McDonald's outlets in east, north India face closure after logistics partner denies supplies

Fresh bout of trouble has sprung up on Vikram Bakshi, the estranged franchisee of McDonald's in east and north India, and right in the middle of holiday season. A total of 80 outlets of the global fast food chain run by Connaught Place Restaurants Limited (CPRL) face closure after its logistics partner discontinued supplies to them. CPRL is a 23-year old joint venture between Bakshi and McDonald's India Pvt Ltd (MIPL) that operates McDonald's outlets in east and north India.

Radhakrishna Foodland wrote to CPRL last week saying that it is cutting off supplies to its restaurants due to reasons like reducing volumes, uncertainty of future, among others. This decision from the supply chain solutions firm is being seen as a consequence of the ongoing scuffle between McDonald's and Bakshi.

Bakshi stated that all McDonald's restaurants in east India have downed shutters and several others in north India will fall prey to same fate. "Almost all the outlets in East India have been shut because of the move by the logistics partner, and others (in North India) are also under pressure due to the supply crunch," Bakshi told PTI regarding the development.

This disruption in supplies means that outlets run by CPRL will see their expected festive season business substantially reduced. And Bakshi holds McDonald's India responsible for the unpleasantness.

"Our long-standing logistics vendor Radhakrishna Foodland allegedly in collusion with McDonald's Corporation and their wholly owned subsidiary McDonald's India Pvt Ltd... has decided to hold back stock paid for approximately Rs 10 crore by us," Bakshi said in a letter to the landlord and developers of his outlets.

"While the American company and its subsidiary, MIPL, may have with their usual mala fide and malicious actions managed to give CPRL a temporary business setback at the end of the year and during this high sale festive season, yet we have made and are making alternative arrangements and shall be back to serve our customers very soon," Bakshi assured further ahead in the letter.

Meanwhile, McDonald's refused denied any hand in the disrupted supply chain. "We were informed that their vendors have stopped delivering supplies... This is between CPRL and their vendors, not MIPL," a McDonald's India spoekesperson told PTI.

Bakshi and McDonald's have at each other's throats since August 2013 when the former was unceremoniously sacked as Managing Director of CPRL. The US-based food giant blamed Bakshi of favouring his other businesses at the cost of CPRL.

Bakshi regained the upper hand in the scuffle when he was reinstated on his earlier position by the NCLT in August this year. However, McDonald's shook the boat again, terminating franchise agreement for 169 restaurants in North and East India under CPRL.

As per the termination notice served by the US-based fast food company, these restaurants were barred from using McDonald's brand name, trademark, design, operating and marketing practices and policies, food recipes and specifications after September 5.

Bakshi remained adamant, stating that he will continue to use the McDonald's brand for the restaurants despite the franchise agreement being terminated. Not only this, McDonald's India asked the suppliers to stop dealing with CPRL. Bakshi reportedly said that McDonald's India Director Robert Vee Chong indirectly pressured the suppliers to stop supplies to 169 restaurants run by CPRL.