McDonald's Vegetarian Only Restaurant

McDonald’s famously world-wide for its golden arches and being the American icon for fast food restaurants has plans of opening a vegetarian only restaurant in India.  For a company famous for its beef centric fast food chain, this is an important development in the globalization of McDonald’s and the localization of the menu for India.  McDonald’s has catered to local needs in India but still is renowned for its brand identity as a American fast food chain with very high quality standards in food and service.  In India, McDonald’s is considered as a premium, youth hangout.  This perception in the market is being addressed by the company which wants to be more mass based youth hangout and also a significant take away market share.  

In India, McDonald’s does not serve dishes with beef and port as they are proscribed for Hindus and Muslims respectively.  The operations are also modified to separate the vegetarian and non-vegetarian kitchens to cater to the cultural sensibilities of the customers.  The localization strategy to capture a share of Indian customers’ wallet is continued in respect of religious places, where the company now proposes restaurants serving only vegetarian cuisine.   This is targeted at the customers who are on pilgrimage to the different spiritual and religious destinations. 

The menu of McDonald’s in India is focused on Chicken as its mainstay in the non-vegetarian category.  In the vegetarian category in has localized versions like McVeggie burger and McSpicy Paneer. In the value for money menu, the company has McAloo Tikki burger, which is a top seller accounting for 25% of the total sales in the country.   

The proposed foray into vegetarian only outlet will be tried near the Golden Temple in Amritsar. The consumption of meat is already prohibited near the shrine and therefore the test site seems to meet the criteria for pilgrims as a target market.  The other locations in the company’s radar are Vaishno Devi shrine in Kashmir, which attracts pilgrims from across India.  This segment has multiple locations in a deeply religious country like India which attracts pilgrims from Hindu, Muslim, Sikh, Parsi, Buddhist and Christian faiths.  Many of the pilgrimages also have strict standards of diet and customers of almost all income levels are part of this category. 

Currently McDonald's has 270 restaurants across India and is a relatively minor player compared to Yum Brands which owns KFC, Pizza Hut and Taco Bell which services customer from around 480 locations in India.  The market for fast foods in India is dominated by the unorganized players, but the market share of branded outlets is increasing over the years. 

The market in India is expected to grow in view of the growing middle class with high consumption capability and increasingly preferring to dine outside the house.  The increasing numbers of customer eating out the breakfast and fast lunches has increased and both McDonald’s and Yum Brands are catering to this market along with the more popular youth segment, which they captured during the initial years of their foray into India.  

Questions

1. Do you think this segment fulfills all the criteria for a target market?
2. Will McDonald’s be successful in their business strategy?
3. What else would you suggest in this localization strategy followed by McDonald’s?
4. Would the branded players be able to take a significant market share from the unorganized players of the fast food business in India?