43 McDonald's outlets to shut, 1,700 to lose jobs
New Delhi - The operation of 43 restaurants operated by CPRL has been temporarily suspended.
McDonald's on Thursday closed its 43 outlets, affecting 1700 jobs, in New Delhi due to differences between its joint venture partners.
Connaught Plaza Restaurants (CPRL), is a 50:50 local joint venture between Vikram Bakshi and McDonald's that operates the fast food chain in north and east India.
The CPRL board on Wednesday took a decision to shut down 43 out of 55 restaurants in Delhi from Thursday, Economic Times reports.
"It's unfortunate, but operation of 43 restaurants operated by CPRL has been temporarily suspended," Vikram Bakshi, former managing director of CPRL, which operates 168 restaurants, was quoted as saying in the newspaper.
Bakshi and his wife are still on the CPRL board while McDonald's has two representatives on the board. The board took the decision to close down the outlets during a meeting via Skype on Wednesday morning.
Though the partners declined to reveal the reasons for closure, highly-placed sources said CPRL failed to get the mandatory regulatory health licences renewed because of the infighting between Bakshi and McDonald's. The move, they point out, will render over 1,700 employees jobless.
Bakshi, who was ousted in August 2013 as CPRL's managing director, has been embroiled in a protracted legal fight with McDonald's, dragging the fast food chain to the Company Law Board (CLB), which is yet to announce its verdict.
McDonald's has been pursuing arbitration against Bakshi in the London Court of International Arbitration.
Marketing and branding experts say the closure will hurt McDonald's, which has been sliding in India since it was dethroned by pizza brand Domino's from pole position in 2013 as the largest quick service restaurant (QSR) chain in the country.