Interview: Amit Jatia, Vice Chairman, US fast food chain's Indian franchisee Hardcastle Restaurants
As part of its efforts to woo health conscious customers, McDonald’s India has revamped its menu to reduce sodium and oil content in various items offered. It has started ‘The Good Food Story’ initiative, which is expected to reinforce its commitment towards promoting nutritious and wholesome food. McDonald’s strength lies in its ability to continuously evolve and remain relevant to its consumers and the Good Food Story is one such journey that the company has undertaken to bring nutritious and wholesome food to them, says the US fast food chain’s Indian franchisee Hardcastle Restaurants vice chairman Amit Jatia in an interview with Ashwin J Punnen of Financial Chronicle. Jatia maintained the company is on an expansion mode and will invest Rs 1000 crore over the next few years to increase the restaurant base that is expected to generate over 1500-2000 jobs annually
What is this new initiative that you have started on the good food concept?
The idea is very simple. It is about good food. Not fast food but good food. Basically, we want our consumers to feel good about the food when they come to our outlets. That is the whole direction in which we are going.
In fact, over the last few years we have also taken steps to make our food more nutritious and wholesome. We have reduced oil content in our mayonnaise by upto 40 per cent, reduced sodium in our patties, fries and nuggets by upto 20 per cent, which positively impacts the vast part of our menu. Our food is trans-fat-free. Our soft serve is made of 100 per cent milk and is 96 per cent fat-free. Our most popular menu item - McAloo Tikki Burger - is a balanced meal from the viewpoint of the guidelines for energy sources issued by the National Institute of Nutrition. Our wraps are multi-grain. We have rice products on trial in some of our markets. We have over 20 dairy and fruit-based drinks on our menu. Our food is wholesome, hygienic and nutritious and is compliant with applicable food laws and can safely form part of the regular diet of our customers. The menu served in India is unique and developed specifically for the market.
Does it add cost to your products?
It does increase the cost. But we have not shared that data so far. I feel we able to absorb that additional cost without passing it on to our customers because of the strong sales growth that we got. Sometimes we have to weigh the consumer benefits versus cost. At McDonald’s the philosophy is about taking cost out the system. We believe we work very hard on productivity. We will maintain our menu price increase by 3 to 5 per cent.
How is the consumer responding to this move?
We are trying to create awareness among our consumers about good food at McDonald’s through our drive to create healthy food. This should allow them to have food at McDonald’s when they want, without worrying about health.
The idea is to stay ahead of the consumer trends and bring in nutrients and wholeness into our food. We, in the recent past, completely re-oriented the menu. We feel that technology in food is changing a lot and is allowing us to do things that was previously not possible. Like, making a patty preservative-free. This way, consumers can come and have our products and feel good about it.
What changes are being made to the food?
Sodium across fries, nuggets, patties and sauces has been reduced by over 20 per cent. Limiting sodium intake is good for health. Oil content in mayonnaise has been reduced by 40 per cent, making it the first ever low-fat mayo in the Indian quick service restaurant industry. This has brought down fat content by up to 25 per cent in its products resulting in calorie reduction by up to 11 per cent.
The result of these changes has been that the iconic McAloo Tikki Burger is now a balanced meal. It has the right balance of carbohydrates, protein and fat as recommended in the guidelines of National Institution of Nutrition or NIN.
The other flagship product - McVeggie Burger too has the right balance of carbs and proteins. The patty has goodness of five vegetables. McDonald’s patties are 100 per cent artificial preservative-free. While the patties never had artificial colour and flavour, they are now completely free of any artificial preservatives.
The patties have been fortified with natural dietary fibre to make them wholesome. This also helps reduce oil absorption. The dietary fibre content in our flagship patties has gone up by as much as 20-25 per cent.
All wraps are now whole grain. Refined flour wraps have been replaced with whole grain wraps to increase their nutritional value.
Soft Serve is made of 100 per cent milk and is 96 per cent fat-free. It nonetheless retains its richness and mouthfeel that is expected of it.
There is this perception of junk food associated with McDonald’s. Is it changing?
It is a misconception. The fact is that this association happened many years ago. Our point is that there is nothing like bad food. If you take desserts, which are basically sugar. In moderation everything is fine. We are saying everything depends on what you eat and what you do. If you are working out regularly and eating in moderation then you are fine. So we are not saying that you have to eat at McDonald’s everyday and not saying that you must have only big burgers. Sometimes you play a game of tennis and are tired and hungry. Then you enjoy a Maharaja meal. That is what it is all about.
Slowly this awareness is building. This awareness is about lifestyle. That is why we are displaying calorie content on our menu. We are boldly telling people this is what it is and hence make your own choice. This is just the begining and this journey is going to continue.
Our customers are increasingly adopting healthier lifestyles and trust brands that behave responsibly and transparently, especially when it comes to food options. Our goal has always been to build a better McDonald’s by making little changes that can add up to a big difference. All modifications in ‘The Good Food Story’ have been a result of over three years of persistent re-engineering of our products just so that we could offer more wholesome and balanced food choices to our customers at a great value.”
Is this a purely India specific initiative?
Globally also it is done. But they are doing what is relevant to them. In the US, they are using fresh meat not frozen. We are doing what is relevant to India. It is country specific. Each country has its plans and consumers and they have the global library. That is how aloo tiki went to West Asia. And aloo tiki was done as a promotion in Singapore.
How you see the fast food market growing?
It has been tough for the past few years. But last year we have seen things turning around. Last 10 quarters we have shown consistent growth. The consumer sentiment is turning around.
McDonald’s has always believed in everyday value rather than discounting or promotions. So this year too, we bring to customers a host of options to choose from, at very attractive prices. Customers can pick a burger or wrap and a beverage or a side dish and a beverage or another combination they like, at an irresistible starting price of Rs 65.
What is the kind of growth you are seeing over the past couple of years?
We are seeing a strong growth. The last quarter we clocked 27 per cent topline growth. The quarter before that, we had a 22 per cent growth. Our ten quarters have been consistent. And in nine out ten quarters we have been ahead of the competition. We are doing 20-30 restaurants a year and that is the kind of restaurant base that we are building.
Any development on the northern and eastern franchise issue? Is it an opportunity?
I don’t want comment on that issue. It doesn’t concern us.
What are your investment plans?
We want to take restaurant base to around 500 over the next three to five years. Our investment will be anywhere between Rs 800 crore to Rs 1000 crore. More importantly we will be creating 1500-2000 jobs annually. Even during difficult times we kept investing. We kept impacting the farms as consumption increased and farmers are supporting us. We have been consistent in procuring products from the farmers. In supply chain, we have invested over Rs 1000 crore. It is an ongoing investment as whenever you need to build your capacity.
Is there any plan to raise equity?
There is no such plan to tap the equity markets. All our investments will be through internal accruals. We are a debt free company, so we could raise some debt.