Mc Goes VEG

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The iconic American brand is seemingly gaining confidence of the Indian vegetarian population. McDonald's (NYSE: MCD) will open its first vegetarian-only location next year near the Golden Temple, a pilgrimage site sacred to Sikhs located in the city of Amritsar in northern India. There is no meat allowed in the temple (or smoking or alcohol, for that matter.)

This isn't exactly the first time McDonald's is breaking into the Indian market

"At the moment, India is still a very small market — we just have 271 restaurants in India, and across the world, we have nearly 33,000," a spokesman for McDonald's in northern India.

The reasons for going meatless in India are obvious: Cows are sacred to Hindus, and the country's Muslims don't eat pork. That leaves a lot of chicken and vegetables to be served in McDonald's existing Indian restaurants.

McDonald's in India already has a menu that is 50% vegetarian. At 28 rupees, or 50 cents, each, its McAloo Tikki burger— which uses a spicy, fried potato-based patty — is the top seller, accounting for a quarter of total sales. And you won't find a Big Mac in India, just a Maharaja Mac, which involves chicken patties. 

The company is also planning to open another fully vegetarian location near the Vaishno Devi cave shrine in Kashmir, a Hindu pilgrimage site that attracts hundreds of thousands of visitors a year.

So how's the new all-vegetarian version of McDonald's going to play in India? We can only guess, although from China to France, the mega chain has a history of successfully adjusting its brand abroad to suit the locals.

Restaurants like Denny's Corp (NASDAQ: DENN), known for serving pancakes and sausages all day is also trying to make its foray in a country of 1.2 billion people. Denny's Corp announced that for fiscal 2012, it expects company same store sales in the range of break even to 2.0%, in line with previous guidance range and adjusted EBITDA in the range of $80 to $84 million. According to I/B/E/S Estimates, analysts on an average were expecting the Company to report EBITDA of $84 million for fiscal 2012.

Similarly Pollo Tropical of Carrols Restaurant (NASDAQ: TAST) is also looking to cash into the Indian quick-service restaurant market worth $13 billion. Carrols Restaurant Group, Inc. announced that for fiscal 2012, it expects comparable restaurant sales to increase 4% to 6%.

That does not mean that pleasing the Indian palate is an easy task. Many items on menus in Western countries have been knocked out by chains like McDonald's because the predominantly Hindu population does not eat beef. And insipid food is not always palatable to people who have grown up on spicy curries. A lot of the vegetarian innovation has happened in India.

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With innovation in the menu keeping the local cuisine in mind, McDonald's is going gangbusters worldwide.

Many of the new restaurant chains heading to India plan to take a leaf out of McDonald’s experience in India, and adapt their cuisines to suit local tastes.    .    

The regional and international marketing skill will always remain a forte for McDonald's which will in a way help its shares to rise in the coming months.


SomnathGuha has no positions in the stocks mentioned above. The Motley Fool owns shares of McDonald's. Motley Fool newsletter services recommend McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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