Westlife Foodworld, the owner of McDonald’s restaurants in West and South India, announced a smaller-than-anticipated gain in first-quarter profit on Thursday due to higher expenses.
A brief about Westlife, a McDonald’s franchisee in India, missed expectations for Q1 profit
The US fast food franchisee said that consolidated net profit after tax increased for the quarter ending in June from 235.8 million rupees to 288.3 million rupees ($3.52 million).
According to IBES statistics from Refinitiv, analysts expected the profit to be 321 million rupees on average.
India is struggling with rising prices for basic foods like tomatoes and cheese, which has forced eateries to come up with novel tactics to safeguard their margins and attract customers who are trying to spend less money.
According to Westlife Executive Director Akshay Jatia, who spoke to Reuters last month, McDonald’s announced cheap meals in June that included a McChicken or McVeggie burger, medium Coke, and fries for Rs 179, along with significant marketing expenditures.
The same-store sales for the quarter climbed by 7% from the prior year, but this was not enough to offset the 14% increase in expenses, which were driven up by higher prices for food and packaging materials.
Westlife’s stock, which had increased 25% between April and June, increased 5% when the restaurant chain announced an interim dividend of 3.45 rupees per equity share.
As a result of an 18% rise in on-premise sales, which include dine-in and takeaway, as well as the opening of four additional locations, the total revenue from operations for the quarter also increased by 14% to 6.15 billion rupees.
In the year ending March 2024, Westlife intends to open 40 to 45 additional locations.
Jubilant FoodWorks, a competing company that operates Domino’s Pizza restaurants in India, reported a 74% decline in quarterly earnings earlier this week as a result of increasing raw material costs and investments to create more outlets.
