Fast-food slowdown catches up with McDonald's India franchisee

Westlife Foodworld

27/10/2023 08:16

By Praveen Paramasivam
       CHENNAI, Oct 27 (Reuters) - Shares in India's Westlife
Foodworld  WEST.NS  fell as much as 7.7% on Friday, a day after
the McDonald's operator reported a surprise drop in quarterly
profit and indicated high inflation was squeezing consumer
spending in the current festive quarter. 
    Prices of essentials in India have shot up in recent months,
prompting companies like Coca-Cola  KO.N  to roll out smaller
packs and restaurants to launch cheaper pizzas and burgers.
    "All around you are seeing pressure on macro spending,"
Westlife Executive Director Akshay Jatia said, adding the
informal eat out category as well as Western fast food are under
pressure in terms of growth.
    "Eating out frequency remains low," he said.
    This slowdown is not restricted to India. Globally,
fast-food chains, including McDonald's  MCD.N  and KFC-parent
Yum Brands  YUM.N , are contending with inflation-stung
consumers preferring to dine at home.
    To counter this, Westlife in June launched discounted meals
at 179 rupees ($2.15).
    However, this only led to a 1% growth in same-store sales,
slowing from a 7% rise in the first quarter and a 40% jump last
year.
    Westlife's shares are tracking their worst day in two years
and seven months, trimming gains to around 5% so far this year.
    Until the second quarter, the company had shrugged off the
fast-food slowdown on higher demand for fried chicken, burgers
and coffee, while pizza chains have been under more pronounced
pressure for several quarters.
    Earlier this week, Domino's Pizza franchisee Jubilant
FoodWorks reported a decline in like-for-like sales - a key
same-store sales metric - for the third straight quarter.
    
    "Although Westlife has been relatively resilient in the past
few quarters, the slowdown has started showing its impact
finally," Prabhudas Lilladher analyst Amnish Aggarwal said after
the company's second-quarter results.
    Consumer spending typically picks up in the October-December
quarter, dubbed the festive quarter, as it includes Christmas
and the Hindu festival of Deepavali, when people engage in more
discretionary spending.
    However, another Westlife executive said the factors that
pressured the franchisee's sales would not "dramatically" change
in the third quarter.


($1 = 83.2380 Indian rupees)

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
McDonald's operator Westlife's same-store sales growth slows   
https://tmsnrt.rs/3tN1OnN
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Praveen Paramasivam in Chennai; Editing by Sonia
Cheema)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))