McDonald's vs. Yum! Brands: Which Wins the Battle for India as US Growth Slows?

"McDonald's ( NYSE: MCD) and Yum! Brands ( NYSE: YUM) face a punishing domestic landscape. QSR traffic from lower-income consumers declined by nearly double digits in the third quarter, a trend persisting for nearly two years. Rising labor costs, consumer pushback on pricing, market saturation, and value menu wars are eroding margins. India offers explosive growth: 1.4 billion people, median age of 29, a rapidly expanding middle class expected to reach 600 million by 2030, and massive underpenetration of Western QSR brands."

"Yum! Brands holds the structural advantage in India. KFC operates less than 600 locations, making it the largest Western QSR by store count in the country. The brand is opening a new restaurant every three hours globally, with India among the top development markets. KFC's chicken-forward menu requires minimal cultural adaptation compared to McDonald's, which eliminated beef entirely and pivoted to vegetarian offerings like the McAloo Tikki burger to accommodate Hindu dietary preferences."

"McDonald's operates over 500 locations split between two franchise partners: Hardcastle Restaurants in the West and South, and Connaught Plaza Restaurants in the North and East. This fragmented structure contrasts with Yum's unified partnership with Devyani International, India's largest QSR franchisee and a publicly listed company. McDonald's also faced legal battles with franchisee Vikram Bakshi that created operational uncertainty. The company's premium positioning limits its addressable market compared to KFC's accessible price points targeting mass-market consumers."

Domestic QSR demand deteriorated as lower-income consumer traffic fell nearly double digits in Q3 and has trended down for almost two years. Rising labor costs, consumer pushback on pricing, market saturation, and value-menu competition are compressing margins. India presents major growth with 1.4 billion people, median age 29, and a middle class projected to reach 600 million by 2030 amid low Western QSR penetration. Yum! Brands benefits from KFC's chicken-focused menu, rapid unit additions, and a unified partnership with Devyani International. McDonald's faces fragmented franchise arrangements, legal disputes, premium positioning, and a greater need for menu localization.

Read at 24/7 Wall St.