Forbes India 15th Anniversary Special

You can't build a business by looking at quarter on quarter: Amit Jatia

Amit Jatia, vice-chairman of Westlife Development, the master franchise for McDonald's in South and West India, believes it might take another three quarters for consumer sentiment to improve in the country

Samar Srivastava
Published: Nov 13, 2015 06:43:23 AM IST
Updated: Nov 13, 2015 09:01:30 AM IST
You can't build a business by looking at quarter on quarter: Amit Jatia
Image: Shailesh Andrade / Reuters

Q. McDonald’s has been expanding rapidly in India. How many stores are you planning to open over the next few years?
Our philosophy is that we constantly think about developing new markets for the fast-food products of McDonald’s. We think there are a lot of under-penetrated markets in the country. We also believe that every time is a good time and so we continue to open restaurants. In the next 3-5 years, we are looking at opening between 175 and 250 outlets in the country. We currently have 215 restaurants in India. Every year, we are looking at adding 30-50 restaurants. I don’t think this will change for the next 10 years. On top of that, we are adding McCafes within the restaurants. We have 45 McCafes, which will go up to 215. So within the cafe space also, McDonald’s will have a leadership position after Cafe Coffee Day.

Q. Analysts have complained that same-store sales (year-on-year increase in revenue from existing outlets) for McDonald’s have not been robust.
Analysts are too paper-driven. That is why you need an entrepreneur to build a business. They are right in their assessments. But you can’t build a business by looking at quarter on quarter. I’ll give you an example. Two years ago, we had no restaurant in Mumbai’s Dadar. So when I opened the Dadar outlet I had a big smile on my face, even though it takes time for an outlet to develop. I can give discounts and show higher same-store sales, but that is not a sustainable model.

Q. How have consumer tastes evolved in the last decade?
Deep down, we have discovered that McDonald’s is a Western quick service restaurant (QSR) brand. People come to us for great burgers, ice creams and wraps. People don’t come to us because of what they can get at other places. We did the aloo tikki innovation in 1997 and, in my view, McDonald’s has written the playbook on what is the balance between Western and Indian tastes. So the consumer bottom line is that when they come to McDonald’s, they are looking for Western food but with flavours that are relevant to them.

Q. The expectation was that consumer sentiment would have improved by now. But it hasn’t. How much longer will the uptick take?
My first thought when the new government came to power was that it would take time. We have to give more time to the government to address issues. I feel the consumer has to feel good about spending. My thinking got confirmed when I was talking to a corporate leader in the consumer business. You might think our burgers are only Rs 25 but we are an impulse business. When the consumer is at a mall she will see my store and decide to have burgers. If the mall’s footfalls are low, businesses like McDonald’s will be hit. I have not seen sentiment change so far. I think it could take three quarters from today for it to change.

(This story appears in the 27 November, 2015 issue of Forbes India. To visit our Archives, click here.)