McDonald’s Middle East Franchise reports a 3.4 percent surge in sales

Jan 25th, 2010

McDonald’s has reported a 3.4 percent increase in sales in the Middle East and Africa, reflecting a year of strong worldwide growth in which the fast food giant served 60 million customers a day - two million more than in 2008. Growth in the MEA region was greater than that in the US, where sales rose by 2.6 percent. Turnover in Europe grew by 5.2 percent in 2009, far exceeding the average global rise in sales of 3.8 percent. News of the fast food giant’s increasing popularity is likely to raise some concern among professionals gathered at the Arab Health 2010 exhibition, which starts today.

The Middle East has some of the highest worldwide rates of potentially fatal conditions such as obesity, diabetes and heart disease. Some have pointed to the growing popularity of fast food as being a factor in the looming health crisis in the region. Many fast food chains - including McDonald’s, Pizza Hut, Burger King - operate in the Middle East.

According to estimates, 71 percent of the Emirati adult population is obese - and the World Health Organization (WHO) forecasts that the number of obese Emirati women will rise to 81 percent by 2015. More than 50 percent of children in the UAE are obese. Diabetes prevalence in the Middle East is among the highest in the world. In Saudi Arabia, around 24 percent of the population is affected by diabetes. WHO figures suggest that more than 2.5 million people living in the Kingdom could have the disease by 2030. The WHO has said that the consequences of nutritional disorders in the region were “too grave to be ignored”, calling for urgent action to combat obesity and diabetes.     

Aside from diet, other factors - such as lack of exercise, smoking and genetic disorders - also contribute to health problems.

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Malaysian Entrepreneur wins Lawsuit solicits overseas Franchising Inquiries

22nd January 2010: Meet the man who took on McDonald’s and won. P Suppiah, a Malaysian born in Tamil Nadu, runs McCurry in Kuala Lumpur. McDonald’s sued him for trademark violation. What followed was a remarkable story of big MNC vs small entrepreneur. Now he gets fan mail from India all the time. You can’t have fries with that and no, you can’t supersize it either. But yes, it is called McCurry. In the heart of Malaysia’s capital Kuala Lumpur, within spotting distance of the landmark twin Petronas Towers, stands Restoran McCurry.

The restaurant serves Tosai Masala (masala dosa, as we know it) for 2.50 Malaysian ringgit, Roti Canai (an adapted Chennai parotta) for RM 1.00, Ghee Uttapam (RM 1.70), and even Chicken Tikka (RM 6.00) and Aloo Paratha (RM 2.50). 

It is Indian fast food, unmistakably, but the menu is not its claim to fame.

McCurry hit headlines around the globe last year-end for delivering a legal thrashing to the global fast food giant McDonald’s in a trademark infringement case in Malaysia’s highest Federal Court. The one-outlet McCurry thus retained the right to use the ‘Mc’ identifier in its name.

It was a battle that captured the imagination of Malaysia, a country dominated by Malay Muslims but home also to Chinese and ethnic Tamil Indians. Now its victorious owner P. Suppiah, 55, a third-generation Malaysian who traces his roots back to Tamil Nadu — his grandfather came to Malaysia 100 years ago to work on rubber plantations and he himself was born in Tiruchirapalli — says he wants to go global with McCurry.

Fresh from the legal triumph, Suppiah, who dabbles in Malaysian real estate market, runs a bistro and dips into the running of his family’s palm oil plantations, says he is already talking licensing arrangements with partners in Sri Lanka, Australia and Indonesia. Since the landmark win against McDonald’s, likened by the global media to a David versus Goliath battle, McCurry has become a tourist hot spot. More importantly for Suppiah, the victory has also brought a flurry of overseas franchising inquiries, some 53 from 21 countries at last count.

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Franchising and Nepal, Impact of Fast Food Franchising in Nepal

I can honestly say that I have not been to a fast food restaurant in a long time, really the only time I eat fastfood is for a late night snack after the pit, however now I find myself walking to the bus loop to go home, rather than to McDonalds in the Village.

The fast food industry in Developing Countries
With the rapid increase in local food and a more health conscious public, fast food restaurants like McDonalds, Pizza Hut and Kentucky Fried Chicken (KFC) are no longer attracting the same number of customers as the restaurants did in the 1990’s. We no longer see the lines outside major fast food restaurants and these restaurants are no longer seen as popular “quick bites. These chains were previously  “cool” hangouts but are no longer considered popular meeting points for today’s youth. Customers who buy local are rarely seen eating popcorn shrimp at KFC or ordering chicken wings at Pizza Hut. But if you hop on a flight to Kathmandu, or easier just rewind time 15 hours to Wednesday November, 23, mid-day and picture the 1,000 plus crowd outside the KFC/Pizza hut in Kathmandu as thousands of people welcomed its first multinational chain of restaurants to enter the country of Nepal.

This forced many questions within my group of trekkers: one being why does a country that eats probably more local food than anywhere in the world welcome these chains? The answer is obvious as Nepal begs for more western capital investment. RJ Corp is the biggest bottler of Pepsi brands in Nepal and also the largest franchisee for YUM brands, mainly Pizza Hut and KFC. As stated by the officials of R J Corp, “Nepal is a promising market for these brands and their entry will give the Nepali economy a boost by creating job opportunities for locals”. The opening of these two fast food chains is said to give Nepali consumers the first local experience of an international food chain. Devyani International along with YUM Brands is the world’s largest restaurant company with five global brands and 35,000 outlets across 105 countries, and they are, “…excited to make their entry in the Nepalese restaurant circle and they have extensive plans for growth and expansion in this market”, says a R J Corp spokesperson. This expansion will in the end hurt Nepal and the people in the local restaurant industry.

The funny thing is that, “many of the ingredients for KFC and Pizza Hut are imported from abroad, including the chicken from Brazil and potatoes from Australia”, and this will be the case as ingredients will shipped to India then brought to Nepal. The most common food in Nepal is daal bhat, which consists of Rice (bhat), and a bean soup (Daal), and whenever I enjoyed it (at least once a day) it was accompanied with potatoes. The people of Nepal eat this for breakfast, lunch, and dinner. Almost everything I ate while I was in Nepal included potatoes as an ingredient. So why would YUM ship in potatoes over 5,000 miles from Australia to Nepal when the locals would be glad to sell produce to YUM? And why is there a belief that consumers in Nepal are ready for an international eating-out experience, as one RJ Corp official stated.

On a Global Level

In educating the world of the benefits of eating local, which 99.9% of Nepal has no choice but to do, it is important that we stop the growth and expansion of international chains. And if it is necessary for the YUM brands to expand into the developing world and benefit communities by providing jobs, it should be addresses that these franchises attempt to use local ingredients. Personally I think RJ Corp is trying to exploit Nepal and the introduction of Pizza Hut and KFC will not help Nepal’s economy. Sure it will provide jobs but the amount of customers taken from the local restaurants will do more harm than good. Not to mention that soon we will see a McDonalds, Burger King, Dairy Queen, (and the list goes on) in the Center of Durbar Square and on the main street of Pokhara.

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