Westlife Development Ltd., the operator of McDonald’s outlets in west and south India, expects to nearly double its store count by 2022, with more Indians eating out as a growing economy boosts incomes.
The company, which runs nearly two-thirds of McDonald’s outlets in India, aims to double its revenue and margins during the period on growing discretionary demand in the country, Axis Capital and Credit Suisse said in their notes citing Westlife Development’s investor meeting. Demand for quick-service restaurants improved last year and the momentum is likely to continue, the company’s management said.
Increasing urbanisation and half the population below 24 years in a country of $1.2-billion people is driving the expansion of the restaurant and catering industry. It’s expected to hit Rs 5.5 lakh crore by 2022, growing at an annualised rate of 10 percent from Rs 3 lakh crore in 2016, according to a National Restaurant Association of India-Technopak report.
Westlife Development runs 277 McDonald’s and 149 McCafé outlets in the country. Its revenue stood at Rs 1,130 crore in the year-ended March 2018.
The company’s same-store sales rose 20.7 percent in the quarter-ended December driven by new products, Amit Jatia, vice-chairman of Westlife Development, had told BloombergQuint in an interview. The company will open 25-30 stores a year and increase prices by 3-5 percent over the next one year, Jatia had said.
The company targets average unit volume growth of 30 percent by 2022 with revenue per store at Rs 6 crore, aided by a 7-9 percent same store sales growth, Axis Capital said in its report. Westlife’s average sales per restaurant grew 13 percent year-on-year to Rs 4.2 crore in the last financial year, led by 16 percent same-store sales growth, the note said.
Three of the five analysts tracked by Bloomberg have a ‘Buy’ rating on the stock. The consensus 12-month target price stands at Rs 421, implying a 14 percent upside from the current level.
Management At Investors’ Meet
- Seek to increase the number of McDonald’s restaurants to 450-500 by 2022.
- Looking to raise the number of McCafé store count to 300-350 during the period.
- Aim to increase the number of McDelivery hubs to 300-325 by 2022 from 165 now.
- Target a revenue of Rs 2,000-2,500 crore by 2022.
- Earnings before interest, tax, depreciation and amortisation margins projected to double at 13-15 percent from 7.5 percent as of 2017-18.
- Aim to maintain same store sales growth of 7-9 percent.