What is McDonald's Franchise Cost in India?

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McDonald's is a well-established fast-food chain company that operates across the globe. It has established its presence in over a hundred countries. It successfully serves thousands of people, making nearly around 600 burgers daily in India. To meet this ambitious target, it has more than three hundred stores operating on a day-to-day basis in the country. They offer a variety of menus to both vegetarian and non-vegetarian customers, thereby expanding their customer base. 

Initially, McDonald’s was a simple grill restaurant. However, their fast food items such as burgers, fries, wraps, soft drinks, ice cream, etc, sold incredibly well leading to its worldwide popularity. You can start a McDonald's franchise if you have the necessary budget and requirements. Let's learn about the fundamentals of this business and McDonald's franchise cost in India. 

How to start a McDonald's franchise in India?

The foremost aspect of starting a McDonald's franchise in India is getting necessary approvals and obtaining the necessary license for operating. As of now, McDonald's operations in India are enforced by two companies. To get the license to operate, one would need to get in touch with these companies.

Basic Requirements for a McDonald's franchise India 

Some of the basic parameters which are required to be met before starting up with a McDonald's franchise are:

• Staff requirement- A minimum of 8 people are required on an average for working at a time with 2 shift managers at a time. The total number of staff should be around 22-25. 
• Education Level- You have to possess a minimum Graduation qualification to open a McDonald’s franchise.
• Land area- For opening a McDonald’s franchise, a significant land area is required. Food courts, buildings, hospitals, or airports. You can also rent a land area of 4000 sq. ft from the brand itself.
• Documents- ID cards, lease documents, etc.
• Franchise Investment Cost- In India, if anyone wants to start a McDonald’s franchise in India, then their net worth should be between INR 10 to 15 Crore. Also, assets worth INR 5 Crore should be in the form of cash or liquid assets. However, this limit may be more or less according to the location and size of the franchise. Also, you will have to take a commercial license from the local bodies to operate in that area.

Also Read: How To Set up a KFC Franchise In India

Location Factor

In any fast food outlet, location is of paramount importance. There are various critical locations like a food court, food building, restaurant hubs, etc. where Mc Donald’s Restaurant can be set up. Outlets can also be opened at colleges, hospitals, and airports. McDonald's outlets are even present at petrol pumps. Apart from that, at times, the brand itself provides the space in return for the rent. Therefore, you can open McDonald's franchise since there is significant scope of expansion in prominent areas.

Generally, you can open four types of McDonald's franchise:

1. Restaurants: This is just like a traditional restaurant setup. These outlets are seen in food courts, freestanding buildings, and other locations. The outlet happens to be a full-menu restaurant, offering its customers unmatched quality and uniformity in food and service. These fast food outlets come under the banner of McDonald's premium chain division.

2. Satellite Locations: These outlets function on a lower scale when compared to a traditional restaurant setup. They operate via a retail store, airport, hospitals, and various other locations. Often, they provide services to other brands of food as well. Since it is operating on a lower scale, it requires lesser investment.

3. STO and STR Locations: ‘Small Town Oil’ or STO locations are situated at petrol pumps and general stores and operate a full-menu McDonald’s restaurant within the shared space. ‘Small Town Retail’ locations, on the other hand, operate in rural areas. These outlets often work under the shared scheme within the space meant for public services. It is seen that it requires an intermediate level of investment.

4. BFL Franchises: “Business Facilities Lease” is a leasing setup. Here, both areas and facilities are leased.

What is the McDonald's Franchise Cost in India?

As mentioned before, the initial cost may vary on a case to case basis. Also, note that McDonald’s does not provide financial assistance in terms of money, lease, rent, or anything.

• The company requires you to pay a down payment of 40% for setting up a new franchise. On the other hand, it requires 25% for the existing franchise. The down payment should not be financed and must come from your funds.
• Mc Donald's requires the buyer to pay 25% of the investment. The remaining amount can get financed. But the period of financing must not exceed seven years. Generally, because of the worldwide recognition of McDonald's, the franchise owners enjoy the lowest lending rates in the country.

Investment Costs in McDonald's Franchise

A popular premium chain of McDonald’s Restaurant has initial costs of around thirty to forty lacs. The capital investment and royalty fees depend upon the types of retail chain franchise you are opting for, as given below:

• Traditional McDonald’s Restaurants (Within the city any place) – Rupees 25 Lakhs
• In Airports, Hospitals, Universities (Within and outside the city) – Rupees 32 Lakhs
• In Railway stations, Malls, Retail store, Fuel stations – Rupees 40 Lakhs
• In Business Corporate offices – Rupees 10 Lakhs

The cost involves custom machines, equipment, and furniture. One also needs to pay for a computerised billing system and food menu display screens. Monthly fixed costs such as Internet facility and Electricity bills and staff salary also need to be accounted for.

Some of the McDonald's India franchise cost include:

• Inventory
• Kitchen equipment
• Construction expenses
• Interior decor and exterior landscaping
• Signage
• Hiring and training

Recurring McDonald's franchise price 

During the operation of the franchise, one needs to pay McDonald’s the following fees:

• Service fee: A fee based upon the restaurant’s turnover. It gets levied every month. (currently a service fee of 4.0% of monthly sales). 
• Rent: A monthly base rent or percentage rent. It varies with the sales volume.
• Employee Cost: McDonald's has mandated that from the very beginning, you need fifteen employees. You need to keep six in the kitchen, four at the cash counter, and five for delivery out of the fifteen. Apart from that, you will need one manager. Separate employees will be required for home delivery.

Buying Existing McDonald's Franchise

Before buying an existing McDonald's Franchise, factors such as location, profitability, sales volume are considered. Some existing franchises might turn to McDonald's on account of poor performance. So planned marketing costs also get factored in before converting an existing franchise. Generally, McDonald's requires the owner to pay 25% of the initial investment upfront. The rest can get finance from the banks.

Profit Margin of McDonald's Franchise

In the current business scenario, assuming that you are operating your McDonald's Franchise on a full scale, you can recover your fixed investment within two years. Depending on the city one is running in, the actual recovery time may vary. You will get free access to delivery packets from Hardcastle Restaurants Pvt. Ltd. The margins will get directly linked to the kind of sales generated. The highest revenue comes from the combo meal plan. Hence, it should get promoted aggressively.

What does the McDonald's Franchise price in India cover?

 The McDonald's Franchise cost covers:

1. The World-Famous Recipe: 

McDonald's is very particular about its recipe. That's the reason why the taste of its food items remains the same irrespective of the location. It is the company's blueprint to success. Instead of worrying about how many potatoes to use, you can refer to the provided recipe. Also, the buyer will get access to the interior design and decor team. You do not need to hire external consultants to take care of your interior design.

2. Brand Value: 

The benefits of advertisement by McDonald's will no doubt accrue to the outlets. One g ets access to the name and brand value of McDonald's. As a result, they need not spend time and money on reaching out to customers and creating their brand. The reach to the customer base increases manifold once you sign up with McDonald's. Your McDonald's Franchise cost helps you navigate through those challenges by including your restaurant in a chain with the advantage of instant name recognition. It gives you the benefit of using the McDon ald's logo and brand.

3. Training: 

Many business houses fail to scale up because their owners lack the requisite skill and experience to compete with the existing business. But McDonald's does away with such loopholes by providing thorough training. The owner has to attend a nine-month-long training (at least) before starting up the outlet. This training cost gets covered in the initial McDonald's Franchise cost.

Following are the states with McDonald's Franchise:

Also Read: Domino's franchise Cost in India: Know How to Start Domino's Franchise

Conclusion

The external environment of any business is very dynamic in the current scenario. This is primarily due to the presence of COVID-19 pandemic. As a result, the prospective promoters are scared before investing their funds. Investing in a McDonald's Franchise requires you to account for various factors and events that may get encountered over five to ten years. The projections may undergo modifications based on the recent turn of events. The idea should always be to meet the unexpected situation without facing severe loss or damage. For that, one needs to have an adequate buffer and must take a calculated risk. Risk avoidance is not advisable in the current business world. 

The fast-food industry is expected to go through a sea of change. The customers now prefer home delivery over regular dining out. As a result, the prime focus should be on faster food packets as nobody likes to eat cold food. Also, customer awareness of food hygiene has increased. So it must get upheld at any cost. Therefore, we hope you have understood the requirements for the McDonald's franchise cost in India. Follow Khatabook for more useful business tips.