Burger King India Bound

By SiliconIndia   |   Friday, 05 January 2007, 06:00 Hrs   |    4 Comments
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New Delhi: The New Year is already showing signs of the next war, and surprisingly, the bone, rather the bun of contention this time is American hamburger chain Burger King’s entry into India. The bun behemoth, best known for its price war with Big Mac in the US, is likely to shake McDonald’s monopoly in India by launching its own brand of burger restaurants. It has already mandated Kotak Mahindra to scout for an Indian partner for a foray in what has now become a growth market for global fast food companies, reported the Economic Times.

Sources told ET that keeping in mind Burger King’s fondness for family-owned operations which have been in business for decades, Kotak has got in touch with a few business houses. Not surprisingly, the company that is now owned by a group of private equity players, including Bain Capital, Texas Pacific Group and Goldman Sachs, has held talks with Ravi Jaipuria (franchisee for Pizza Hut, KFC and Costa Coffee) and some others groups for a partnership.

Industry watchers opine that even though McDonald’s is firmly established in large metro cities like Delhi and Mumbai, Burger King’s entry is likely to start a burger war of sorts. “If the target customers are upwardly mobile kids, Burger King cannot keep away from Delhi and Mumbai. Innovation in product offerings and location of outlets would play a crucial role in drawing customers in the long run. In the short term, McDonald’s would lose some customers to Burger King out of the sheer curiosity factor. However, this would happen only if both are located in the same catchment area,” an industry source told ET.

McDonald’s joint venture partner for North and East India, Vikram Bakshi, however feels that all the talk about competition is overrated. “Mc-Donald’s is the leader in quick service restaurants and firmly established since it came to India a decade ago. It has always laid emphasis on understanding its customer needs with localized menu to make itself relevant,” he said, adding that despite Big Mac’s success in India, there was still scope for new entrants.

Burger King is likely to follow the approach it adopted while entering the Japanese market: franchisee-driven, with lower capital spent on opening new restaurants by designing smaller, less-expensive, and space-optimized ones.

“We’re attracting key franchisees with strong local and financial standing who can open several profitable restaurants quickly, establishing Burger King in previously under-penetrated areas,” said Burger King’s 2006 annual report. The company wants to open more than 400 restaurants worldwide in 2007.

As of 30 June 2006, the group, which operates in the United States and Canada; Europe, Middle East and Africa and Asia Pacific and Latin America, owned 11,129 restaurants in 65 countries.

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