Pandemic or not, I'm bullish on FY23 biz outlook: Westlife's Amit Jatia

In a Q&A, the chief of McDonald's master franchisee, talks about his company's strategy to expand its presence in more towns as it increases its store count

Westlife Development, which holds the master franchise for McDonald’s in west and south India, expects same-store sales growth to be in the 8-10 per cent range. In an interview with Sharleen D’Souza, Amit Jatia, vice chairman of Westlife Development talks about the company’s strategy to expand its presence in more towns as it increases its store count. Edited excerpts:

Do you expect revenue performance to continue in Q4, considering the third wave had an impact on mobility and people going to restaurants?

First and foremost, we have got to go beyond the pandemic. The good news is that the whole world is recognising that in some form. It might stay, but it is becoming less deadly.

After all going through the worst, we feel that we have a very, very strong playbook at Westlife for brand McDonald's through our omni channel strategy. And the last (December) quarter reflects that because out of three months in the quarter, one month the pandemic was there and yet we've delivered the best-ever sales and a very strong flow through to the bottom line. Of course, if I take out the IND AS adjustments, I'm talking of a net profit of Rs 28 crore and a cash flow of Rs 62 crore in one quarter on a top line of almost Rs 500 crore. I feel that we've been able to demonstrate quarter after quarter that our business is here to stay and the foundation is very strong. And again, when we talk of, you know, products like Chicken, Chicken is here to stay. On top of that, we've launched gourmet burgers. So I'm pretty much of a believer that the revenue trajectory is here to stay. And we do believe pandemic or no pandemic, I'm very bullish about the outlook for our business in FY23.

Despite high raw material costs, what aided your margin expansion in the quarter?

For us, it’s about three levers that we have. One is about product mix. As we introduce new products, and as we deal with our product mix, we try to ensure that it is favourable. The second big lever is long term supply chain discussions with our suppliers linked backward to the farms. And the third is menu prices. Between these three levers we are able to deliver, and we manage our gross margins quite well.

Do you expect same-store sales growth to remain as robust?

If I were to normalise our business, 8 to 10 per cent same-store sales growth (SSG) is what we always talk about, from a consistency point of view. Last year, SSG may have been lower because of the pandemic, but we have sustained it at 8-10 per cent in normal years which is significant.

Will we see more launches in the premium range?

Essentially, we have two strategies around product launches. One is limited time offers where we take a favourite of the customer and extend that and the other platforms. The chicken initiative is a platform now and that's there to stay consistently in the long term. Not only am I expecting the chicken launches to continue in the West, but I expect as consumers start recognising that McDonald's has a fantastic fried chicken product, I expect to see sales continuously rise there. Similarly, with gourmet burgers, it's only been one quarter (since its launch) and we continuously change the product to engage with the consumer. So, you will continuously as always see leadership from Westlife around products.

How have your online sales played out?

Typically, people relate to McDonald's as an in-store brand and we have demonstrated time and again, but more so in the last quarter that we are an omni channel brand. In the last quarter everybody talked about in-store coming back and I've always maintained that as in-store comes back our convenience channel sales will remain steady and grow. So, in this particular quarter, our convenience channels also grew by over 50 per cent as in-store came back to about the same level. It truly reflects the fact that we are an omni channel brand and I expect that to continue for the next five years.

Which geographies is Westlife focusing on to expand stores?

We have over 100 stores in Mumbai and it can go up to 200 stores. We believe we have a pretty good presence in small cities. We are in 46 cities and over the next few years, we definitely feel we will add another 20-25 new cities. Our strategy is about first, not losing but gaining market share in the cities we already operate in. And that itself requires us to double the base. On top of that, we will add at least 20-25 new cities and that involves adding a lot of new restaurants to that market as well.