Here's What Drove McDonald's Chain Operator's Q2 Growth
McDonald's same-store sales rose in Q2, signalling that the pandemic fears have largely abated as people throng restaurants.
McDonald's sales surged in the second quarter, signalling that the pandemic fears have largely eased as people throng stores to eat out.
Revenue rose 48.5%, same-store sales jumped 40%, and gross margin improved despite inflation pressure for Westlife Foodworld Ltd. in the quarter ended September, according to its exchange filing. Westlife holds the master franchise for McDonald's in south and west India.
Westlife Foodworld Q2 FY23 (Consolidated QoQ)
Revenue up 6% to Rs 572.3 crore. It rose 49% year-on-year. Bloomberg estimate: Rs 547.6 crore.
Ebitda up 7% at Rs 98.8 crore against the estimated Rs 93.16 crore. Year-on-year, it rose 116%.
Ebitda margin at 17.3% vs 17.1%.
Net profit up 34% at Rs 31.6 crore against the estimate of Rs 26.5 crore. A year earlier, the company had reported a loss.
The numbers reflect the company's successful strategy, Akshay Jatia, executive director at the company, told BQ Prime in an interview.
"Brand strategy and menu, an omni-channel approach, and growing volumes to increase market penetration through store expansion are the three main strategy components that enabled them to achieve the reported sales and margin growth," he said.
Spicy Fried Chicken, McCafe Boost
McDonald's introduced its popular 'Spicy Fried Chicken' in South India in 2020 when Covid-19 had just started. “As things started getting better, this dish began driving very high incremental volumes in the south and received remarkable traction,” Jatia said. Spicy Fried Chicken will mainly cater to the south and parts of the west, Jatia said.
McCafé, introduced around 2013-2014, is another growth driver because of its “differentiated business model where we have a counter at the restaurants that serves crafted barista-made coffee at a very good price".
"Customers are liking the product and the value and experience that come along with it. In turn, this is adding to our incremental volumes because of our diverse product portfolio," Jatia said. "It also increases the margin profile as it’s a beverage offering. Hence, we have scaled McCafé to 80% of our restaurants.”
McDonald's also intends to expand its dessert offering under McCafé.
Store Addition Outside Metros
Stores in non-metro cities are growing at a rate of 1.6–1.7 times the ones in metros, said Jatia. “In tier-two and tier-three cities, brand relevance is high, product market fit is good, and McDonald’s is being used as a destination," he said. "Therefore, we are seeing very encouraging average unit volume there, and so the focus is going to be on further expansion in these secondary cities.”
Watch the full interview here: