Westlife, Jubilant post double-digit sales growth for 5th straight quarter

In the past week, two of the country’s top food service operators — Westlife Development and Jubilant FoodWorks — have reported double-digit same-store sales growth (SSG). This came for the three months ended December 2018, which was the fifth straight quarter of double-digit SSG for the two. SSG is sales growth for stores that are operating for one year and above.

At 14.5 per cent (Westlife) and 14.6 per cent (Jubilant), SSG reported by the two for the period under review is also their closest in five quarters. While analysts point to the competitive intensity between the two companies for the near-equal SSG numbers reported by them, both firms insist they have strategies in place to outdo each other in the coming months.

Westlife runs McDonald’s stores in the south and west, while Jubilant is the master franchisee of Domino’s and Dunkin’ Donuts in the country.

Amit Jatia, vice-chairman, Westlife Development, says the focus on delivering value, variety and convenience will continue. In the third quarter, Westlife launched whole-wheat buns as an option for its burgers. This is the first time, say analysts, that a domestic fast-food player has launched whole-wheat buns. The initiative, said Jatia, would be taken to more markets in the west, where it was initially launched (in Mumbai and other regions), following feedback received. 

Rival Jubilant has also been expanding its menu on health lines, adding options such as multigrain crust for pizzas in the third quarter. At the same time, the company has been keeping a tight control on costs, says Pratik Pota, chief executive officer and whole-time director, Jubilant FoodWorks, a strategy that has yielded results too.

For the three months ended December 2018, Dunkin’ Donuts, Pota said, broke even ahead of the Q4 timeline that the company had set. While operating margins for Q3 were up 120 basis points over the year-ago period to 18.4 per cent, a seven-year high, he said.

Westlife’s operating margins also grew in the December quarter, touching 9.8 per cent, an increase of 113 basis points over the year-ago period. The company also reported its seventh straight quarter of net profit at Rs 13.6 crore for the three months ended December 2018.

On Friday, Finance Minister Piyush Goyal also increased standard deduction from Rs 40,000 to Rs 50,000. Also, tax deducted at source would not be charged on interest income up to Rs 40,000. He also exempted income tax for those earning up to Rs 5 lakh. Analysts say that the effort by the government to put more money in the hands of the middle class will augur well for food service operators.

“Discretionary spending is likely to go up with the measures announced for the salaried class,” says Abneesh Roy, senior vice-president (research), institutional equities, Edelweiss. “Consumer-facing firms, including retail and fast-food majors, will benefit.”