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Supply Chain Analysis of McDonald's India

By:   •  January 4, 2019  •  Case Study  •  4,590 Words (19 Pages)  •  20 Views

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SUPPLY CHAIN ANALYSIS OF McDonald's India

SUBMISSION MADE TO:

Prof. Pradeep Pai

SUBMISSION MADE BY:

GROUP 1

E023 Pranav Goyal

E031 Shivram Kashyap

E036 Shekhar Kulkarni

E041 Prachi Madan

E056 Krutika Sampat

E061 Arushi Singh


UNDERTAKING OF PLAGIARISM

Date: October 25, 2018

We, the members of group 1, certify that the submitted written report is the original work of our team and all the analysis and reporting text is entirely our own. Facts, figures and other relevant information drawn from sources, where required, are duly acknowledged.

SIGNATURES:

      PRANAV GOYAL                                                                               PRACHI MADAN

     SHIVRAM KASHYAP                                                                       KRUTIKA SAMPAT

    SHEKHAR KULKARNI                                                                     ARUSHI SINGH

PLAGIARISM REPORT

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INTRODUCTION

 

The Indian fast food industry has grown over time and always has been in line with the wants of people of all ages and segments. There are enterprises which scale from single room outlet to a chain having many hundreds of outlets like McDonald's in India.   

People favor fast food as it is less time consuming, easy to prepare, cheap, and heavily promoted. As per a new research report ―Indian Fast Food Market Analysis, India is blessed with one of the fastest rising fast food markets in the world. The Indian fast food market is increasing at an annual growth rate of 30-35%. Almost all big fast food brands of the world have succeeded in making their existence felt in the country and most of them posting an appreciable progress. Although the marketplace has witnessed robust progress in the past couple of years, it remains largely underpenetrated and focused in the metropolitan cities. However, there is a large room for growth in tier-II cities, tier-III cities which are mostly unexploited. Therefore, the future of Indian fast nourishment industry lies in crowds that live in tier-II and tier-III cities.

In 1993 McDonald entered India through a 100 percent subsidiary MIPL (McDonald’s India Private Limited) that formed 2 50:50 joint venture (JV) with Connaught Plaza Restaurant’s  Vikram Bakshi to manage North and East India; and Hardcastle Restaurants’ Amit Jatia for South and West India. Radhakrishna Foodland is its distribution and logistics partner, which has a facility in Kalamboli, Mumbai.   

The objectives of the study are mentioned as follows:

1. To explore the factors influencing the growth and challenges faced by the Indian QSR industry.  

2. To analyze the transportation chain used to deliver materials to McDonald's outlets. 

LITERATURE REVIEW

 

Food services market is worth around INR 250,000 crore. It contributes around 2-3% to India's GDP. It comprises organized sector(i.e. licensed standalone and chain players across Quick Service Restaurants, Fine Dining Restaurants, Full Service Casual, Bars and Lounges, Hotels, Frozen Dessert Formats, and Cafes) as well as an unorganized sector(dhabas, halwais, food carts, roadside vendors, street stalls etc). The industry can be divided into six formats, viz. QSR(quick service restaurants), CDR(casual dining restaurants), Frozen Dessert(including ice cream and yogurt), Café(including bakery), FDR(fine dining restaurants), PBCL(pub, bar, club, lounge).  QSR and CDR are the two sub-segments driving the organized sector's growth, achieving 70% growth in licensed standalone outlets and 75% growth in chain restaurants. Among the two, QSR has been outperforming the market’s estimated growth by 25%. 

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Chart 1: Country-wise Average eating out per individual per month

 

A report from ASSOCHAM as shown in Table 1 shows that country wise average eating out per individual per month is highest for USA(14 times) and least for India (8 times). Brazil (11 times), Thailand (10 times) and China (9 times) are in between USA and India. 

It has been found by CRISIL that 25% of the Indian Population eats out for a minimum of two times in a month with the average bill charge of Rs. 150-300.  Around 50% of the Indian Population is eating out for a minimum of one time in three months. In 2020. It is estimated that 35% of India’s population will be in urban areas, RJ Whitehead (2015) study expects that increased Eating Out -fuelled by the arrival of more international chains and strengthening of local players as well. 

QSR MARKETPLACE CONSTRUCT

  1. Marketplace Overview

 

A major contributor to the Indian economy among the fast food sector is the QSR market. Many international players have arrived in India where a small percentage of the population used to eat out with a few numbers of branded eateries. The changing trends in shopping and entertainment have also contributed to the growth of the segments as it has become a necessary part of the entire shopping experience. This industry has succeeded to answer the questions raised on its credibility and has convinced the market by satisfying the Indian taste-buds. Better cold storage and supply chain infrastructure have facilitated the industry to expand across the entire nation and equal growth is observed in tier 2 and 3 cities. ASSOCHAM has projected growth at a 25% CAGR & it is likely to cross Rs 25,000 crore by 2020.

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Table 1:
Growth of QSR in Indian Cities

Quick Service Restaurants (QSRs) have been an important segment for the Indian Diet Services marketplace. It has grown over the years because of its focus on competitive pricing, affordability and customer's needs such as convenience, increased disposable income, enlarged appetite and its hunger for international diet. Marketplace growth in this segment over the last few years is because of a number of international QSR chains which offers product offering with specific cuisines. At the micro level, a share of the QSR marketplace largely rests in metro cities and mini metros because of higher consumption, market placing activities, increased customer's awareness.

  1. Marketplace Companies

With the entry of Indian and international brands into this marketplace, the concept of QSR is gaining prominence in India. The marketplace is quite competitive in nature with companies operating via core menu offerings and introducing variations in Indian and international diets. The established international brands proposition such specialties as burgers, wraps, pizzas, sandwiches, etc. Interestingly, another group consists of several applicants who are mostly confined to precise regions (e.g. Jumbo King etc.); this emphasis on providing tailored Indian or international cuisines to suit the Indian customer.

A notable aspect is the focus of Indian companies on multiple cuisines, which differences the international companies’ concentrating on a single cuisine or product class. When it comes to the menu, Indian QSRs like Haldiram’s, Bikanervala, etc. have a tilt towards vegetarian diet indifference to which international companies like McDonald's, Dominos, KFC, Subway, etc. offer a mix of both vegetarian and non-vegetarian offerings. The chain space is marked by the existence of 90-100 brands with ~2900-3000 openings spread across many cities in India. To withstand rivalry, most of the companies are tailoring their offerings in terms of flavors, pricing, services, etc. to meet Indian customers’ inclinations. Some exertions reflecting this include the inaugural of pure vegetarian restaurants in certain parts of the India, offering no beef-based product offerings, establishing discrete cooking areas for vegetarian and non-vegetarian diet, introducing local flavours in the menu, offering home delivery services, opening trivial-sized formats in high concentration areas with higher rents (like malls, office complexes), etc. Additionally, companies are also growing their presence at various destinations high streets, airports, hospitals, office complexes, highways, etc. through diverse formats like inline/mall, drive-through, and express formats.

A major part of food service business is composed of unorganized eat outs where the organized sector is only up to 20 percent out of which QSR encompasses half. It comprises all the types of eateries offering diversities of snacks and other fast foods. It is further divided as illustrated below:

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Chart 2: Composition of Indian QSR Industry

The major progress catalysts are increasing disposable income, youth spending, urbanization, mall and multiplex boom, and better logistics.

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Challenges affecting the growth of the QSR Industry:

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