker) February 21, 2024

Others on X complained that Gemini had gone "woke," citing instances where prompts regularly resulted in responses including the word "diverse."

Woke AI Gemini is awkward… it keeps inserting the word “diverse” into its responses even though the prompt isn’t for such content. And look what it did for the 1800s request. pic.twitter.com/CBdoP5gIN0 — Marina Medvin 🇺🇸 (@MarinaMedvin) February 21, 2024

Debarghya Das, a computer scientist who used to work at Google, said on X that "it's embarrassingly hard to get Google Gemini to acknowledge that white people exist."

It's embarrassingly hard to get Google Gemini to acknowledge that white people exist pic.twitter.com/4lkhD7p5nR — Deedy (@debarghya_das) February 20, 2024

In a statement provided to Business Insider via email, a Google spokesperson said it was "working to improve these kinds of depictions immediately."

The spokesperson highlighted the importance of generating images representing a diverse range of people, given Gemini's global user base, but admitted that it's "missing the mark here."

A post from Google on X acknowledged that Gemini was "offering inaccuracies in some historical image generation depictions."

In further comments released on Thursday, provided to BI by email, a Google spokesperson said Gemini would temporarily pause the feature that generates images of people while the changes are made.

The spokesperson added that Google will "re-release an improved version soon."

mcdonald's business model in india

Watch: Accenture CMO Jill Kramer talks about how generative AI will enhance, not diminish, the power of marketing: video

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