McDonald's to use alliance with oil firms for expansion

McDonald’s India, a food service retailer, said it will use its alliance with oil marketing companies such as HPCL and BPCL to expand the retail network along the national highways and in major cities in the country.

Ten out of 40 new stores to be opened next year will be opened in association with oil companies.

The company last week opened first outlets under an alliance with BPCL in Karnataka, one each in Bangalore and Channapatna on the way to Mysore.

Amit Jatia, Managing Director, Hardcastle Restaurants Pvt Ltd and JV partner, McDonald’s India, said McDonald’s will spend Rs 150 crore this year to expand its network to reach a mark of 170 outlets in the country, of which 80 will be in West and Southern India.

McDonald’s has two JV partners in India, one for north and east and the second for west and south. During 2009, the company plans to open another 35-40 stores across the country, about 50 per cent of them will be in west and south. By end of 2009, the company will have 40 restaurants in south India, he said.

“We will invest an average Rs 100 crore every year in the country to expand out retail chain. Each store will see an investment of approximately Rs 3 crore except real estate. We will expand along the national highways wherever HPCL and BPCL have their fuel stations. This year we will open two or three more outlets,” Jatia said.

McDonald’s plans to open eight more restaurants at select BPCL retail outlets in cities of Mumbai, Chennai, Hyderabad, Bangalore, Kochi, Thiruvananthapuram-Kochi Highway and on Kochi-Coimbatore Highway by 2009 with the next McDonald’s-BPCL outlet coming up at Khed Shivapur on the Pune-Kolhapur-Bangalore highway.

McDonald’s has set up its own cold chain in the country to maintain high quality in its products. The company directly procures its raw materials like vegetables from the farmers across the country and moves them through its cold chain. It has also invested in educating the farmers in growing the best quality vegetables. For example, it has assisted farmers to grow fresh iceberg lettuce in Maharashtra, Ooty and Nainital.

Today, it procures 1,200 tonnes of lettuce. McDonald has also trained farmers Gujarat to grow potatoes in Deesa and Kheda districts. It procures around 2,000 tonnes of potato annually, Jatia said.