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November 7, 2001
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McDonald's India plans expansion despite war fears

McDonald'sMcDonald's Corp, the world's largest restaurant company, is pushing ahead with plans to expand in India despite heightened security fears caused by the US-led strikes on Afghanistan, the burger chain's domestic partner said.

"We didn't cancel plans. They are on track," Amit Jatia, managing director of Hardcastle Restaurants Pvt Ltd, one of McDonald's two franchises in India, said on Wednesday.

McDonald's chain of 30 restaurants occupies prime space in the main cities of Bombay and Delhi and could be vulnerable to protestors seeking to vent their anger on the United States over Afghanistan, analysts said.

Washington launched a military campaign against Afghanistan's ruling Taliban a month ago for giving shelter to Osama bin Laden, the Saudi-born militant millionaire blamed for the September 11 attacks that killed up to 4,800 people in the United States.

The expansion is set to increase the number of outlets to 80 at a cost of Rs 3.5 billion, to be shared equally by McDonald's and its two partners. They invested about Rs 4.0 billion in the first 30 restaurants.

"In such an economic environment, it is better to be aggressive. It is the right business thing to do," Jatia said of the expansion programme.

"There are some disadvantages when you have a highly visible brand. But we want to be leaders and the only way we can do it is to continue to invest in our stores."

McDonald's is no stranger to controversy.

In May, a right-wing Hindu group attacked a McDonald's outlet in Bombay after an ethnic Indian lawyer sued the company in the United States for selling french fries flavoured with beef tallow. McDonalds said it used beef tallow in the United States but denied using beef in any of its products in India.

Other Western restaurant companies have faced protestors wrath in the past for various reasons.

In January 1996, farmer activists attacked and damaged a Kentucky Fried Chicken store in Bangalore, saying KFC represented western food habits which are not needed in India.

American firms have been targeted anew since the campaign in Afghanistan began. A bottling plant owned by the world's No 1 soft drinks company, Coca-Cola Co, was bombed in Andhra Pradesh last month.

And last week, Enron Corp's Dabhol Power Company received a threat that its giant, $2.9 billion power plant on the country's western coast would be blown up.


The Oakbrook, Illinois-based maker of Big Macs has reaped success in India since arriving five years ago -- despite not selling a single beefburger.

Its first outlet in the financial capital of Bombay caused a stir with crowds lining up for days outside the restaurant to tuck into its mutton burgers and French fries.

"We made a commitment far back in 1995 about no beef or pork. We have a nice vegetarian menu and we don't even use eggs in ice cream or mayonnaise," Jatia said.

India's majority Hindus revere cows as sacred and Muslims, who form a significant minority, do not eat pork.

"The consumer response is evident from our growth. We went from nil to 30 in five years. Now, we are adding 50 more in three years. This would not have been the case if consumers had not responded," Jatia said.

But Hardcastle declined to give any financial information on the business, except to say it is not yet in the black.

McDonald's operates in India with two franchisees. Hardcastle Restaurants is responsible for the western region.

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