Westlife Foodworld, which owns the franchise for McDonald’s in west and south India, is betting on its meal strategy going forward to drive demand as well as customer ticket size.
“There has been a shift towards more filling and indulgent offerings like meals. It may not be only premium burger meals, but those with not only a burger but also fries and coke. These give customers value for money, said Akshay Jatia, executive director at Westlife Foodworld. “We’re going to continue to go after the meals category and kind of establish or continue to build on our market leadership in this category,” Jatia said.
Through meals, McDonald’s has also been able to premiumise its product range by offering gourmet burgers and fried chicken to customers.
Gourmet burgers are more indulgent and filling, and are a little more expensive. These offerings have resonated with a certain set of customers, particularly families, Jatia said. These cost more with average being between Rs 250 and Rs 320, Jatia said. However, in the competitive landscape, it’s a very affordable price point, he added.
While there is a shift towards more premium products, McDonald’s also sells extra value meals which are more towards entry level and ensure that there’s a diverse portfolio available.
Overall, it’s the meals category and diverse product mix that drove volumes as well as order size for Westlife even through the inflationary period, which impacted demand in general, Jatia said.
During July-September, Westlife Foodworld saw a 40% on year jump in same-store sales growth, which Jatia says was due to volumes and improved ticket size on the back of meals and a diverse product range. The company’s revenue grew 49% y-o-y and 6% q-o-q to Rs 572 crore during the quarter.
Despite the 5% price hike taken during the quarter to pass on inflationary pressures to customers, the company’s margins also improved both y-o-y and sequentially.
Jatia said that the margin expansion came on the back of a higher operating leverage, which is improved volumes and sales, coupled with cost-saving initiatives. “I think it all comes down to how we’ve grown volumes and sales, it’s foundational and it’s part of our growth strategy where we have increased our brand relevance and product market fit,” Jatia said.
The company’s volumes also improved due to the expansion strategy in south India, which aided in volume growth of the topline. “Even though they are newer stores and they’re not having a negative impact in terms of our margin. So, that’s where all the volume growth has aided our bottomline as well as our topline,” Jatia said.
In terms of cost-saving measures, the company saved cost in food and paper, labour, utilities and energy, Jatia said.
Broad basing the menu with enhanced meal offerings like gourmet burgers, chicken-led meals, network expansion is what the company believes will cumulatively drive growth for McDonald’s going forward.
Westlife added 6 restaurants during Q2FY23 and is on track to add 35-40 new restaurants in FY23 and 200 plus over the next 3-4 years.