We will double-down on feel-good marketing to beat inflation: Arvind RP, McDonald’s

Arvind RP, Marketing Director, McDonald’s India West and South, speaks to e4m on inflation, the company’s media mix, the new menu and expansion plans

by Kanchan Srivastava
Published - January 17, 2023
6 minutes To Read
We will double-down on feel-good marketing to beat inflation: Arvind RP, McDonald’s

Westlife Foodworld, which operates McDonald’s India outlets in south and west regions, plans to add 250-300 stores, most of them in small towns, over the next five years and double sales to more than Rs 4,000 crore. 

As part of a five-year plan, Westlife Foodworld, which set up the first McDonald’s outlet in Mumbai in 1996, will operate 580-630 stores by 2027. 

What are the biggest challenges and opportunities before you in 2023? How did you realign your marketing strategy post-pandemic? 

It has been a challenging environment for some time. The first challenge, especially in Q3 was to grow the business and build market share leadership amid softening of demand coupled with high inflation. We have had a strong strategy to tackle the situation, which paid dividends in the last two quarters. We are sure that despite inflation and softening, we would manage to maintain growth.  

From a brand perspective, our idea is to double down on the feel-good marketing or fun marketing that builds and rebuilds good memories among consumers' minds about the brand McDonald’s. 

Then comes the marketing effectiveness i.e., which media to invest in or campaign to go behind from an ROI perspective. It is very important in this challenging environment that every dollar that is spent needs to give adequate returns from a business perspective. So far, our playbook has delivered good results. 

Hence, I would say there is one challenge and two opportunities.   

Are you planning to increase your advertising spends in the coming months as latest reports indicate consumer demands are picking up?

Our advertising spends are based on the category benchmark and global benchmark and it’s the global and India imperative of the brand. Since we are a listed company, I cannot share any figures. We have delivered outstanding results over the past few quarters and would double down on our feel-good marketing. Once you have a winning formula and a strong strategy, you can see the momentum going forward. 

Can you please share your current media mix?

Our delivery business was about 20-25 per cent in the pre-pandemic days. Now, it has grown to 40 per cent, which is very significant. Our consumers value convenience and safety. They consider McDonald’s as an anytime brand. Our omnichannel strategy is based on these findings.  

Digital assumes significant investment in our consumer-facing investment. In the pre-pandemic days, digital accounted for 30-35 per cent of the consumer-facing spend. It has now gone up to 55-60 per cent. Most of it is being spent on brand building, performance marketing and on CRM analytics. 

OTT is a very significant part of our mix in some geographies besides programmatic. We are going to launch a new McDelivery app, which will not only give a store experience but will take the consumer's digital experience to a new level. 

How do you plan to expand your footprint in the south and west? 

We have aggressive plans to improve our footprints. We have recently announced the opening of 250-300 new stores in the next five years. There are three dimensions to this plan. The first is from a geographic perspective. We are very strong in Mumbai and Pune, and now new stores will be coming up in the South.  Another dimension to expand is in smaller cities, which have shown good growth in the post-pandemic days. 

When the unlock happened post-pandemic, one of the first geographies where we saw the bounce back of demand was from the smaller cities and it remains consistent. The growth in smaller cities like Kolhapur, Indore and Coimbatore has been larger compared to the big cities.  

A significant amount of our growth comes from smaller cities. That gives us more encouragement to open more stores in smaller cities. 

The third dimension to expand is our dry fruits category, which has shown good growth. We have the largest number of dry fruits in India.  

How are you dealing with inflationary pressures?  

There are 3-4 dimensions to it. One needs to pass inflation to the consumers in a calibrated manner. We did a lot of research to get consumer insights and have got better over time. Increase in prices is based on products, geography and channel. Our whole idea is not to impact growth, which has been relatively successful. 

So, we focussed on calibrated price increase with a lot of consumer research. 

Secondly, we doubled down on value. One of the dimensions for value is innovation of the menu. Consumers are liking our new menus. We have attractive pricing on key products from a tactical perspective. 

Moreover, our app extends a lot of personalised offers to consumers. 

You have launched the Chicken Big Mac for the first time in India. What is the objective and which consumer segment are you targeting? 

Chicken Big Mac is an iconic product worldwide. It is the biggest launch for India and another menu innovation with limited time offering for our customers. With the launch, we wanted to dramatise its filling size and indulgence and also bring alive its iconic stature. 

Globally, the brand has a huge fan following especially for our Big Mac. More than a decade back, we launched the Maharaja Mac in both Veg and Chicken, conceptualized for the Indian market and since then it has developed its own franchise and following.  Chicken Big Mac is conceptualized as the revitalization of the Mac platform to give consumers of Maharaja Mac chicken something different. I'm sure the fans of the brand would love it. 

How does Virender Sehwag connect to McDonald's as a brand and the youth of India? 

When we were ideating on the launch, we chalked down the theme “Chicken Big Mac ke saamne har Big Name bhool jaaoge!” It was funny. Sehwag is an icon in his own way. We thought who other than Sehwag can bring this campaign alive in a quirky way. His iconic and quirky personality is a perfect fit for our brand. It is a multimedia campaign across touchpoints.