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McDonald’s Plans First Vegetarian Restaurants in India

September 05, 2012

McDonald’s Plans First Vegetarian Restaurants Globally in India

The attempt to draw religious Indians shows how McDonald’s Corp. is attempting to boost sales by catering to local tastes outside its home market. Photographer: Andrew Harrer/Bloomberg

McDonald’s Corp. (MCD:US) will swap its trademark burgers for potato sandwiches when it opens two vegetarian restaurants in India next year, the first such outlets globally for the world’s biggest restaurant chain.

The fast-food chain will open two new locations in northern Indian cities that are pilgrimage sites for Hindus and Sikhs, according to Rajesh Kumar Maini, a spokesman for the company’s north and east Indian operations. McDonald’s already keeps beef and pork products off the menu in India, where a majority of the population are Hindus and Muslims.

The attempt to draw religious Indians shows how the Oak Brook, Illinois-based company is trying to boost sales by appealing to local tastes outside its home market and compete with other chains such as Yum! Brands Inc. (YUM:US)’s KFC and Pizza Hut. McDonald’s, which gets more than 60 percent of its revenue (MCD:US) from international stores, said last month that it was exploring and evaluating opportunities in Vietnam, where it doesn’t have any stores.

The vegetarian restaurants will sell items such as the McAloo Tikki burger, a sandwich with a mashed-potato patty, and the Pizza McPuff, a vegetable and cheese pastry.

India, the world’s second most populous nation, is important for McDonald’s as it increases sales overseas. The country’s large population, growing urbanization and increasing number of people joining the workforce may help the fast-food industry expand from 47 billion rupees ($840 million) in 2010 to to 146 billion rupees in 2014, according to estimates by researcher RNCOS E-Services Pvt.

Golden Temple

One of the vegetarian outlets will be in Amritsar, where the Golden Temple, a holy site for Sikhs, is located. The other will be in Katra in Jammu and Kashmir in the north, which houses one of the main pilgrimage sites for Hindu people, according to the spokesman. McDonald’s sells Chicken McNuggets and fish burgers in its regular Indian outlets although its traditional beef burgers aren’t available. The cow is sacred to religious Hindus, who don’t eat beef.

“The new restaurants in pilgrimage areas will be vegetarian-only because of the specific area and customer base,” Becca Hary, a McDonald’s spokeswoman, said in an e-mail. McDonald’s kitchens have always been divided into separate sections for cooking vegetarian and non-vegetarian items in India, she said.

Opening no-meat stores “speaks to McDonald’s efforts to cater to local tastes,” she said.

Indian Partnerships

McDonald’s, which opened its first restaurant in India in 1996, operates as many as 271 stores there now through partnerships with two local Indian companies, Connaught Plaza Restaurants Pvt. for the north and east, and Hardcastle Restaurants Pvt. in the west and south.

McDonald’s isn’t alone in trying to capitalize on the market in India. Louisville, Kentucky-based Yum, which also owns Taco Bell, has about 479 stores in its India division, which includes Bangladesh, Mauritius, Nepal and Sri Lanka, and plans to open 100 stores there this year. Domino’s Pizza Inc. (DPZ:US) has about 500 stores in India and has said the nation can be its second-largest market in three to five years.

McDonald’s was little changed at $89.06 at the close in New York. The shares (MCD:US) have dropped 11 percent this year.

To contact the reporters on this story: Malavika Sharma in New Delhi at msharma52@bloomberg.net; Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net


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Companies Mentioned

  • MCD
    (McDonald's Corp)
    • $91.59 USD
    • 0.55
    • 0.6%
  • YUM
    (Yum! Brands Inc)
    • $69.13 USD
    • 0.76
    • 1.1%
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