McDonald’s is soon going to have a competitor in India with the entry of US fast food chain, Burger King into India in partnership with DLF, if reports are to be believed.
Burger King may set up a 51:49 partnership with DLF and operate on a franchisee model. The venture will take a larger shape once DLF puts in its retail plans of building malls and shopping centres across India within next 3-4 years.
Earlier Burger King was in talks with Future Group but the deal fell mid-way when Kishore Biyani started negotiations with Starbucks.
The primary reason for Burger King choosing to partner DLF instead of any player in food business is the availability of prime real estate with DLF and rising rentals and real estate costs across India. Rentals to sale ratio in India is very high at 30-35% while global figures are pegged at just 10-12%, making it an unsound business proposition.
Burger King is worth $2.3 billion and has 11,100 restaurants globally but it is still a pygmy when compare with McDonald’s since the latter is 10 times its worth and operates 31,000 stores. In India, McDonald’s has 122 restaurants and firmly established its presence but it is sure to face pressure specially if Burger King is situated within the vicinity of a McDonald’s outlet.
DLF is also reported to be in talks with Wendy’s though Indian market is not on priority list for Wendy’s since it wants to first firm up its presence in North America and Europe.
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