Rivals rush to take a bite out of McDonald's market

Look to poach employees, take over real estate

While McDonald’s India and Vikram Bakshi battle it out in the courts, franchisees of competing brands are working on plans to poach the fast food major’s employees. 

Rivals are also in talks with real estate owners of the 43-odd McDonald’s outlets that have been shut for over a month, and hoping to get possession of other key locations.

Franchise management company Yellow Tie Hospitality, for example, has approached many employees from McDonald’s north and east outlets that are facing closure. 

According to Karan Tanna, founder and chief executive officer of Yellow Tie, skilled manpower is a crucial resource for the firm, as it is planning to more than double its restaurant count over the next six quarters. “While we anticipate an increase in sales, it is a short-term phenomenon. The lasting benefit we expect to get is by poaching the firm’s skilled employees. We have already approached a number of McDonald’s store managers and offered jobs to them. It will not only help them but also our franchise owners,” Tanna said.

Yellow Tie operates restaurants for a number of brands including US fast food chain Genuine Broaster Chicken (GBC). The firm has 22 GBC outlets in Kolkata, Patna, Gangtok, Imphal, Guwahati, Varanasi and Lucknow, apart from some in the National Capital Region. 

Tanna said the aim was to take the total number of restaurants they operate to 125 by the end of 2018, including 75 GBC stores. “In most cases, attractive and iconic locations are usually blocked by bigger brands. Like employees, the real estate owners may have to look for stable partners like us. This is an opportunity for us,” Tanna said.

Burger chain Carl’s Jr is not behind. Sam Chopra, founder and chairman of CybizCorp. that owns franchise rights for the brand in India, said: “We are growing our restaurant count by one per month and hope to hire senior-, mid- and crew-level employees of McDonald’s.”

Chopra said he was interested in the real estate that may get vacant due to the closure of more stores. The firm’s focus is on Punjab, Haryana, Delhi, Rajasthan, and Uttar Pradesh, with special emphasis on stores that are located near the highways. “We plan to open 100 restaurants by 2020 and shutting down of more McDonald’s outlets will help us grow faster,” Chopra said.

Other brands are also looking to make the most of the situation McDonald’s is in right now, sources said. 

Yum! Brands, which owns Pizza Hut, KFC and Taco Bell, is also expanding its store count rapidly. The number of Pizza Hut outlets is expected to double to 700 by 2022. Yum! also aims to open 100 Taco Bell restaurants by 2021. Another rival brand, Burger King, which operates through 103 stores in 28 cities, plans to open another 35 stores by the end of the year.

Executives from Devyani International, which operates Yum! Brands and Burger King, were not available for comment.

Vikram Bakshi, the estranged managing director of Connaught Plaza Restaurants Lts (CRPL), had recently said that he wished to continue running the outlets under the McDonald’s brand despite the parent company terminating the franchise agreement. 

On Friday, the National Company Law Appellate Tribunal (NCLAT) had directed McDonald’s India and CRPL to keep the 169 stores in northern and eastern India open until further orders.