McDonald’s has recently decided to temporarily shut down its 165 outlets in India after six years of battle with its Indian Franchise partner, Vikram Bakshi, before an out-of-court settlement which ended up with McDonald’s buying out the 50% of his stake. Bakshi, who, besides Amit Jatia, is the one who introduced McDonald’s in the country in 1996. The transfer of ownership has now eased the tensions, removing the clouds of uncertainty hanging over the fate of staff working at the 165 outlets. For now, the Chicago-based food giant’s outlets will stay closed for another two weeks and in the meantime, it will seek to ensure the enhanced quality of food to serve to its customers (Sarkar, 2019).
The food giant has bought over the 50% stake held by Bakshi and his wife in Connaught Plaza Restaurants (CPRL), the firm that operates all McDonald’s restaurants in North and East India. This legal battle started following the unilateral removal of Bakshi as the MD of CPRL by McDonald’s. The matter went from Delhi High Court, Supreme Court to the London Court of Arbitration before it was mutually resolved out of the court (Dutta, 2019).
After the settlement, Robert Hunghanfoo has been appointed as the head of CPRL.
“Accomplishing a mutually agreed settlement in this matter means that our customers can now look forward to a reinvigorated, consistent and uniquely McDonald’s experience when they visit us,” Hunghanfoo said in the release.
“Our top priority is to deliver the highest quality restaurant experience to our customers. While we are confident this will result in the best possible experience for our customers, we sincerely regret any inconvenience the temporary restaurant closures may cause,” Hunghanfoo said.
The other man responsible for bringing McDonald’s in India is Amit Jatia, who first experienced it in Japan when he was 14. Although a vegetarian whose experience restricted to the shakes, it proved to be lasting. Still, before he was about to introduce it in India, he knew the enormity of the task he had taken up. Or, for that matter, it would have been a challenge for anyone considering to introduce a burger chain whose world-famous signature product was beef, generally a taboo in Indian society. In India, the half of whose population thrives on a vegetarian diet, mostly for religious reasons. In a country where the cow is revered as a sacred animal, it was obviously out of the question to expect the prospects of the success of Big Mac beef burger. So, something needed to be there to replace it and the Chicken Maharaja Mac finally came to the rescue. However, it was not the only problem the local partners of McDonald’s had to face. The other big challenge included the national habit of preferring home food. As the research in this regard showed in 2003 that out of 100 meals that people take in a month, only three were eaten out (Kannan, 2014).
The food giant’s journey started in 1995 when McDonald’s Corp announced its plan to open restaurants in India in the following year. Before that, the Corp had 16000 restaurants scattered around 79 countries. In the planning stage, it was carefully catered to opt out beef and pork, replacing them with the veggies, fish or chicken.
Vikram Bakshi and Amit Jatia became the Corp’s two joint venture partners who, in the following years, made a success of McDonald’s in India. For the initial training, they spent a few months in Chicago at McDonald’s worldwide training center (Sullivan, 1995). The current story of the out-of-court settlement in which McDonald’s has acquired the 50% stake of Vikram Bakshi and his wife began with the conflict in 2008 when the fast food chain tried to buy Bakshi’s 50% stake in the price he considered too less to be negotiated (Stacey, 2017). In 2013, the Corp had offered Bakshi Rs. 120 Crore in local currency for his stake while his demand was 1800 crore (Dutta, 2019). On August 2017, the food giant canceled the franchise agreement for its 169 outlets in North India following the conflict that had started nine years ago.
