According to McDonald’s India North and East chairman Sanjeev Agrawal, the only large QSR (quick service restaurant) chain in India that is not listed on the stock exchanges, has no present plans to go for a listing or give any stake to private equity investors.
He said that they want to build scale, revamp existing stores, and focus on opening new stores. This exercise will be completed on the strength of our internal investments. Agrawal added, “There is a lot of revamping we are undertaking first on modernising stores and introducing new formats such as personalised service, self-ordering kiosks, digital menu boards, and new products.”
Agrawal took over the business from McDonald’s India in February last year, soon after the pandemic led to mass closures and shutdowns of public places, including restaurants, and resultant job losses in the sector. Even after the nationwide and state-level lockdowns were lifted, restaurants could operate only with restricted timings for several months.
In mid-2019, McDonald’s India acquired Connaught Plaza Restaurants Ltd (CPRL) after a long-drawn-out battle with alienated joint venture partner Vikram Bakshi. Early last year, the restaurant chain named diversified entrepreneur Sanjeev Agrawal as its developmental licensee for its North and East operations and chairman of CPRL. With the post-lockdown reopening and high investor interest in the QSR space, three large private equity firms approached McDonald’s North & East to acquire a minority stake in the business, officials directly aware of the developments said. However, the chain, which operates 150 restaurants in the region, is unwilling to divest its stake in the near term.
Amid heightened appetite from investors, analysts say the QSR sector is set to benefit from recovering demand with dine-ins, menu premiumization, and better operating parameters.
Most QSR companies have now raised the outlook for store expansion on the back of the perceived expanded market opportunity. Secondly, with a scaled-up omni-channel play, the companies are now confident of better baseline sales, which augurs well for store dynamics.
In the past 12 months, we’ve seen almost all the other large QSR chains launch initial public offerings (IPOs). Sapphire Foods, backed by Samara Capital, Goldman Sachs, CX Partners, and Edelweiss, and RJ Corp-owned Devyani International, which operates Yum Brands’ owned KFC and Pizza Hut, separately, have listed in the past six months, while Burger King made its stock market debut in December 2020. Sapphire Foods made its debut on the stock exchanges last month, and Devyani International listed in August this year.
Both Westlife Development Ltd, which operates McDonald’s West & South and Jubilant FoodWorks, which operates Domino’s, have been listed for many years. QSR brands have said in separate investor meetings that they plan to accelerate store expansion in the next 12 months to leverage demand recovery and recruit new consumers in tier-2 and tier-3 markets.