Here’s How McDonald’s Is Looking To Woo Its Indian Customers For Breakfast
After the resounding success of its All Day Breakfast strategy, McDonald’s (NYSE:MCD) is now innovating in international markets to attract customers for breakfast. The company is launching a new breakfast menu in India that will feature versions for local favorites such as “Masala Dosa Brioche” and “Masala Scrambled Eggs” in addition to traditional breakfast items such as waffles and hash browns. Customizing its menu to suit local tastes appears to be McDonald’s strategy to grow in international markets. The company already serves vegetarian burgers with local ingredients at its outlets in India. Foundational markets (Japan, India and other South East Asian countries) account for slightly more than 10% of McDonald’s franchised revenues. These markets are critical for the company’s future growth and customized offerings suiting local tastes can ensure that McDonald’s grows faster in regions such as India.
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Capturing The Growth In The Indian Fast Food Market
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India’s fast food market holds strong growth potential, with just 2,700 fast food outlets for a population of 1.2 billion. With economic growth and increasing disposable income in the country, the fast food market is expected to grow at a compounded annual growth rate (CAGR) of 18% from 2015 to 2020. In 2020, India’s fast food market is expected to generate $26 billion in revenue. However, McDonald’s is still not a dominant player in this market. Dominos is the leading international player in the country with stores in 850 locations. McDonald’s operates only from around 370 locations in the country. Dominos enjoys a 16% market share in India’s food services sector with McDonald’s share being around 7.5%. While this is primarily due to preference of pizza over burgers, localizing its menu to cater to customer preferences in the region is critical for McDonald’s growth in India. With a dominant vegetarian population the company has vegetarian-only stores in the country and does not serve beef in any of its outlets to respect religious sentiments in the region. It already has spicy burgers in its menu to suit the tastes of Indian consumers. As the company tries to expand its “All Day Breakfast” initiative in India, creating localized menu items for breakfast can further this cause.
McDonald’s opened its first store in India in 1996 and has been able to gain a decent market share since. However, competition in the Indian burger market is now intensifying. In the past two years other major American burger companies such as Burger King, Wendy’s and Fat Burger have opened their stores in India. An American burger is no longer a novelty in the country but customers are now spoilt for choice to choose what suits their palate. While it is being overshadowed by the popular pizza chain, McDonald’s now also has to compete with other burger restaurants in India. Its strategy for growth in India has been to offer localized menu items. However, whether a similar strategy in innovative breakfast items will work or not, remains to be seen.
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