McDonald’s to expand in emerging cities and towns

India: McDonald’s has planned to invest around USD110 million over the next 2-3 years to expand its fast food chain in India, in emerging cities and towns. The company has been trying new variants of food items which are also being introduced in Singapore and Middle East. The company is expected to increase its product offering by introducing new products such as McSamosa, McDosa. India was the first country wherein the company started offering vegetarian menu in 1996.

According to TechSci Research, with increasing global demand for vegetarian products, the company should focus on increasing its presence in small cities and towns where the share of vegetarians is higher. The company recently opened stores in cities such as Nellore, Andhra Pradesh, and Goa. Around 250 more outlets have been planned for the western and southern India. McDonald’s operates in India through Hardcastle Developments, which is a 100 per cent subsidiary of Westlife Developments.

According to a recent report by TechSci Research “India Food Services Market Forecast & Opportunities, 2020”, the market for food services in India is expected to grow at a CAGR of over 12% through 2020. Growth in the market is anticipated primarily on account of higher disposable income, improved standard of living and changing preferences of consumers. In addition, expansion of brands into tier II and tier III cities, is also a major factor which is expected to drive growth in food services market of the country over the next five years. In 2013, the market was dominated by unorganized and non-branded players, however, with growth of various foreign and domestic brands, these players are expected to lose their market to organized branded players. Segment-wise, dining food services segment was the largest contributor in India food services market in 2014, on account of the large number of dining restaurants in the country. The segment is expected to retain its dominance in the market over the forecast period as well.