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Jan 10, 2018 01:47 PM IST | Source: Moneycontrol.com

McDonald's closed doors open windows of opportunity for its rivals

Although many of the shut McDonald's outlets are in the process of reopening, the company is bound to fell some pain stemming from the reduced customer base.

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Fast food chains like Burger King, KFC and Carl’s Jr have been making the most of the void left by McDonald’s in the north and east of India.

Knowing only too well the scope of the value meals segment, these quick-service restaurant chains have been swift in coming up with attractive value-meal packages. Outlets of these chains have seen a massive surge in sales for the December quarter.

"We are on television with a value offer. This offer is massive value for consumers and hence we are up all across India. Traffic into our restaurants across markets has surged to take advantage of the limited time offer," Rajeev Verman, Chief Executive of Burger King India, told The Economic Times.

Nearly 80 outlets of McDonald’s in the region had shut down last month after logistics partner Radhakrishna Foodland stopped supplies, citing "reduction in volumes and uncertainty of the future". The logistics issue cropped up as a fallout of the legal tussle between the Indian partner Vikram Bakshi-led Connaught Plaza Restaurant (CPRL) and the parent company.

Although most of the shut outlets have reopened or are close to opening, McDonald's is bound to feel some pain stemming from the reduced customer base. Many of its rivals have already reported higher same-store sales growth, one of the most important metrics when it comes to assessing the performance of store-based businesses.

American fast food chain Carl’s Jr, which is operated in India by Cybiz BrightStar Restaurants, has come up with a range new products that have been priced quite attractively. "We have had a tremendous same store sales growth of over 22 percent between 2016 and 2017, which is probably one of the highest in the QSR industry. It is partially because of McDonald's, and partially because of our new range of low-priced high-quality menu starting at Rs 39," said Cybiz Corp group chairman Sam Chopra.

A spokesperson for Yum Restaurants-operated KFC also confirmed the company had witnessed increased footfalls this season but refrained from attributing it to the McDonald’s factor since this was peak season and there was no way to determine where new customers were originating from. "We would not like to speculate on the subject," the spokesperson said.
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