Even as a slowing economy and price inflation keeps customers away from fast food chains, Westlife FoodWorld, which runs McDonald’s fast food chains in the western and southern parts of India, is betting on a turnaround during the upcoming festive season.
“We are unfazed by the near-term challenges which are largely transient and expect customer sentiments to improve during the festive season,” Westlife FoodWorld management said in a post-earnings call with investors.
“..the festive season should change the perception of consumers.. and allow us to have the right moment in the coming few weeks,” it added.
Apart from Westlife FoodWorld, several major fast-food and restaurant chains — including Devyani International and Jubilant FoodWorks — have also complained of a sharp dip in consumer sentiment towards discretionary spending.
Akshay Jatia, Executive director of Westlife FoodWorld attributes this decline in demand to macro economic factors that influence the consumer trends.
“the informal eat-out category as well as western fast food are under pressure in terms of growth,” he noted.
At the same time Westlife FoodWorld managed to eke out 7% growth in sales during the three months ended September in the middle of these factors. This, Akshay Jatia said, is “mostly due to an increase in frequency of ordering by the same customer more than an increase in footfall”.
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Interestingly, the hit from inflation has been felt primarily on regular sales, while the premium category has been largely unaffected, according to Westlife.
Jatia pointed out that they have seen a decent performance in terms of the premium category even with a rise in inflation.
According to him, this is because premium is focussed on customers who come for occasional visits like a family outing. Such customers have relatively lower chances of cutting down on their expenditure during times of inflation, compared to value customers.
Nevertheless, the company will continue to focus on value-for-money options such as burgers, chicken and coffee, and will pay more attention to menu innovations in these items.
Smita Jatia, Vice Chairperson said the company’s strategy of committing to burger, chicken and coffee as growth drivers is “working seamlessly” .