McDonald’s supersizes its north and east India bet to $80 million, even as rising costs squeeze profit

New Delhi: Quick service chain McDonald's India's north and east business has revised investments upwards to about $80 million over the next two-and-a-half years on store expansion and digitisation, to meet consumer demand, and as competition from rivals such as KFC operator Devyani International and Burger King heats up, though it expects profitability to remain under pressure amid surging food and packaging inflation.

"This will be our highest investment in a two-year period. Up till now, we have invested $175 million in the business, through our own family offices; future investments will also be funded internally from group companies," Sanjeev Agrawal, chairman of McDonald's India (North & East), told ET in an interview. The chain had previously said it would invest US close to $100 million over the next four years to accelerate its business.

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The north and east business of McDonald's operated by Connaught Plaza Restaurants (CPRL), was acquired by MMG Group in 2020 from the Chicago-based McDonald's Corp after the latter's prolonged legal tussle with CPRL's previous head Vikram Bakshi.

Similar to dozens of consumer companies from Apple to Unilever which are betting on India as a key growth bastion when their headquarters are seeing continued slowing sales, McDonald's too is placing bets on key markets such as India.

At its September 2026 Investor Day, McDonald's global chief Chris Kempczinski announced an "$8.5 billion franchisee support package" to bet on growth in franchise-led markets, while cautioning that customer traffic in its developed western markets would remain flat as long as inflation stays elevated.

He had noted that of the total commitment, $5 billion is allocated for franchisees by 2030, through a mix of rent relief and direct capital assistance. In its last reported earnings for the June '26 quarter, McDonald's has reported US sales increase of 0.8% year-on-year, with its international developmental licensed markets growing 1.9%. The India business operates as a developmental licensee.

Agrawal said chain has not taken pricing now and continues to operate in value segment, though inflationary pressures have escalated over past year. "Due to West Asia crisis, profitability has been under stress with costs of oil, transportation, packaging-all up and have had a cascading effect," he said. "We were waiting for crisis to end; but the inflationary impact continues. We will be taking marginal price increases on select items which will not impact value-conscious consumers, because the prices are unsustainable."

CPRL expects to close FY27 with revenues of ₹2,000 crore, up from ₹1,695 crore in FY26, and 12% Ebitda, filings showed. It operates over 320 stores and expects to cross 500 stores by 2028, which will be a mix of drive-throughs, highway stores and at government-run fuel stations, Agrawal said.