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McDonald’s sells Hardcastle stake
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Tuesday, 22 February, 2011, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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McDonald’s Corporation has exited Hardcastle Restaurants Pvt. Ltd, one of its 15-year-old equal joint ventures that run Big Mac outlets in India, and is converting it into a franchise operation. The US company is selling its 50% stake to Indian partner B L Jatia family for an undisclosed amount. “We are excited. It gives us the freedom to grow aggressively and take quick decisions,” HRPL vice-chairman Amit Jatia said. Hardcastle Restaurants operates the fast food chain in west and south India.
The change in ownership means McDonald’s will no longer invest in HRPL, but will lend its brand name and help with training, development and knowledge. The Indian company will pay a royalty for the use of the brand. It will own the real estate and use its local knowledge and capital for brand-building.
Both Jatia and a top McDonald’s official denied speculation that the decision to switch to the franchisee model was triggered by the US firm’s reluctance to use bank loans for expanding HRPL operations, for which it supplied letters of comfort, and that it wanted expansion only through internal accruals. “McDonald’s was not a guarantor, it just gave letters of comfort which was not legally binding,” Jatia said.
The US company has no immediate plans to exit Connaught Plaza Restaurant, its equal joint venture with Vikram Bakshi that operates McDonald’s in north and north-east India. “If the need arises, we will consider it,” said Bakshi, who is also the managing director of McDonald’s India. Connaught Plaza Restaurant recorded its first profit of Rs 9 crore last year.
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