Food & Drink

McDonald's In India: Chain Underperforming, Hopes Price Slash Will Boost Sales

McDonald's isn't doing so well in India, and the global fast food chain is slashing prices in an effort to boost sales.

Forbes reports that Indian McDonald's will see the prices of entry-level and core products come down by six to 15 percent beginning August 1. That means lower costing items in categories including extra value meals, breakfast products and desserts.

McDonald's India and joint venture partner Vikram Bakshi told The Economic Times that the company wants to boost sales even if it means lower margins:

"There is pressure on consumption and people are beginning to hold back spending... the objective of our price rationalisation is to give them more reasons to come to our stores," Bakshi said. Continued food price inflation and a slowdown in the country's economic growth rate—which slipped to a nine-year low of 5.3% in the fourth quarter of the last fiscal—have impacted overall consumer sentiment and made many people to spend less on discretionary items such as clothing, food and entertainment.

McDonald's first entered the Indian market in 1996. At the time, it offered a Big Mac made with lamb called the Maharaja Mac. It now has 210 stores across the subcontinent, but since opening has had to rethink its offerings.

In 2011, the managing director of McDonald’s India, Amit Jatia, told Nation's Restaurant News that the chain had only one vegetarian option when it first opened. “Half of our customers are vegetarian," Jatia said. "Did we have the right value proposition? No.”

McDonald's India now offers a local burger, the aloo tikki burger, which features a patty of spiced potatoes and peas. At the time of Nation's Restaurant News' publication, the company planned to expland to 450 restaurants by 2013.

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