McDonald’s New Twist in Asia: Vegetarian-only Cuisine

What do you make of the McAloo Tikki burger? Tried the Maharaja’s Mac?

You might be familiar with these McDonald’s offerings if you frequent their franchises in India.

Now the company is going one step further to challenge the traditional definition of a burger joint.

Next year it will be opening its first ever vegetarian-only restaurants near religious shrines in India.

Sara Senatore is an analyst at the equity research firm Sanford Bernstein and Company.

She says emerging markets require different menus and different operating models, and that sometimes those new ideas spread.

“We’ve seen the global limited service restaurants innovate in other markets and bring that to the United States,” she says, offering as an example the McCafe beverage line, which had its start in New Zealand.

But if you think there will be a vegetarian-only McDonald’s franchises in the US anytime soon, Senatore says don’t hold your breath.

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Lisa Mullins: I’m Lisa Mullins and this is “The World”. You wouldn’t think that India and McDonald’s would be a great combination. A lot of people in India are Hindus and don’t eat beef, and McDonald’s built an empire on its burgers. Well, that helps explain why McDonald’s is trying something new in India. The company says that next year it’s going to be opening its first vegetarian-only restaurants near religious shrines in India. Sara Senatore is an analyst at the equity research firm Sanford Bernstein and Company and she says that McDonald’s has been reinventing its brand in India.

Sara Senatore: You certainly have seen McDonald’s offering more locally relevant foods in places like India, where it doesn’t serve beef, it tends to serve a Maharaja’s Mac, which is a chicken or lamb, or places like China where you have offerings, whether it’s dough sticks or breakfast or things like that that would appeal to local palate. So I think this is more of an evolution than rather than a sharp change in their trajectory.

Mullins: OK. So you’re saying evolution because they’ve been already serving things like Maharaja’s Mac which is a chicken patty, there’s a fried spicy potato patty known as a . . .

Senatore: Yeah.

Mullins: . . . McAloo Tikki burger.

Senatore: Tikki. Right.

Mullins: Tikki. Right. Is this the kind of thing though that McDonald’s will have to serve up in larger numbers to truly crack the Indian market?

Senatore: Yeah, I think emerging markets require different menus and different operating models. Yum! Brands, which is the company that owns Taco Bell, KFC, and Pizza Hut in the US, really dominates the emerging markets with the KFC business and, to some less extent, Pizza Hut, is known for tailoring both its menu so offering things like Congee [sounds like] and China, and also its operating model so it does breakfast in the developing markets where KFC has a teatime offering in all of its brands in China and it’s renowned for doing that and for dominating the emerging markets as a result.

Mullins: OK. And the Congee being a kind of a Chinese breakfast, kind of a salty porridge type meal that you’re saying . . .

Senatore: Exactly.

Mullins: . . .they’re serving. So is there a possibility do you think that what goes in China or what goes in India might then be brought back here to America? In other words, can you imagine McDonald’s bringing vegetarian-only outlets here to the US?

Senatore: I don’t know that we’ll see vegetarian-only outlets, but I do think we have certainly seen the global quick service, limited service restaurants innovate in other markets and bring that to the United States. So an example would be their McCafe beverage line which actually came from New Zealand. We do see a lot of cross-market pollination from McDonald’s.

Mullins: McDonald’s apparently in St. Paul, Minnesota there’s a McDonald’s franchise that’s reaching out to the Hmong community by advertising on billboards in the Hmong language of Southeast Asia. There are some Hmong speakers who say though that McDonald’s actually botched the translation and is kind of mashing words together and sounding not very colloquial. Assuming those grammar problems are eventually ironed out, is this the kind of thing you think will help McDonald’s back here in the US with non English speakers?

Senatore: Yeah. And that is certainly something that you see. I mean the most obvious example would be marketing to Hispanic [sounds like] customers. I mean you see a lot of Spanish minority marketing go on not just by McDonald’s, but by many of their competitors and even some of the full service restaurants.

Mullins: But we’re talking about a much smaller population, I mean a significant population of St. Paul of Hmong, but much smaller than you would think Latino in the United States.

Senatore: Hmong is never going to be a national marketing campaign for them. But for the franchisees, you are operating in an area where there is an enclave, an ethnic enclave, it makes perfect sense to have a different language marketing strategy.

Mullins: OK. Thank you. Sara Senatore, senior analyst at Sanford Bernstein and Company. She spoke with us about the recent efforts by McDonald’s to expand its market share globally. Nice to talk to you, Sara.

Senatore: Thank you.

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McDonald’s Hmong billboard ad in St. Paul, Minnesota

McDonald's Hmong language billboard in St. Paul, Minnesota. (Photo: Video grab)