McDonald's India franchisee Westlife posts surprise profit drop on higher costs (updated)

Westlife Foodworld

26/10/2023 09:52

(Adds background, details on sales, costs in paragraphs 4-9)
       CHENNAI, Oct 26 (Reuters) - Westlife Foodworld
 WEST.NS , which operates McDonald's restaurants in west and
south India, reported a surprise drop in quarterly earnings on
Thursday as increased costs overshadowed higher sales of its
burgers and fried chicken.
    The franchisee said consolidated net profit after tax fell
to 223.7 million rupees ($2.7 million) in the July-September
quarter from 315.4 million rupees a year earlier.
    Analysts were expecting a profit of 319.6 million rupees,
according to LSEG data.
    Prices of several major commodities, including cheese and
vegetables, shot up during the quarter, resulting in a jump in
expenses with many restaurants going as far as taking tomatoes
off their recipe. 
        For Westlife, total expenses climbed 9.7% to 5.88
billion rupees.
  
        Revenue from operations, however, rose 7.4% to 6.15
billion rupees, driven by the launch of discounted meals and the
opening of new stores.
  
        Westlife operated in "challenging market conditions" and
"macroeconomic challenges persist", Chairperson Amit Jatia said
in a statement, adding the company is investing in new stores
and plans to grow its business.
  
        Shares of Westlife, which operates 370 restaurants in
states like Maharashtra and Tamil Nadu, declined 2.2%, cutting
their gains to about 11.3% this year.
  
        The downbeat results come a day after fast-food rival
and Domino's operator Jubilant FoodWorks  JUBI.NS  
    posted
     a smaller-than-expected drop in quarterly earnings on
cost-cutting and demand for its cheaper pizzas.
    
 
 ($1 = 83.1590 Indian rupees)

 (Reporting by Praveen Paramasivam in Chennai; Editing by Savio
D'Souza and Sohini Goswami)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))