The Hindu Business Line : Behind the big bite

Neha Damani, an investment banker in her mid-twenties, is a regular at the McDonald’s restaurant at the Palm Beach Galleria mall in Vashi, New Mumbai. Texting to someone from her mobile, she orders a McVeggie Cheese. From that moment, it takesjust less than a minute for Damani to sink her teeth into a hot and fresh burger. A few minutes later, she is done with her snack and steps out of the restaurant, her fingers still texting.

But it took the global food major McDonald’s years to ensure that speed. “The efficient supply chain that we have put in place is the backbone of the whole business,” says Abhijit Upadhye, Director - Supply Chain, Menu Management & New Business Channels, McDonald’s India.

Big Mac and its Indian supplier partners spent close to six years and Rs 500 crore on establishing a supply chain before setting up the first restaurant in Delhi in 1996. “We had to ensure the right ingredients at the right quality and at the right time,” says Upadhye.

McDonald’s, which has over 30,000 restaurants in 119 countries and is known for its quick service, entered India through two equal joint ventures – with Hardcastle Restaurants Pvt Ltd for the West and Southern markets and Connaught Plaza Restaurants Pvt Ltd for the North and Eastern markets. Currently, it has 132 outlets in India. Of this, 53 are in the West and South and the remaining (79) are in the North and the East. However, at the back end, the supply chain is the same for its entire operations in the country.

It sources almost 200 ingredients from over 40 suppliers spread all over the country. For example, the iceberg lettuce in Damani’s burger could have been procured months ago from Pune or Delhi or Nainital or even Ooty in Tamil Nadu. Similarly, McDonald’s buys buns and sauce from Bector Foods in Punjab; cheese from Dynamix Dairies in Maharashtra; vegetable and chicken patties from Vista Foods at Taloja in Maharashtra; and a few dairy products are supplied by Amrit Food, Uttar Pradesh.

In a year, McDonald’s consumes a minimum of 4.6 crore buns, 17 lakh bottles of sauce, 1,200 tonnes of iceberg lettuce, six crore patties and hundreds of tonnes of dairy products and other ingredients. “And the key challenge is to ensure that none of these ingredients runs out of stock in any of our outlets at any point of time,” explains Upadhye to this correspondent, who was on a familiarisation trip organised by the burger chain for the media.

According to him, McDonald’s, through its unique cold chain, has been able to cut down on its operational wastage as well as maintain the freshness and nutritional value of raw and processed food products. This includes procurement, warehousing, transportation and retailing of perishable food products, all under controlled temperature.

All supplier partners and distribution centres in the cold chain work cohesively to ensure that the final product reaches customers consistently. “Every care is taken to guard against any interruptions in the cold chain, which can break the link and have a detrimental effect on the quality of the product.”.

The setting up of this extensive cold chain distribution system was possible thanks to the cooperation from international suppliers in transferring technology, and in some cases, investing to form joint venture companies which today are an integral part of the McDonald’s cold chain.

The food major’s expertise in the area of agriculture also brought in new crops, irrigation systems and new technologies to farmers here. For example, initially, lettuce could only be grown during winter. But McDonald’s cannot do without lettuce even for a day. In the case of Trikaya Agriculture, a major supplier of iceberg lettuce to McDonald’s India, exposure to better agricultural practices and sharing of advanced agricultural technology by McDonald’s has made it possible to grow this crop all the year round. “We also made them extremely conscious of delivering their products with utmost care and quality,” says Upadhye.

McDonald’s has provided assistance in the selection of high-quality seeds, exposed the farms to advanced drip-irrigation technology, and helped develop a refrigerated transportation system allowing the small agriculture company in Taloja to provide fresh, high-quality lettuce to restaurant locations thousands of kilometres away.

Post-harvest facilities now at Trikaya include a cold chain consisting of a pre-cooling room to remove field heat, a large cold room and a refrigerated van for transportation where the temperature is maintained between 1ºC and 4ºC and the relative humidity of the crop at 95 per cent. Vegetables are moved into the pre-cooling room within half an hour of harvesting. The pre-cooling room ensures rapid vacuum cooling to 2ºC within 90 minutes from the field. The pack house, pre-cooling and cold rooms are located at the farms itself, ensuring no delay between harvesting, pre-cooling, packaging and cold storage.

With this cold chain infrastructure in place, Trikaya Agriculture is now planning to export this high-value product to other international markets, especially to McDonald’s West Asian and Asia Pacific operations.

“McDonald’s expertise in packaging, handling and long-distance transportation has helped Trikaya to do trial shipments to the Gulf successfully,” says Upadhye. In addition to export, McDonald’s assistance has enabled Trikaya Agriculture supply this crop to a number of star-rated hotels, clubs, flight kitchens and offshore catering companies all over India.

Trikaya is growing over a dozen varieties of lettuce. It supplies around 30 tonnes of iceberg lettuce every month to McDonald’s. Apart from this, “we also supply red cabbage and celery. However, lettuce forms 95 per cent of what we supply to BigMac,” says Samar Gupta, Chairman and Managing director of Trikaya Agri. Prior to the McDonald’s tie-up, Trikaya Agriculture was growing vegetables and selling them in select pockets of the Maharashtra market. “Now, we are introduced to new technology and new crops with quality seeds, and as a result well exposed to the international market,” says Gupta. Trikaya supplies 10 to 12 per cent of its output to McDonald’s and the rest to other institutions. In the case of dairy products such as milk and cheese, McDonald’s major supplier Dynamix Dairy has set up a dedicated quality programme for milk procurement. It has made significant investments in setting up bulk coolers at all milk collection centres in the Baramati area, where it is based.

Efforts have been made to see that the bulk cooling centres are located in such a way that farmers do not have to travel more than an hour from their farms to reach the collection centre. “This has drastically reduced the time from milking to refrigeration, which is critical, especially since lack of proper refrigeration can greatly impact the quality of milk,” says Upadhye. Upon receiving, the milk is immediately stored in the bulk coolers at the collection centres to prevent growth of bacteria in the milk and preserve its freshness – thus, maintaining the ‘cold chain’.

For the supply of vegetarian and non-vegetarian patties and other frozen foods, McDonald’s has a pact with Vista Processed Foods Pvt Ltd. The latter, in collaboration with OSI Industries Inc of the US (which is again a major supplier to McDonald’s worldwide), has set up the necessary infrastructure and support facilities, covering an area of 2,000 sq. m at Taloja.

This includes hi-tech refrigeration plants for manufacture of frozen food at temperatures as low as -45°C. Explains Bhupinder Singh, Chairman and Managing Director of Vista Foods: “This is vital to ensure that the frozen food retains it freshness for a long time and the ‘cold chain’ is maintained. The frozen product is immediately moved to cold storage rooms.”

With continued assistance from its international partners, Vista has installed separate lines for both chicken and vegetable processing. Non-vegetarian foods require machines for de-boning, blending, forming, coating, frying and freezing. For the vegetable range, vegetable mixers and blenders are in operation. “Keeping cultural sensitivities in mind, both processing lines are absolutely segregated and utmost care is taken to ensure that the vegetable products do not mix with the non-vegetarian ones,” says Singh.

Vista now offers a wide range of frozen chicken and vegetable products. Ongoing R&D, both locally and in the foreign partner company, work towards innovation in taste, nutritional value and convenience.

These products, besides being supplied to McDonald’s, are also offered to institutions such as star-rated hotels, hospitals, project sites, caterers, corporate canteens, schools and colleges, restaurants, food service establishments and coffee shops.

Once McDonald’s has procured all necessary ingredients, how does it store and distribute them to its outlets across the country? Here comes the role of Radhakrishna Foodland, which operates distribution centres for all McDonald’s restaurants in the country. These distribution centres (Taloja and Noida facilities being the main, Radhakrishna Foodland runs two small facilities in Kolkata and Bangalore) have focused all their resources to meet “our expectation of cold, clean, and on-time delivery and play a very vital role in maintaining the integrity of the products throughout the entire cold chain,” explains Upadhye.

Ranging from liquid products from Punjab to lettuce from Pune, the distribution centres receive items from different parts of the country. These items are stored in rooms with different temperature zones and are finally despatched to the McDonald’s restaurants on the basis of their requirements. The company has both cold and dry storage facilities with capability to store products up to -22º C as well as delivery trucks to transport products at temperatures ranging from room temperature to frozen state.

According to Upadhye, Big Mac has also developed a menu especially for India with vegetarian selections to suit Indian tastes. “In fact, India is the first country where we do not serve both beef and pork,” he says. Especially for India, McDonald’s also re-engineered its operations to ensure the separation of vegetarian and non-vegetarian food products throughout the various stages of the cold chain — procurement, cooking and serving. “So much so that the mayonnaise and the soft serve we use here are also 100 per cent vegetarian,” he assures.

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Behind the big bite