The Aryavarth Express
Agency (New Delhi): Westlife Foodworld (WEST.NS), the franchisee for McDonald’s restaurants in west and south India, experienced a 96% decline in fourth-quarter profits. The company reported a profit after tax of 7.6 million rupees ($91,012.8) for the January-March quarter, compared to 200.9 million rupees in the same period last year. This marks the company’s lowest profit since the July-September quarter of 2021, when it posted a loss.
The significant drop in profit reflects the challenges faced by India’s quick-service restaurants (QSRs) as they struggle to attract consumers amidst persistent inflation and increased competition from local players. Despite efforts to lure customers with discounted prices, consumer spending on fast food has declined.
Following the announcement of the results, shares of Westlife Foodworld fell by as much as 7.7% before closing down 1.7%.
Westlife’s total expenses rose nearly 6%, whereas revenue growth was only 1.6% during the quarter. Elara analyst Karan Taurani noted, “Margin pressure persists, with category competition growing,” and added that growth is expected to remain weak due to a volatile demand environment, though the extent of the decline may lessen over time.
Efforts to attract customers with affordable value packs have been unsuccessful, as India’s food inflation remains high. The company’s same-store sales, which track revenue growth from stores open for at least a year, fell to 5% during the quarter.
Other major QSR operators in India, including KFC-operator Devyani International (DEVY.NS), Pizza Hut-operator Sapphire Foods (SAPI.NS), and Domino’s India-franchisee Jubilant FoodWorks (JUBI.NS), have yet to report their results.
In November last year, Westlife came under scrutiny when the Maharashtra state suspended the license of a McDonald’s outlet in east Mumbai for allegedly using cheese alternatives and misleading consumers. However, the top food standards authority in India later verified that the company was using real cheese in its products.
