The world’s largest fast-food restaurant company, McDonald’s Corporation, has exited from one of its Indian joint venture entities which runs its chain here.

Hardcastle Restaurants Pvt Ltd (HRPL), which operates McDonald’s outlets in the South and Western India, has bought the US fast food chain’s 50 per cent stake in the joint venture, HRPL Managing Director for McDonald’s India for South and West, Smita Jatia, told Business Line .

She said HRPL has now become a “developmental licensee” for McDonald’s chain of restaurants in its region here which allows it more leeway to make decisions.

“Earlier, all investment decisions had to go through the US company,” she pointed out. Now, HRPL can take decisions regarding locations, purchase of real estate, among others. “We can now grow faster than before,” she said. McDonald’s upgraded HRPL’s status on the basis of its financial performance, organisational capabilities, as well as other criteria. But HRPL will continue to pay a royalty fee of 5 per cent on its gross sales to McDonald’s Corporation every year, Jatia said.

She, however, did not disclose other details of the new profit sharing arrangement. As a franchisee, HRPL paid a franchisee fee of $45,000 and 5 per cent of gross sales as royalty every year to McDonald’s Corporation. Jatia said HRPL will now invest over Rs 600 crore within a period of two-three years to expand rapidly. She said her company would open between 30 outlets and 40 outlets a year, compared with about 15 per year earlier.

HRPL runs about 140 outlets in South and Eastern India.

HRPL has also increased the prices of its food products about 3 per cent every year to adjust for inflation.

> giriprakash.k@thehindu.co.in

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