While inflationary pressure from rising input costs has forced brands across segments to raise prices significantly, Westlife Development, which holds the master franchise for McDonald’s in west and south India, plans the usual price hike as it does every year. Further, Westlife plans to expand its ‘brands’ and add 200-plus McDonald’s outlets in the next 3-5 years, to the existing 316 stores in 44 cities. Amit Jatia, vice-chairman, Westlife Development spoke to Tanya Krishna of FinancialExpress.com about the brand’s expansion strategies, new initiatives, and its outlook for the next quarter. Excerpts:
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How much price hike will be seen on your menus given the inflationary pressures? How are you tackling inflation?In my opinion, India has an inflationary tendency, and therefore cutting costs is a part of our corporate DNA. My philosophy is that while you grow sales, you have to cut 100-250 basis points on cost, year-on-year to survive. I think we’ve tackled inflation reasonably alright. How we work is, if the cost for something goes up, the company needs to find something to bring down in order to maintain the balance and I don’t see this changing even three to five years from now.
Inflation is here to stay. In the current situation too, we have reported an Ebitda of Rs 836.2 million, a 61% increment y-o-y. As a result, the company clocked PAT of Rs 208.2 million. While we will not be able to do a knee jerk reaction in a quarter. But over the years, we will try and smoothen things as we go. In terms of price, we take a 3-5% hike every year & we’re going to stay with that.
How many new stores will you open going forward? How many McDonald’s stores are there under the Westlife brand now, and what are your expansion plans?Currently, we have a total of 316 McDonald’s outlets, out of which 248 have McCafe inside them, which are like proper coffee shops. We are working towards accelerating the expansion of our network, taking the overall footprint to over 500 restaurants over the next 3-5 years, with an investment of Rs 800 plus crores. Our expansion strategy will also be aligned to our omni-channel strategy with a robust portfolio of ‘experience of the future’ (EOTF) stores, drive-throughs and stores with separate take-out windows. Our EOTF stores are a big thing for us right now. We are trying to change the way the QSR industry is going to be operated in the future. We are also doubling down on our drive-throughs in the country. Menu innovation, omni-channel presence and network expansion will continue to be the key levers of strategy for Westlife.
Which menu item is your bestselling right now? Are you planning to change the menu in any way?In terms of menu, we have been playing around with our offerings. One good thing about McDonald’s is that there are no favourites and we have a number of options that come to mind when you talk about the brand. Offering like McChicken, McSpicy, McAloo Tikki, McVeggie are all consumer favourites and we are not dependent on one product. Furthermore, while we play around all segments, value is an important platform for us that we will continue to build. Currently, our big focus is also on meals. The eating behaviour has changed tremendously wherein consumers earlier were more focused on snacking when eating out at a QSR; however now, consumers are looking at a complete meal. So, our whole focus has shifted towards larger opportunities which are meals, complete with fried chicken and other options. We recently launched our Happy Happy Meal, which has all the calorie contents that a mother would like to give her child. So, you will see us continuously redefining and breaking barriers and boundaries in QSR territory and keep leading.
How has the competition been in the QSR segment right now? How are you keeping McDonald’s above the segment?It’s been 25 years of McDonald’s operations in India and we are still standing and are one of the leading brands in the QSR segment. Competition, I feel, is good as it keeps everybody on their toes, otherwise brands will become complacent. There needs to be a push for brands to keep reinvesting and to build & rebuild the product. EOTF is one such example for us which is keeping us ahead of our competition. Similarly, we are the first ones to add drive-throughs and that is working out greatly for us. Also, we have breakfast, we have McCafe, etc, so I think we are offering a holistic experience to our consumer base.
What would you credit the revenue jump and a good financial result to?In the last two years we pivoted to become an omni-channel brand wherein the digital channels accelerated at a phenomenal rate for McDonald’s. Our drive-through, contactless take-away, on-the-go service ensured easy operations. Also, as in-store came back, delivery continued to grow and that together gave us a good impetus. Even in this quarter, where most dine-in restrictions were eased, revenue from convenience channels saw a 55% jump y-o-y with McDelivery reporting its highest ever revenue so far. Then, our foundation around products helped us a lot. Our new range of burgers, along with the Fried Chicken platform and McCafe helped accelerate our average unit volume (AUV) growth by 30% without any significant capex investment. Westlife has strengthened all its channels and is ready in case of another wave, if at all.
From Source Article: financialexpress.com