McDonald's to open 150 new McCafe stores

Expansion of McCafe brand and its product offering is part of company's goal to elevate its coffee portfolio

Betting big on rapid growth of coffee consumption in the country, McDonald’s is planning to expand its footprint by opening 150 new McCafe stores over the next 3-5 years. In a span of one year, the company has opened   27 McCafé restaurants in Mumbai, Pune, Ahmedabad, and Nashik.

The expansion of the McCafé brand and its product offering is part of the company’s goal to elevate its coffee portfolio. McCafé is the third line-extension for McDonald’s in India after it added McDelivery and Dessert Kiosks in the last two years.

Hardcastle Restaurants, a master franchise for western and southern Indian operates McDonald’s restaurants and is a subsidiary of the BSE-listed Westlife Development.

Recently, the company opened four new outlets at Amanora Mall, Pimpri, Hinjewadi and Magarpatta in Pune.

Smita Jatia, Managing Director of McDonald’s India, west & south said, “We are opening 75-150 McCafes over the next 3-5 years in key cities across west and south India, where we have a licence to operate. We see a huge potential here and will continue to expand our beverages platform to serve as one stop destination for all customers across all day parts. Our range of premium coffees and specialty teas offer great value for money and can be enjoyed in the relaxing ambiance of McCafé – which is housed within McDonald’s restaurants. The launch of McCafé brand is a major step in our beverage growth strategy and building on the strong brewed coffee success.”

According to Technopak Advisors, the organized café market in India, is currently $230 million and is likely to hit $410 million by 2017. The organised cafe market of India is of Rs 1,380 crore.

Last fiscal, sales revenues grew 10 per cent at Rs 740 crore at Westlife Development, which focuses on opening quick service restaurants (QSR) across India.

According to Jatia, each company owned store would require capital investments of about Rs 30 – 35 lakh per McCafe which would be operating within its 192 existing McDonald’s outlets in west and south India.

She added, “Internationally, McCafes are housed within McDonald’s outlets but have a separate look and feel, the same format will be followed here in India. McCafes will complement McDonald’s restaurants by offering a range of premium specialty coffee including cappuccino, latte, iced mocha and frappe. It would also sell quality beverages such as hot chocolate, specialty teas along with cookies, pastries and muffins.”

Prices of beverages range from Rs 90 for a latte or cappuccino and Rs 110 for a frappe. Now, Mc Cafe will compete with leading coffee chains such as Cafe Coffee Day, Barista, Starbucks, Costa Coffee, Mocha, The Coffee Bean and Tea Leaf and Gloria Jean's.