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Farah \n Bookwala, Moneycontrol\/CNBC TV18<\/i><\/p>\n Farah \n Bookwala, Moneycontrol\/CNBC TV18<\/i><\/p>\n
Mumbai, \n October 11, 2013<\/i><\/p>\n
\n McCaf\u00e9 is the coffee-house chain owned by McDonald\u2019s \n Corporation. It has a worldwide presence. Hardcastle Restaurants, \n the master franchisee of Mcdonald\u2019s in Western and Southern \n India, will open the first McCaf\u00e9 outlet in India in Mumbai \n on Monday at SOBO Central Mall. <\/p>\n
Hardcastle Restaurants is a 100% subsidiary of Westlife Development \n Ltd, a company listed on the BSE. Hardcastle Restaurants plans \n to set up around 100-150 McCaf\u00e9 restaurants over the next \n 3-5 years in metro cities of west and south India. <\/p>\n
For Hardcastle Restaurants, McCaf\u00e9 represents a host of \n opportunities. Incremental revenues, a chance to enter into premium \n segments such as coffee and confectionary, and that too, without \n extra rental costs, as McCaf\u00e9 outlets will be located within \n existing McDonald\u2019s outlets. <\/p>\n
Typically, a McCaf\u00e9 outlet will be spread over 500 square \n feet within a 4,000 square feet McDonald\u2019s outlet. The McCaf\u00e9 \n outlet will have an ambience of a premium caf\u00e9, and the \n company will spend nearly 30-35 lakhs per outlet on interiors \n and refurbishments. For customers, McDonald\u2019s India believes, \n it is an opportunity to get the best of both worlds at the same \n location. McCaf\u00e9 will offer a menu comprising of beverages \n such as cappuccinos, lattes and espressos along with a selection \n of cookies and muffins. <\/p>\n
Amit Jatia, Managing Director, McDonald\u2019s India (west & \n south), says, \u201cIt not only provides another beverage option \n to our customer, but with their meal, if they decide to have a \n frappe instead of another carbonated drink, I think that is one \n option.\u201d<\/p>\n
But experts are skeptical of this possibility. McDonald\u2019s \n is largely seen as a value meal chain and McCaf\u00e9\u2019s \n menu starts at upwards of Rs90. While beverages will range from \n Rs90 for a latte or cappuccino, frappes will start at Rs110. Arvind \n Singhal, chairman, Technopak Advisors says, \u201cIf the customer\u2019s \n average meal size in terms of spending is in the range of Rs40-60, \n would that customer also be tempted, or some of those customers \n be tempted, to move into a separate area and pay Rs90 for a cappuccino? \n I would be very, very skeptical about this possibility.\u201d \n This price positioning pits it against recent entrant, Seattle-based \n Starbucks. And Singhal feels, this puts McCaf\u00e9 at a disadvantage. \n Singhal says, \u201cMcDonald\u2019s is certainly not seen as aspirational \n in the context of a premium pricing product. The same customer, \n would he be willing to consider McDonald\u2019s a cheaper alternative \n to Starbucks? I certainly find challenges accepting this.\u201d \n So, with high prices and a shop-in-shop format, experts feel McDonald\u2019s \n will find it hard to create a mark either as a premium coffee \n chain or capitalize on McDonald\u2019s value priced customers. \n <\/p>\n
But other experts feel the wide food and beverage menu McDonald\u2019s \n can now offer, at one location, gives it a leg up over other players. \n <\/b> According to Devangshu Dutta, chief executive, Third Eyesight, \n \u201cIf the operating framework is right, it will allow McDonald\u2019s \n to add revenues organically and also by nibbling away customers \n who may be going to other outlets by offering them a combination \n of meals which a neighbouring outlet will not be able to offer.\u201d<\/b><\/p>\n