McDonald’s India operator Westlife sees 228% jump in Q3 profit

Forum Gandhi Mumbai | Updated on January 24, 2020

McDonald’s owners, Westlife Development Ltd, posted a net profit of ₹22.72 crore for the December quarter of FY20, which is a jump of 228.3 per cent on a year-on-year (YoY) basis. Westlife owns Mc Donald’s restaurants in western and southern India.

The company’s total revenue stood at ₹432.9 crore, against ₹370.6 crore in the previous-year period, recording a growth of 16.8 per cent. Its operating costs, however, grew 13.4 per cent YoY.

According to Westlife, the company has managed to post a strong profit “despite a challenging economic environment” in India. This was driven by a strong strategy, said the company.

“Over the past three-four years, we have been reinvesting back in the business and making long-term calls,” said Amit Jatia, Vice-Chairman of Westlife Development. “It’s this foundation that is helping us. From a consumer point of view, we have created more occasions like McCafe.”

WestLife added 11 new restaurants in the December quarter, taking the total restaurant count to 315. It added 13 more McCafés, taking the number of the brand’s in-house coffee chain units to 218. In the last four years, McCafé sales have increased eight-fold, said the firm.

In Q3, McDelivery India was among the top five McDelivery global markets for most deliveries achieved in one day. The company now has 258 delivery hubs and is tapping into both its owned platform as well as third party aggregators to serve the burgeoning delivery market, it said.

Takeaway options

“Takeaway and eating out of home are increasing and thus, for us, increasing the possibility to deliver. Delivery is a natural phenomenon of the market, and when you cannot fight it, you join the bandwagon. We are maintaining a balance between delivery and walk-ins,” Jatia said. Mc Donald’s recently tied up with Zomato as its exclusive delivery partner.

According to NRAI’s ‘India Food Services Report 2019’, the cloud kitchen industry’s market size was ₹928 crore. Speaking about cloud kitchens in areas which have a high-intensity delivery focus, Jatia said: “For us, we need a good mix. There may be certain small areas that may need a cloud kitchen, it might be a part of our mix. Our strategy is not to aggressively building a cloud kitchen, we may look at assessing cloud kitchens in a few high-intensity areas.”

The company continued to maximise operational efficiencies coupled with strict cost control that led to a more than 200 bps expansion in restaurant operating margins and operating EBITDA.

Speaking about the expansion plan for 2020, Jatia added: “We will be 27 restaurants this year. About 70 per cent openings will be in the same city and 30 per cent will be in new cities. Penetrating and scale help consumers to be habituated with it. Penetrating through new areas through new restaurants and simultaneously engaging our existing customers. It’s very much in line with our vision. ”

Published on January 24, 2020

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