Ending the six year-long bitter fight, McDonald’s India (McD) and Vikram Bakshi, the erstwhile managing director (MD) of Connaught Plaza Restaurants (CPRL), have finally decided to lay down arms.
McD, the local arm of the American burger major McDonald’s, has bought over the 50 per cent stake held by Bakshi and his wife in CPRL for an undisclosed amount, the company announced on Thursday.
With this move, McD, along with its affiliate McDonald’s Global Markets LLC — a US-headquartered subsidiary of McDonald’s Corporation — now fully controls CPRL, the firm that operates all McD outlets in North and East India.
According to Barry Sum, director, corporate relations for Asia, McDonald’s, the out-of-court settlement would allow McD to revamp its business in the region. However, starting Thursday night, all McD outlets in North and East India will be shut temporarily.
“We are going to conduct an all-round assessment of the outlets, including requirements for training of staff. This is just a temporary measure. Once the assessment is over, we would know what kind of improvements or changes are required to be implemented to align the business with our basic global parameters,” Sum said.
Sum said it may take up to two weeks to finish the process and outlets are re-opened. Currently, there are some 160 McD outlets in the two regions concerned.
Moreover, the fate of 6,500 employees of CPRL, working in its outlets and offices, is hanging by a thread. While McD had earlier alleged that the quality of restaurants under CPRL is below par, Sum said all CPRL staff would be paid salaries during the transition period.
McD further said in a statement: “During the transition, it will be focused on two key areas — providing employees with clarity and confidence in their future at McDonald’s and leveraging McDonald’s global system expertise to fortify high operating standards for our local customers”.
The takeover ends an era of McD’s initial growth and expansion in India. After forming a joint venture (JV) with Bakshi in March 1995, McD’s first India outlet came up in Delhi’s Basant Lok. While the outlet has been closed down long ago, over the years Bakshi’s connections in the Capital’s real estate market increased McD’s growth.
However, the long-drawn battle between McD and Bakshi had a severe impact on the brand’s operations in the two regions during the past few years. Trouble began in August 2013, when McD had unilaterally removed Bakshi from the position of MD of CPRL — then a 50:50 JV between Bakshi and his wife Madhurima and McDonald’s India. However, the two directors of CPRL, representing the burger major, issued a termination notice to Bakshi. Following which, Bakshi had then approached the now-defunct Company Law Board against McD. Rounds of legal battle, spread over the next five and a half years, were fought that included hearings in the Delhi High Court, Supreme Court, and the London Court of Arbitration.
In late-2013, a round of offers was forwarded by Bakshi and McD to buy each other out. While McD had offered Rs 120 crore for Bakshi’s 50 per cent stake, Bakshi asked for Rs 1,800 crore.
In June 2017, following instructions from McD to its suppliers, CPRL had to shutter down over 80 per cent of its outlets in the Delhi-National Capital Region due to lack of supplies. Weeks later, McD severed all operational ties with CPRL and forbade it from using its logo and brands.
With Bakshi’s departure, Robert Hunghanfoo has been appointed head of CPRL with immediate effect, McD said. Hunghanfoo, an McD veteran, has been in charge of operations at many of its Asia-Pacific markets. Starting his stint in McD in August 1994 in Brisbane, Australia, Hunghanfoo has worked in South Africa, Italy, Korea, and the Netherlands, before taking over as MD for Indonesia in 2010. He was the MD for McDonald’s in Singapore between 2014 and 2016.
Bakshi did not respond to calls and messages at the time of going to press.