Food ordering has not seen downward trend: Westlife Development's Jatia

Amit Jatia, vice-chairman, Westlife Development, talks about the road ahead for the company

Westlife Development, which runs McDonald’s restaurants in western and southern India, reported same-store sales growth of 10.5 per cent in the March quarter (Q4) of financial year 2020-21 (FY21) as dine-in operations improved. Convenience channels have emerged as a strong platform for Westlife, triggered by the Covid-19 pandemic. It contributes 60 per cent to overall sales, with dependence on the channel expected to grow during the second wave. In an interview, Amit Jatia, vice-chairman, Westlife Development, talks to Viveat Susan Pinto about the road ahead for the company. Edited excerpts:

How do you see FY22, since Covid-19 has resurfaced?

We are better placed than before to take on this time’s issues. We learnt a lot in the first wave and the consumer too has evolved over the last year. We’ve entered FY22 and the second wave with a strong balance sheet. We are also coming into this wave with our convenience channels well-entrenched. Food ordering has not seen a downward trend. I believe that in the next three-four months, the situation will settle down as far as the second wave is concerned. We should be the first brand to get back on the growth path once it abates. I am feeling quite good about FY22.

What in your view will be the restaurant of the future?

There is a shift towards the organised sector from the unorganised segment, triggered by the pandemic, since consumers want safety and hygiene. To that extent, the trend is good for organised players like us. The question is when will things normalise? That is an answer that many are seeking. As I mentioned earlier, I believe the second wave will abate in about three-four months. Of course, there is a third wave looming. From a long-term perspective, things may settle down in a year or two. However, I remain bullish about the market because the shift to the organised sector will continue. Plus, the out-of-restaurant consumption has grown during the pandemic and that is here to stay. Also, McDonald’s is a convenience brand. All of this will aid growth. And we will continue to invest in the business, open new stores as well as drive our convenience channels.

Can convenience channels really make up for dine-in sales?

While dine-in is an important constituent of the restaurant business, as I mentioned earlier, food ordering has not come down at all. People are, therefore, turning to takeaways, drive-throughs, on-the-go and delivery to compensate for the lack of dining-in due to lockdown curbs. Our convenience channels have added a lot of value to our total sales. Also, as an impulse business, consumption for us is not restricted to in-store alone. Globally, 70 per cent of McDonald’s business is off-premise. That speaks for itself, especially during the pandemic in the last one year, when in-store sales had suffered, it was convenience channels that were ticking. Even after dine-in sales touched 70 per cent of pre-Covid levels in January-February, there was no drop in sales from our convenience channels. That clearly shows that this has become a habit for consumers.

 What is your outlook on store additions this financial year?

 We have around five to six stores in the groundbreaking phase this (June) quarter. Since there are lockdown curbs in place right now, we cannot do much. However, we hope to touch 22-30 stores in terms of new additions by the end of this financial year, for which our capital expenditure will be around Rs 100 crore. Last year (FY21), we opened five stores only. We would like to go back to our normal cycle of store additions in FY22, around 22-30 outlets. And we hope not to change the plan this year.

What relief measures do you expect from the government for the sector?

Definitely, the challenges faced by the industry are a cause for concern for many. Restaurants in the rest of the world have been through a similar phase. But they got tremendous support from their governments in terms of furlough pays, taxation and financial assistance, which helped sustain them. Some support to sectors such as restaurants, hospitality and tourism in India will go a long way towards preventing job loss and closure of businesses. This is the need of the hour.