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Sunday, April 14, 2013

Frenemy format: Will McDonald's, CCD share table?

My colleague Nupur Anand co-authored this story appearing in DNA Money edition on Tuesday, Feb 26, 2013.

Imagine walking into a McDonald’s outlet for a McSpicy Paneer burger and also getting to pick up a cup of cappuccino from a Cafe Coffee Day (CCD) counter inside.

Going by a buzz, McDonald’s and CCD operators in India could very well team up to create co-located stores.

Officials of both companies denied the move.

“There has been no move to tie up with or create associations with Café Coffee Day or any other brand in India presently,” said Smita Jatia, managing director, Hardcastle Restaurants Pvt Ltd (McDonald’s west & south India operations).

K Ramakrishnan, president – marketing, Café Coffee Day, also refuted any such collaboration being worked out with McDonald’s.

Industry sources, however, say it makes sense for quick service restaurants (QSRs) to operate in a co-location format with rival brands that offer complementary product lines.

Call it the ‘frenemy format’, if you please. The least it can do for the players is help exploit synergies and increase footfalls and conversions by building on each other’s strengths and creating a fulfilling experience for customers.

“This may be for sharing property and floor space, for better supply chain management or for other franchisee synergies,” said Arvind Singhal, chairman, Technopak Advisors.

A recent collaboration between cafe chain Braista Lavazza and Mumbai based ice-cream chain Hokey Pokey is a case in point.
Under the tie-up, those visiting Barista outlets can also savour ice cream flavours specifically launched for the cafe chain, said Rohan Mirchandani, co-founder, Hokey Pokey.

It is akin to food courts, albeit on a much smaller scale, say experts.

“The only difference is that two complementing brands are coming together to jointly take up retail real estate and a launch co-located store,” said Harminder Sahni, founder and managing director, Wazir Advisors.

But there’s a caveat, said Devangshu Dutta, chief executive of consulting and advisory firm Third Eyesight. “Such offerings can work in certain catchment areas... But in case there is a conflict between what is being offered, then a format like this will not work.”

Follow Ashish K Tiwari on twitter @ashishktiwari

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