The exit of Vikram Bakshi, joint venture partner and managing director, north and east, McDonald’s India, could be a part of the company’s efforts to rev up sales in India.
Faced with stiff competition from domestic players in the quick service restaurant category, the world’s largest burger chain is looking to boost its sales kitty in India, and Bakshi’s exit is likely to be a fallout, industry sources said.
Connaught Plaza Restaurants, Bakshi’s joint venture with McDonald’s ran 154 outlets in northern and eastern parts of the country.
Last year McDonald’s slashed prices of over half of the items it sells in India by up to 15% to arrest a slide in growth and boost expansion, in what was considered to be the company’s biggest pricing strategy in the country till then.
"We want to accelerate sales in India even if it means lower margins at a time when same store comparable sales growth has dropped to high single-digits in April-June from double-digit growth last year," Bakshi said while announcing the price revision.
While underperformance of the company in selected parts of the country could be a reason for Bakshi’s exit, he was also allegedly involved in a land dispute at one of the company’s restaurants in New Delhi’s Khan Market area.
"Multinational companies are very sensitive and do not appreciate their brand names to share space with any legal issues," said a retail expert from a leading consultancy.
"In the Indian market where other chains have been growing significantly, McDonald’s is likely to set a sharp focus again," he added.
The company, however, did not want to speak on its souring relations with Bakshi, who is almost a two-decade old partner in India. "As we have stated previously, the public notice gives all the correct details, including how the company is being managed. We have no comment beyond what is outlined in that notice," said Danya Proud, director, corporate relations, McDonald’s (APMEA).
Also, mail sent to Bakshi did not elicit any response. However, Bakshi is likely to move the Company Law Board and seek reinstatement as managing director.