Westlife Foodworld Limited (WFL), formerly Westlife Development Limited, is one of the fastest-growing players in India’s quick service restaurant (QSR) sector. It focuses on establishing and operating McDonald’s restaurants across West and South India, through its wholly-owned subsidiary Hardcastle Restaurants Pvt. Ltd. (HRPL).
Westlife Foodworld is listed on the Bombay Stock Exchange (BSE: 505533).
Westlife operates 337 McDonald’s restaurants (as of September 30th 2022) across 52 cities in the states of Maharashtra, Karnataka, Telangana, Gujarat, Tamil Nadu, Kerala, Chhattisgarh, Andhra Pradesh, Goa, parts of Madhya Pradesh and Union Territory of Puducherry, and provides direct employment to over 10,000 employees. McDonald’s operates through various formats and brand extensions including standalone restaurants, Drive-Thrus, mall food courts, McDelivery, McBreakfast and dessert kiosks. It also has three thriving brand extensions – McDelivery, McCafe and McBreakfast.
Quarterly Result Highlights
In Q4FY23, Westlife Foodworld Ltd. (WFL) saw a revenue growth of 22.3% compared to the previous year. However, it did not meet market expectations of Rs. 575.0 crores. The company’s McCafe portfolio and the successful launch of the Chicken Big Mac contributed to an increase in average sales per store, reaching Rs. 6.6 crores.
On the operational side, WFL’s EBITDA was Rs. 91.9 crores in Q4FY23, slightly below market expectations of Rs. 93.4 crores. The company’s profit after tax (PAT) grew by 31.4% YoY to Rs. 20.1 crores, resulting in a PAT margin of 3.6%.
As of March 31, 2023, WFL expanded its presence to 56 cities with a total of 357 restaurants.
Valuation and Outlook
Westlife Foodworld Ltd. had good revenue growth due to strong demand in its dine-in business. However, it didn’t meet expectations this quarter. The company addressed margin pressures and improved efficiency by adjusting prices and saving costs. Input costs remained stable. The increased gross profit margin was influenced by a one-time volume delivery incentive, so this trajectory may not be sustainable. The company plans to grow in non-metro towns, enhance its McCafe offerings, and introduce new menu items, which gives us optimism for future growth.
Key Concall Highlights
- Westlife Foodworld Ltd. plans to open 40-50 new restaurants in FY24 and aims to have a total of 580-630 restaurants by 2027.
- The company’s revenue growth was driven by a 14% year-on-year increase in same-store sales and a stronger dine-in business with attractive value offerings.
- Their McDelivery platform also experienced significant growth, with a 1.5x increase in off-premise business.
- Gross margins expanded by 371 basis points due to a one-time volume delivery incentive, cost savings, and previous price adjustments.
- As of Q4FY23, WFL operates 357 restaurants in 56 cities. The company’s board of directors updated the dividend distribution policy, targeting a dividend payout ratio of around 25%, subject to certain conditions.
Management Strategy & Outlook
- Westlife Foodworld Ltd. has a vision to achieve high single-digit same-store sales growth in the future.
- Despite adding more stores, the company’s capital expenditure (Capex) plan has remained unchanged, ranging from Rs. 200 to Rs. 250 crores per year.
- .In FY24, WFL plans to implement a 2%-3% price increase, in line with their previous trend, and expects inflation in raw material costs to be around 4%-6%.
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Read more about the other results declared in Q4
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