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Bad news for McDonald fans in the capital. Forty-three of the 55 McDonald’s outlets in Delhi are shutting down. Yes you heard it right. You will not find more McDonald outlets in Delhi from now onwards. The unprecedented move has also threatened the jobs of 1700 employees, as per the latest media reports.
Why it all happened?
There was a legal tussle between Vikram Bakshi and McDonald's and that seems to have reached a logical end with the board of directors of the Connaught Plaza Restaurants Ltd, (CPRL) deciding to shut down 43 out of 55 McDonald’s outlets in Delhi from Thursday. "It's unfortunate, but operation of 43 restaurants operated by CPRL has been temporarily suspended," The Economic Times quoted Vikram Bakshi, former managing director of CPRL, as saying. The decision was made by the board members via Skype on Wednesday morning, the reports added.
What were the other reasons?
McDonald’s, once a popular brand in fast food and the largest quick-service restaurant (QSR) chain in India was replaced by Domino’s in 2013. As per reports, losing “eating house licences” because of quality and hygiene issues, falling revenues, lack of investment and a huge legal battle over ownership of the fastfood chain brought the whole trouble.
How it all started?
McDonald’s US-headquartered fast food chain came to India in 1995 with a 50:50 joint venture agreement (JVA) agreed by Vikram Bakshi, the estranged partner of McDonald’s Pvt. Ltd, and the global fastfood chain. However, the trouble started brewing in 2013 when McDonald’s India removed Bakshi as the managing director of the joint venture, alleging misconduct. Bakshi eventually challenged his removal in the Company and began a long legal battle between the two parties affecting operations.
Who will be the most affected?
According to the Economic Times report, the latest move comes as a shock not only to the company but also to the over 1,700 employees who might be rendered jobless. In a statement McDonald’s India Pvt. Ltd, however, refuted it, saying, "We understand that CPRL is retaining the employees of affected restaurants and will pay them their salary during the period of suspension."
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