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Over half of McDs outlets close down in North & East

Tuesday, December 26, 2017, 16:00 Hrs  [IST]
HBI Staff | Mumbai

According to a Times of India report, with the closure of 84 outlets on Monday, over half of McDonald’s restaurants in North and East India have now downed shutters, which may put pressure on franchise partner Vikram Bakshi to sell out to the global burger giant.

Connaught Plaza Restaurants (CPRL), a 50:50 joint venture between Bakshi and McDonald’s, ran around 160 outlets. But fallout between the company and McDonald’s supply chain partner Radhakrishna Foodland, due to alleged non-payment of dues by CPRL, has hit supplies hard.

“We are now having to airlift supplies and more outlets are likely to get affected over the next few days,” said Bakshi. “Radhakrishna Foodland has abruptly ended their services and the timing is a suspect because this is the peak season.”

CPRL was in constant dialogue with the promoters of Radhakrishna Foodland, Bakshi said, and the due of INR 2 crore was not part of the regular monthly payments that were being made to the company. “They are holding back around INR 10 crore of my stocks,” he said. “I was ready to pay INR 50 lakh up front to resume dialogue.”

However, Raju Shete, promoter of Radhakrishna Foodland, told that the discontinuation of his company’s services to CPRL was not abrupt. “We had written three letters to CPRL and followed it up with several meetings with Bakshi, as even our regular payments were not being made and CPRL’s dues were ballooning,” he said. “I am not ready to fund the collateral damage between two battling partners with my own money.”

According to Shete, Bakshi had asked the logistics firm to pick up supplies from companies that were not approved by McDonald’s and as an official partner of the US burger chain, the company is not allowed to do it. “We declined to do it,” Shete said. With regards to the outstanding dues from CPRL, Shete said the Bakshi-led company’s volumes had fallen by half, when it closed down several stores earlier this year. As per the legal understanding with McDonald’s, if volumes go down, the cost to the logistics partner goes up. “As for the stocks that are lying with us, most of it has passed the expiry date because CPRL was not picking them up due to poor sales,” he said.

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