How McDonald’s Shutdown in North and East India impacts KFC and Subway?

After a dispute with Connaught Plaza Restaurant Limited (CPRL), McDonald’s has shut down 169 of its franchise restaurants from today that operated in north and eastern parts of India. A blow to food lovers and McDonald’s employees.

Dispute turns out to be Costly for McDonald’s Lovers and its Employees

McDonald’s alleged that Vikram Bakshi, head of CPRL committed fraud with them and transferred rupees 7 lakhs from McDonald’s account and transferred to his personal company. McDonald’s also alleged that Bakshi showed almost no interest towards their business commitments that were costing them. As a result McDonald’s terminated its deal with CPRL. From 06 September, 2017, 169 franchise restaurants of McDonald’s operated by CPRL will be closed. The petition of Vikram Bakshi was rejected by NCLT costing loss for Bakshi and the employees of the franchise.

The franchise would no longer be able to use the monograms, logo, food recipes, brand name, and method of processing food, trademark cuisines and intellectual properties. CPRL and McDonald’s had 50:50 partnership with each other for 169 restaurants operated closely in northern and eastern India.

Also, McDonald’s has stated that CPRL will retain its employees during the time of suspension and will pay them salary. CPRL, who has franchise with McDonald’s in west India is in the race to get the contract for the closed shops. Till then the employees may face some trouble.

Other’s Loss is Someone’s Gain

The closing of McDonald’s has created a way for other such chain restaurants. One of them is KFC India. KFC came in India for the first time in 1995 with a violent protest but later got settled. Presently, KFC has over 300 outlets in India focusing mainly into urban and sub-urban areas especially in metropolitan cities. KFC previously had set its desire to open more than 500 outlets in specific target year. Now with the closing of McDonald’, the gate is open all the way. KFC has already seen a 2% rise in sales in Delhi.

KFC will immensely benefit from this as being a premiere promoter of non-veg cuisines; it will definitely help KFC to stretch its arms in north-eastern India given the choice of food. North-east of India prefers non-veg food and given the crunchy chicken offered by KFC, it is definitely going to boost its business. Therefore, the people of these regions shouldn’t worry much as companies like KFC have lot to offer to them. Also, opening of KFC like restaurants will fill up the job lost due to closer of McDonald’s.

Meanwhile, the sales of other chain restaurants have grown. Subway has already seen 8% growth in sale since the close down of 43 out of 55 restaurants of McDonald’s in Delhi. Burger King also witnessed 2% sale rise while Subway had 5% growth in shares. It seems McDonald’s loss has opened the gate for the success of other chain restaurants.