McDonald's India franchisee Westlife's profit misses as costs mount

Westlife Foodworld

27/07/2023 09:54

BENGALURU/CHENNAI, July 27 (Reuters) - Westlife
Foodworld  WEST.NS  reported a smaller-than-expected rise in
first-quarter profit on Thursday as higher expenses took the
shine off increased sales at the operator of McDonald's  MCD.N  
restaurants in West and South India.
    The franchisee for the U.S. fast-food chain said
consolidated net profit after tax rose to 288.3 million rupees
($3.52 million) for the quarter through June from 235.8 million
rupees a year earlier.
    Analysts on average were expecting the profit to be 321
million rupees, according to IBES data from Refinitiv.
    India is reeling under rising prices of essentials including
tomatoes and cheese, prompting restaurants to introduce new
strategies to protect margins and keep sales coming in from
consumers looking to cut back spending.
    McDonald's  MCD.N  in June launched discounted meals
comprising a McChicken or McVeggie burger, medium Coke as well
as fries at 179 rupees, with hefty marketing spends, Westlife
Executive Director Akshay Jatia told Reuters last month.
    Same-store sales for the quarter increased 7% from a year
earlier, but that was not enough to make up for the 14% increase
in expenses, with higher prices of packaging material and food
products inflating costs.
    Shares of Westlife, which rose 25% from April to June,
climbed 5% as the restaurant operator declared an interim
dividend of 3.45 rupees per equity share.
    Total revenue from operations for the quarter also rose 14%
to 6.15 billion rupees, driven by an 18% increase in on-premise
sales, which includes dine-in and takeaway and the addition of
four new stores.
    Westlife plans to add 40-45 new stores in the year ending
March 2024.
    Earlier this week, rival Jubilant FoodWorks  JUBI.NS , which
runs Domino's Pizza  DPZ.N  restaurants in India, posted a 74%
slump in quarterly profit due to higher raw material costs and
investments to open more stores. 

    ($1 = 81.9400 Indian rupees)

 (Reporting by Navamya Ganesh Acharya in Bengaluru, Praveen
Paramasivam in Chennai; Editing by Nivedita Bhattacharjee)
 ((Navamya.GaneshAcharya@thomsonreuters.com; +91 8805175330 ;))