McDonald's to Double India Stores

29 Jan 2008 • by Natalie Aster

McDonald's Corp., the world's largest restaurant company, plans to this year double its stores in India and open 125 outlets in China to tap growing demand for fast food in Asia, reported The Bloomberg.

McDonald's plans to open as many as 140 restaurants throughout India this year, focusing on drive-through outlets, Tim Fenton, president for its Asia Pacific, Middle East and Europe business, said in an interview in Beijing today. The Oak Brook, Illinois-based company has 135 restaurants across India.

The Asia-Pacific region was the chain's fastest-growing last year, with comparable-store sales advancing 12.6 percent on extended hours and new breakfast menus. McDonald's is adding to the 31,000 restaurants it operates worldwide and promoting products that cater to locals tastes, such as spicy chicken and fish sandwiches in China and vegetarian products including McAloo Tikki and Shahi Paneer McCurry Pan in India.

``The popularity of McDonald's and other such fast-food restaurants is growing, particularly in the big cities, with people having more discretionary income and less time and inclination for cooking at home,'' said Anand Shah, an analyst at Mumbai-based Angel Broking.

McDonald's will open another 150 restaurants in China next year and 175 in 2010, Jeff Schwartz, chief executive of McDonald's China Co., said in an interview with Bloomberg Television today.

``The majority of those (new restaurants) will be on the east coast and the bigger cities of Beijing, Tianjin, Shanghai, Guangzhou, Shenzhen,'' Schwartz said. ``Half the growth will be in the interior cities in the country.''

McDonald's will continue to serve western-style meals in China because burgers and French fries still appeal to consumers, Schwartz said. The company has 875 restaurants in China, he said.

``Foreign fast-food chains like McDonald's have excelled in China because their stores are clean and they have a standard of food quality that is the same everywhere,'' said Kevin Luo, an analyst with Guotai Junan Securities Co. in Shenzhen, south China. ``I think smaller cities and towns in China offer a good opportunity for expansion right now.''

Half of McDonald's menu in India is vegetarian-based products, catering to local tastes, Fenton said.

``We serve chicken and a lot of vegetarian products,'' Fenton said. `` We don't serve any beef. We've adapted to the McDonald's platform there so we can serve the quality and the speed.''

McDonald's raised prices on some menu items in China last year due to rapid food inflation and rising wages.

The price of a Big Mac in China gained 10.7 percent to $1.45 in 2007, according to The Economist's Big Mac Index, which compares the price of the signature hamburger in countries around the world. That was still 58 percent lower than in the U.S. and the lowest in the world.

``It's China and India and we happen to have both areas in our world,'' Fenton said. ``China, being the economic power of the hour and the size of the population, takes front center stage.''