Job Cuts: What's With McDonald's India?

04-Jul-2017 - USA

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In a major setback for McDonald's Corp. (MCD), many of the fast-food chain's restaurants in New Delhi, India's capital city, have been shut down from Thursday as their operating licenses expired. The move will reportedly result in 1,700 people losing their jobs.

Connaught Plaza Restaurants Private Limited or CPRL, the fast-food chain's licensee in north and east India, has decided to shut 43 of its 55 restaurants in Delhi. CPRL, which operates 168 McDonald's restaurants, is a 50:50 joint venture between Vikram Bakshi and McDonald's.

The Economic Times newspaper reported that about 1,700 employees would lose their jobs as a result of the restaurant closures. According to the report, CPRL failed to get the mandatory regulatory health licenses renewed because of infighting between Bakshi and McDonald's.

However, other reports quoted CPRL as saying that the company is temporarily suspending the operations of the affected restaurants, and that all employees working in these restaurants will be retained. The salaries of these workers will also reportedly be paid during the period the restaurants remain closed.

Bakshi was dramatically ousted as managing director of CPRL in 2013 and has since been embroiled in a protracted legal battle with McDonald's. The fast-food giant is pursuing arbitration against Bakshi in the London Court of International Arbitration.

McDonald's currently has more than 400 franchises across 65 Indian cities.

The restaurant closures are likely to hurt McDonald's, which lost its top position in the quick service restaurants business in India to Domino's Pizza in 2013. (dpa)

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