Westlife Foodworld Limited (“WFL”), formerly known as Westlife Development (BSE: 505533) (“WDL”), owner of Hardcastle Restaurants Pvt. Ltd. (“HRPL”), the master franchisee of McDonald’s restaurants in West and South India, has announced its financial results for the quarter ended September 30, 2022. 

Following a strong performance in Q1 FY23, the company demonstrated yet another quarter of solid growth in Q2 FY23, with sales at Rs. 5.72 bn, up 49% year on year and 6% quarter on quarter. Owing to product innovations and sustained momentum across channels, the company achieved more than Rs. 67.5 mn in average annualized sales per store with Op. EBITDA at 17.3%. Same Store Sales Growth (SSSG) for the quarter was 40% year on year, and the company reported a Cash PAT of Rs. 680 mn, up 159% year on year. The company’s Restaurant Operating Margin was Rs. 1,299 mn, up 94% YoY. Despite the effects of inflation, the company achieved its highest-ever operating profits at Rs. 988 mn this quarter, and its gross margins exceeded pre-Covid levels.

Westlife continued its momentum across channels with the on-premise business gaining strong traction and healthy growth, while the off-premise business grew steadily. The on-premise business increased 96% YoY and 24% over the Pre-Covid levels, and the off-premise business consisting of its digital channels, delivery, takeout, and on-the-go services rose by 12% YoY and 88% over the Pre-Covid base. 

In the quarter under review, the Company witnessed broad-based growth across store formats with mall stores improving pace sequentially. It witnessed a 22% rise in monthly active users for its McDelivery app which led to the highest quarterly sales for its delivery channel. The McDelivery app had over 21 mn cumulative Apps downloads in this quarter.  

Commenting on the results for Q2 FY23, Mr. Amit Jatia, Vice-Chairman of Westlife Foodworld Limited, said, “This quarter, our company demonstrated consistent performance yet again and showcased the resiliency of the business we have set up. Our focus on core business fundamentals coupled with rising consumer demand in the QSR industry enabled both on-premise as well as off-premise businesses to deliver solid numbers. Such strong growth quarter on quarter strengthens our confidence in the business strategy and enables us to build more trust among our stakeholders.”

Westlife continued steadily on its expansion path and added 6 new restaurants this quarter which included its first restaurant in the holy city of Shirdi. It plans to add 35-40 new restaurants in this financial year and over 200 new restaurants in the next 3-4 years with greater emphasis on smaller and emerging cities. For Westlife, its restaurant sales in non-metro towns grew at an impressive 1.6x of the store in Metro cities, from / on the pre covid base.

In a new initiative to grow brand relevance and brand affinity, the company launched a new 360° campaign for McDonald’s – ‘Meals Make Families’. Menu innovations have been a source of competitive strength for the company ever since it brought McDonald’s to India. The company introduced a new variant of the Shake-Shake condiment, Chatpata Fries this quarter.

Westlife now has a total of 337 restaurants across 52 cities as of June 2022 with 68 Drive-Thrus, 274 McCafés, and 138 Experience of the Future (EOTF) restaurants.

Particulars (INR Mn, Post INDAS 116)Q2FY23%Q2FY22%Q1FY23%
Sales  5,724.2 100.0%3,854.3 100.0%  5,379.3 100.0%
YoY Sales Growth %48.5% 84.0% 107.6% 
Food & paper  1,976.2 34.5%  1,359.5 35.3%    1,920.7 35.7%
Gross Profit3,748.0 65.5%  2,494.7 64.7%3,458.6 64.3%
Payroll & Benefits      507.4 8.9%      360.3 9.3%      425.8 7.9%
Royalty      261.9 4.6%        172.9 4.5%      245.9 4.6%
Other Operating Expenses  1,679.5 29.3%    1,290.7 33.5%  1,622.9 30.2%
Restaurant Operating Margin (ROM)  1,299.2 22.7%      670.9 17.4%  1,164.0 21.6%
General & Admin Expense        311.2 5.4%        213.4 5.5%      243.3 4.5%
Op. EBITDA    988.0 17.3%      457.4 11.9%      920.7 17.1%
YoY EBITDA Growth %116% 994%  1706% 
Depreciation      366.3 6.4%        338.1 8.8%      357.9 6.7%
Other (Income) / Expense, net      (53.6)-0.9%      (39.4)-1.0%          (0.2)0.0%
Financial Expense (Net)      225.5 3.9%      204.4 5.3%        215.0 4.0%
Extraordinary Expenses*          30.7 0.5%          13.0 0.3%          30.3 0.6%
PBT      419.1 7.3%      (58.7)-1.5%      317.6 5.9%
Tax        104.1 1.8%        (14.4)-0.4%          81.8 1.5%
PAT      315.0 5.5%      (44.2)-1.1%      235.8 4.4%
PAT (pre-IND AS 116)    398.0 7.0%        38.0 1.0%      316.0 5.9%
Cash Profit After Tax    680.2 11.9%      262.3 6.8%

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