Is McDonald's in India on the Same Path to Decline as Subway?

As a kid of the 90's, I remember Happy Meal, mainly the toy inside, was my favourite. I went to many friends' birthday parties celebrated at McDonald's at Crossroads Tardeo in Mumbai, which had an adjoining play area for children. Even as a college student, the Aloo tikki and Maharaja Mac were frequent travel indulgences. Yet, I haven't taken my three year old daughter to a McDonald's till date and it's definitely not because she only eats healthy food.

And, I don't think I am singular. Recently, I read about Westlife's terrible Q2FY25 performance. Westlife Foodworld Ltd is owner-operator of McDonald's restaurants across West and South India,

- Its consolidated total revenue from operations in the quarter under review stood at Rs 618 crore, a mere 0.7% YoY growth

- It reported consolidated profit after tax at Rs 36 lakh for the second quarter ended September 2024, -98.4% decline YoY (down from Rs 22 crore last year)

- Same-store sales growth (SSSG), a key metric in fast food restaurants declined 6.5 per cent year-on-year. In comparison, Dominoes India posted a 3% YoY growth

So that got me wondering, what's not working for McDonald's?

1. More options within the category: Whether Taco bell, Burger King, KFC, and many more smaller fast food outlets, there are a multitude of options. The KFC Zinger would be my pick over an Aloo tikki now.

2. Limited innovation: Except for McCafe launched in 2013, I haven't heard of any significant experiment in India to cater to different eating out occasions or menu changes to appeal to local tastes.

3. Rise of food delivery: With rapid growth in food delivery in the last 4-5 years across city tiers, combined with its large selection, I can imagine going-out occasions reducing and hence the decline in the trends.

Will we see a fantastic turnaround in the next few quarters? Hard to say. Not many can turnaround food companies like Brian Niccol did for Chipotle or Kevin Hochman/David Graves for Pizza Hut.