McDonald’s buys out Vikram Bakshi; temporarily shuts over 160 outlets3 min read . Updated: 10 May 2019, 11:33 AM IST
- Search on for new partner for north, east India biz; K Hospitality Group, private equity firm likely to be in the race
- Vikram Bakshi opened the first McDonald’s in India in the mid-90s and then expanded to over 160 restaurants
New Delhi: Ending a six-year-long dispute between McDonald’s Corp. and its estranged India partner Vikram Bakshi, the local unit of the US fast-food chain on Thursday said it has bought out Bakshi’s 50% stake in their joint venture Connaught Plaza Restaurants Ltd (CPRL).
The move marks an end to the fast-food chain’s association with Bakshi, who opened the first McDonald’s restaurant in the country in the mid-1990s and then expanded to more than 160 restaurants in north and east India.
McDonald’s India Pvt. Ltd (MIPL), along with its affiliate McDonald’s Global Markets Llc, now wholly owns CPRL, the US fast-food chain said in a statement on Thursday. CPRL will now be headed by Robert Hunghanfoo.
McDonald’s India did not disclose the financial details of the transaction.
Over the next one-two weeks, McDonald’s India will review its over 160 outlets in north and east India, Barry Sum, director of corporate relations for Asia at McDonald’s, said in an interview.
The restaurants would remain shuttered during this period starting 9 May, he added.
“We will see if any remedial action is necessary at these outlets," Sum said.
However, the company is still actively looking out for a partner for its north and east India business.
“McDonald’s... intends to facilitate future growth by continuing to actively progress finding the right development licensee (DL) for the region. As this process continues and until the company has secured the right DL partner for the business, CPRL will remain owned by MIPL and its affiliate," said the company.
Sum declined to share details as to when a new licensee would be named.
Bakshi’s over two-decade-long association with the fast-food chain turned bitter in 2013 after the latter voted against his appointment as managing director of CPRL.
“With the transfer of ownership and management today, Mr. and Mrs. Bakshi end their association with CPRL and McDonald’s. McDonald’s acknowledges the significant work and contribution of Mr. Bakshi in establishing McDonald’s restaurants in North and East India," the company said in a statement.
Over the next few weeks, the company will work on transitioning to the new ownership structure and speed up the opening of these restaurants. “During the transition, MIPL (McDonald’s India) will be focused on two key areas—providing employees with clarity and confidence in their future at McDonald’s and leveraging McDonald’s global system expertise to fortify high operating standards for our local customers," the company said in a statement.
The announcement comes after the two parties had on Monday informed the National Company Law Appellate Tribunal that they were working on an out-of-court settlement.
As part of the settlement, the two parties have also agreed to withdraw all litigation against each other, including a case in the London Court of International Arbitration.
Allaying concerns of any job losses in the near future, Sum said that “there will not be an immediate organization restructuring as a direct result of this transition".
On expansion plans, Sum added that the company would work with the new licensee for the region.
Several contenders are in the fray to partner with the fast-food chain after Bakshi’s exit.
Mumbai-based K Hospitality Group, which manages restaurants and pubs such as Copper Chimney and Irish House, is in discussions with McDonald’s to run its business in north and east India, according to a person familiar with the matter.
A large private equity firm could also be part of the deal, the person said.
On Thursday, The Economic Times reported that McDonald’s was in talks with potential partners, including Kolkata-based RP-Sanjiv Goenka Group and Moon Beverages—Coca-Cola’s largest bottling partner in India—for a possible stake in the joint venture between McDonald’s and Bakshi.
K Hospitality Group, promoted by Sunil Kapur, runs several food services business such as Travel Food Services that manages 300 food and beverage outlets across airports, railway stations and highways.
An email sent to K Hospitality’s executive director Varun Kapur remained unanswered till the time of going to press. Bakshi did not respond to calls and texts from Mint.