CPRL to double McDonald's store count to 600 by 2030, to invest up to $150 million in expansion

New Delhi: Connaught Plaza Restaurants Pvt Ltd (CPRL), the master franchiser for McDonald's restaurants in India for north and east regions, has plans to invest up to USD 150 million (Rs 1,280.7 crore) in next three to four years for expansion of network of quick service restaurant outlets, said a top company official.

It has plans to take the store count by 300 by the end of this year from its existing 245 and then double it in the next three to four years from there, as part of its aggressive expansion plans, said Anant Agarwal, Vice Chairman- MMG Group & CPRL.

Besides, CPRL, part of USD 1.2 billion MMG Group, is also expanding McCafe, the in-restaurant café brand of McDonald's, from its 125 outlets presently to 200 by the end of this year.

The group, which acquired CPRL in 2020 following a bitter tussle between the Chicago-based QSR (quick service restaurant) major and its former Indian partner, is modernising the existing stores and upgrading them to the EOTF (experience of the future) format. It also plans to tap into the opportunities from the small emerging tier III and below cluster places, with smaller-format stores, said Agarwal.

When asked about expansion, Agarwal told PTI: "We have very aggressive plans for the growth" as the north and east region, when it operates are "very under penetrated".

"I think the potential and the opportunity are huge. So by this year, we should have more than 300 stores, and we plan to grow more than double this number in the next three to four years," he said, adding, "by 2030, the number of stores should be between 500 to 600 stores." Over the investments, Agarwal said: "So we will be investing between USD 100 to USD 150 million to do this. This will be for opening new stores and modernising a few of the older remaining stores." All the upcoming stores will be operated by CPRL only. As per its strategy, CPRL will not only open new stores at Delhi NCR and existing big markets of Punjab and UP -- populating its network in metro markets -- but also go to new tier III cities.

"We have opened a few new stores in new states and cities like Gangtok (Sikkim), Siliguri (West Bengal) and Guwahati (Assam). We see these regions as very promising,” he said, adding that people had queued up in these small markets. They are aware of the brand and have been waiting for it to come.

"So we see a big boost in sales. So I think it will be a good combination of new cities, new states, and existing states as well," he said.

According to Agarwal, ideally, a McDonald's store is sized around 3,000 sq feet, however, the group is looking for smaller format stores, which will help it to penetrate into smaller Tier III places.

"There is a demand requirement of smaller formats, and innovation is in our heart. So we are constantly working to make the format smaller. We aspire to be able to manage a store in 2,000 or 1,800 square feet. That is something we would want to, maybe in the next one to two years," he said.

Tier II & III cities are "big target areas" for CPRL to open McDonald's stores.

"Sometimes demand is higher from there than from the developed cities. We cannot neglect those markets," said Agarwal.

Currently, on average, 65 per cent of sales from McDonald's stores come from dine-in, and delivery contributes approximately 35 per cent.

The company expects this ratio to remain as McDonald's is mainly a family restaurant, hence it also requires a larger area to operate than rival QSR chains.

On McCafe, Agarwal said it's one of the most promising channel of sales with the growing cafe culture in the country and millennial preference towards coffee.

When asked whether CPRL plans independent standalone stores of McCafe, Agarwal said: "No, not at the moment. I think right now we feel McCafe as a store extension works very well." "The idea would be to double down on this number. So by this year, we will end with 200-plus McCafes. So, ultimately, the idea is to have a McCafe in every store that we operate. So if we have 500 stores tomorrow, I will have close to 500 McCafe," he said.

According to financial data accessed through business intelligence platform Tofler, CPRL's total income in FY24 was at Rs 1,449.30 crore, up 18.6 per cent. Its net profit was also up 58.4 per cent to Rs 123.32 crore.

When asked about the overall QSR industry, Agarwal said, it is very promising, with a projection of high double-digit growth for next 3-4 years, helped by tailwinds such as growing economy, increasing income of the middle class, specially from the smaller towns and rural area.

McDonald's QSRs in the south and western region is operated by Westlife Foodworld Ltd, its master franchiser for the region.

In the Indian market, McDonald's competes with both international and local players. Major international competitors include Burger King, Subway, and Yum! Brands KFC and Pizza Hut, while local chains like Jumbo King, Burger Singh and Biggies Burger are also amplifying their play.