43 McDonald's outlets closed in Delhi due to expiry of licenses

In a setback to US-based fast food giant McDonald's, 43 of its 55 outlets in Delhi will be shut from June 29, over failure to renew eating house licenses by its North and East India licensee Connaught Plaza Restaurants Pvt Ltd (CPRL).

"It is unfortunate. Around 40 restaurants have temporarily suspended operations in the city of Delhi from (Thursday) morning," Vikram Bakshi, former managing director of CPRL told media persons on Thursday.

CPRL is a 50:50 joint venture between Bakshi and McDonald's. The company manages 55 such restaurants across the city.

Sources said that around 1,700 employees will be affected by the move. Asked how many employees will be impacted by the decision, Bakshi said: "As this is a temporary shutdown, all our employees working in these restaurants shall be retained." He added that the decision had been taken by the CPRL board.

"The Eating House Licenses of a number of McDonald's restaurants in Delhi have expired. The Board of Connaught Plaza Restaurants Private Limited (McDonald's licensee in North and East India) is working to obtain the required licenses. Pending this, CPRL is temporarily suspending the operations of the affected restaurants," McDonald's India Pvt Ltd said in a statement.

Apologising for the inconvenience caused due to the closure, the company said its greatest concern "is always for our customers and employees, and we are committed to doing what it takes to ensure compliance." "It is our understanding that CPRL has notified the key affected stakeholders including employees, landlords and suppliers before the temporary suspension started on June 28. India continues to be an important market for McDonald's and we are committed to working with CPRL to resolve the issue as soon as possible," the statement added.

Since the last two years, Bakshi and McDonald's have been at loggerheads over the control of CPRL. Bakshi was ousted as managing director of CPRL in 2013 and dragged the world's largest fast food chain to court. McDonald's is pursuing arbitration at the London Court of International Arbitration.

"The board of CPRL is working to obtain the required licenses. Pending this, CPRL is temporarily suspending the operations of the affected restaurants," McDonald's India Pvt. Ltd. spokesperson Barry Sum said.

When asked about the possible job losses due to the closure, Sum said the rumours about "employees becoming jobless are erroneous." "We understand that CPRL is retaining the employees of affected restaurants and will pay them their salary during the period of suspension," he reportedly said.

Meanwhile, highly-placed sources said that that more outlets in Delhi could be shut as a result of the expired licences.