We’re definitely not loving it.
The world’s favourite fast-food chain will no longer be ubiquitous in the streets of Delhi. In an unprecedented move, 43 of the 55 McDonald’s outlets in Delhi will be temporary shutting down, due to a tussle between the North Indian segment and the global authorities.
What is the tussle about?
The scrimmage between the Connaught Plaza Restaurant Ltd. (CPRL) and Vikram Bakshi has been in the pipeline for quite some time now. CPRL is the regulatory body which operates the fast-food restaurants in North and East India. Vikram Bakshi was signed on as a partner of McDonald’s India Pvt Ltd. back in 1995, when the global fast-food chain entered India on account of liberalisation. A 50:50 joint venture agreement was adopted by the two parties. In 2013, however, leadership battle came to the fore. Alleging misconduct, McDonald’s resisted the re-election of Bakshi as the Managing Editor, countering which Bakshi challenged his removal in the Company Law Board, Delhi (CLB). He claimed mismanagement and oppression as the contesting arguments, paving the way for an unpleasant legal battle. Naturally, McDonald’s rescinded the JVA and citing an arbitral clause in the agreement, proceeded to claim arbitration in the London Court of International Arbitration. Bakshi appealed to the High Court and Supreme Court to contest the proceedings, which remained unfruitful. They currently await a decision from the CLB.
What are people saying?
McDonald’s India Pvt Ltd issued a statement announcing the decision. It said, “The ‘eating house licenses’ of a number of McDonald’s restaurants in Delhi have expired. The board of Connaught Plaza Restaurants Private Limited (or “CPRL”, McDonald’s licensee in North and East India) is working to obtain the required licenses. Pending this, CPRL is temporarily suspending the operations of the affected restaurants.” It also added, “India continues to be an important market for McDonald’s and we are committed to working with CPRL to resolve the issue as soon as possible.”
The former Managing Director, Vikram Bakshi, was quoted in the Economic Times saying, “It’s unfortunate, but operation of 43 restaurants operated by CPRL has been temporarily suspended.” The decision was made in a Skype call on Wednesday.
What are the other factors which contributed to the shut-down?
Due to the initiation of the legal battle, revenue trends and investment valves deteriorated inadvertently. The store-level efficiency had to suffer major challenges and maintenance factors such as the hygiene requirements were severely hampered due to the ownership struggle. Due to this, the eating house license of these outlets has been expired. The decision also comes as a blow to the employment sphere, as it will lead to a loss of 1,700 jobs. According to reports, CPRL has decided to retain the employees and will not revoke their salaries during the turbulent period. The negative impact of the tussle became visible post-2013, with Domino’s overtaking the position of the country’s largest quick-service restaurant chain in the country. In 2014, the number of stores opened was a palsy 9 as compared to 27 in 2012.
Which outlets are still open?
The following areas will continue to offer the lavishness of the McBurgers, McFries, and McDesserts!
- Ground Fllor, Ansal Plaza Mall
- Community Centre, Saket
- 17 Regal Builing, Connaught Place
- 10, Block N, Connaught Circus
- ITO Milap, Milap Building, Bahadur Shah Zafar Marg, I.T.O
- Shop No.: 1, Plot No.: 45, Satyam Cinema Complex, Nehru Place
- Shop No.: 34, 102B, 109, 110, Ground and First Floor, DLF South Square
- Domestic Terminal of Terminal-3, D-40, IGI Airport
- International Terminal of T-3, IN-50, Food Court, International Aiport
- Kashmere Gate, ISBT, DMRC Railway Station, Kashmere Gate
- Form No.: 16, Old Delhi Railway Station
- E-31 and 31, South Extension Part II
- V3S East Central Mall, Ground Floor, Laxmi Nagar, Preet Vihar
- Agarwal Fun City Mall, Shop No.: 7,8, and 9, East CBD, Shahdara, East Delhi
What are you waiting for? Scram!