McDonald’s shuts 43 of 55 outlets as licences expire

New Delhi: Fast food major McDonald’s on Thursday shut down 43 of its 55 outlets in Delhi as they failed to secure the mandatory regulatory health clearances.

The restaurants were operated by Connaught Plaza Restaurants Private Limited (CPRL), which is a 50:50 joint venture between its founder Vikram Bakshi and McDonalds India Private Limited (MIPL), and an infighting between the two is said to be reason behind the decision.

In a statement issued by McDonald’s, it said, “The Eating House Licences of a number of McDonald’s restaurants in Delhi have expired. The board of Connaught Plaza Restaur-ants Private Limited is working to obtain the required licences. Pending this, CPRL is temporarily suspending the operations of the affected restaurants.” According to reports, the shut down will result in a loss of 1,700 jobs. Responding to this, the MIPL said that the reports are untrue.

“We understand that CPRL is retaining the employees of affected restaurants and will pay them their salary during the period of suspension,” the MIPL said.

CPRL runs the famous fast food chain in north and east India. Trouble started in 2013 when McDonald’s India removed Mr Bakshi as the managing director of the joint venture, alleging misconduct. The joint venture had four members on board — Mr Bakshi, his wife, and two representatives from the American company.

Mr Bakshi challenged his removal in the company law board, initiating a long legal battle between the two parties over share and ownership of the company, hampering operations.

Falling revenues, lack of investment and a legal battle over ownership of the fast food chain led to the trouble.

The shut down decision was reportedly taken during a board meeting via Skype on Wednesday morning.

“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 MIPL said.