McDonald’s India: Pains of Partnering with a Delinquent Partner

Abstract

McDonald’s India is a real-life, undisguised decision case. This US-based fast food multinational corporation set shop in India in early 1990s to gain early mover advantage in a country with a huge population. It struck joint ventures with two domestic Master Franchisee to grow its business. The company made efforts to localize its menu and customize its offerings to suit domestic customers. With the passage of time competition intensified and so did customer expectations. Of the two Master Franchisees, while Westlife Development Ltd. maintained cordial relations with McDonald’s, the chief executive officer of Connaught Plaza Restaurants Ltd. Vikram Bakshi became an impediment in its business plans. Differences between McDonald’s and Bakshi reached a flash point and the matter landed in the courts in India and London. Even after several years of litigation no clear winner emerged. As a consequence, while operations of Westlife Development flourished, the business of Connaught Plaza Restaurants remained stunted. While the two partners in the joint venture clashed, competitors took advantage of the situation to capture emerging opportunities. Even after over two decades of operations in the country, McDonald’s is not making profits. On the contrary it has accumulated losses of ₹4.22 billion by the end of 2018. The challenge facing McDonald’s is how to find a quick solution to the long-drawn problem and thereby accelerate the pace of growth of its business in one of the fastest growing economies in the world.