In Conversation with Kedar Teny
How critical is the breakfast category for McDonald's growth? Globally, this category is losing its novelty. What is the McDonald's India strategy in the breakfast segment and why do you continue betting in the breakfast category?
McDonald’s believes in staying ahead of the curve, the unorganized breakfast market is huge however out-of-home branded breakfast category is at a very nascent stage in India. Consumers are very alien to the concept of consuming breakfast and as per researchers, 1 out of every 4 people skip breakfast every day. There is a lot of potential for organized players like McDonald’s to grow here.
McDonald’s was one of the early players/ pioneers to introduce the concept of QSR in India. From being a complete alien concept to now being a go-to option suiting every occasion, we have come a long way. With the launch of McBreakfast, we took a bold, disruptive stance which will result as a game changing initiative generating a habit amongst people to consume breakfast.
In India, the segment is influenced by evolving lifestyle, emerging nuclear families, urbanisation, rising young and working population coupled with growing disposable income, increasing distances and commute times. McBreakfast is not just a category for McDonald’s but instead an opportunity to invite incremental customers by giving them what they have wanted for decades- the ability to enjoy favourite McDonald’s breakfast anywhere they want, whether in-store, takeaway or via McDelivery. McBreakfast is not just a category, it's the ability to enjoy favourite McDonald’s breakfast anywhere one wants, whether in-store, takeaway or via McDelivery.
Could you give us instances of how and where localization of marketing strategies have worked and where they've failed in the Indian context?
When we started our journey in 1996, we were known as a big American multi-national brand where only few people were familiar. After the initial euphoria of McDonald’s, we experienced few barriers as we saw there were people who believed that any glass establishment which is air condition is expensive and McDonald’s is anything but that. So shedding the inhibition was the first thing that broke the barrier, followed by the next set of people to come in where looking for affordability, which played a very big role and therefore localization became the corner stone of the strategy for McDonald’s.
When we came out with the ‘Stage Fright’ ad, that really resonated well with the consumers and opened the gates to a whole lot of people. Following this, the launches such as McAloo Tikki at Rs.20, gave assurance to consumers of McDonald’s providing affordability and value that they wont get anywhere else.
The campaign “Baap ke Zamane ke Daam” resonated well through the years as it was talking more about the glocalisation of our menu. However to build the brand, a lot more relevance was required towards western fast food, as it was still unfamiliar for a majority of people and that’s when PizzaPuff, McVeggie and McSpicy came in and helped us climb the ladder. Once people became familiar with our food format, we also provided them with, value chain and premium price offerings for various occasions.
Globally, McDonald is betting on the McCafé concept to up its revenues. Do you think brand extension works in India? How many are there currently and what is the outlook for it? How is it branded from the rest of the Mc Donald's outlets?
Satiating consumer tastes, adding choices and broadening accessibility are our key differentiators. We have introduced brand extensions such as McDelivery, Kiosks and then McCafé in 2013. McCafé is currently one of our fastest growing brand extensions that has broadened accessibility for consumers and evolved as a premium destination for all the coffee lovers in the country at affordable prices. It is in-house coffee style chain within McDonald’s serving handmade Barista coffees. Our locally sourced coffees are made with 100% Arabica beans, which have been received very well by our customers and helped us further build McCafé brand.
Brand Extensions have been working well for us. Because we realized people come to us for different reasons. The same person could walk in to have a meal with his family or cold coffee with friends or order breakfast at home. So it’s the same person accessing your brand for different reasons. Also, as coffee trend in India is on an upward swing, it becomes crucial for a leading QSR brand to address the need at the right time. And thus the introduction of McCafé helped us to reach out to coffee-consuming customers.
In a span of 3 years, we have rolled out over 100 McCafés across west and south India. This is a clear testament from our customers on enjoying the coffee experience provided at McCafé. We plan to double our base by FY18. Satiating consumer tastes, adding choices and broadening accessibility are our key differentiators. We have introduced brand extensions such as McDelivery, Kiosks and then McCafé in 2013.
Can you give us examples of how McDonald's is strategising to save on development and operational costs?
In December 2015, McDonald’s successfully launched a sustainable growth model with new Restaurant Operating Platform 2.0 (ROP 2.0) that has been a key component in driving up our operating margins and consistently contributing to our SSSG while delivering 20-25 per cent saving in CAPEX. In order to reduce development costs, McDonald’s brought Indian and global equipment suppliers to work jointly with its local suppliers on design and material sourcing. The company further cut operational costs by installing LED lighting, and solar panels to heat water, thus eliminating the need for boilers.
We also created multiple green initiatives based on solar power models to reduce costs and increase efficiency with available resources. In future also, we will be introducing new models and ways to utilize our resources in the best possible manner.
Can you tell us about the forthcoming strategies for McDonald's in terms of advertising and marketing?
Last quarter, we launched ‘A lot has changed. Nothing has changed.’ to mark the successful completion of our twenty year journey in India. Right now, for our latest LTO(Limited Time Offer), our ‘Junior Maharaja Mac Moment’ is on air which talks about enjoying little moments of achievement. Besides that, we have a pipeline process that uses consumer data information to understand potential trend and on what lies ahead. Based on this, we have a robust plan for marketing which will play out in the quarter
What makes Dosa Masala Brioche work?
Today, Indians are open to experimenting with food and they often keep looking for a mix of local tastes in a global format to suit their taste buds. In the past few years also, McDonald’s has brought innovations like McAloo Tikki, Kebab Burger, McAloo Tikki Burger in Mexican and Lebanese flavor which customers readily accepted. We got the new Dosa Masala Brioche which is an amalgamation of a delightful South Indian patty clubbed with Brioche (a kind of bun originated from the French breakfast classic). I think, this combination topped with Malaga Pudi mayo is winning Mumbaikars head over heels.Today, Indians are open to experimenting with food and they often keep looking for a mix of local tastes in a global format to suit their taste buds.