McDonald’s franchisee Westlife Foodworld leans South to power growth
Majority of new stores this year will be added in the South, the company said, adding that profitability is higher in some of the new towns than in Mumbai.
Westlife FoodWorld, the Indian franchisee for McDonalds fast food chain, will focus on South India for its expansion as it sees greater opportunities to experiment and grow in this region.
“We will add 40-45 new stores in FY24 with the majority of them being in the South,” said Akshay Jatia, Executive Director, Westlife FoodWorld, which runs McDonalds in the western and southern parts of India.
McDonald’s has had relatively greater success in western and northern Indian markets such as Delhi and Mumbai compared to Chennai and Bangalore, partly due to the greater popularity of rice and rice-items in the South. McDonald’s sells mostly wheat and chicken-based items at its stores.
“While we are already leaders in the West, we are inching closer to a leadership position in the South,” said Smita Jatia, Vice Chairperson, Westlife FoodWorld.
According to the management, the brand has been experiencing a growth uptick in the South with a substantial increase in per-outlet sales over the last few years.
Akshay Jatia said that profitability is better in stories in smaller towns and cities which are seeing a pick-up in sales in recent times, compared to established markets like Mumbai.
“Profitability is good..unit economics are structured even better in smaller towns, in cities where you have seen the growth come now..compared to cities like Bombay where average unit volume has been higher,” he said..
He also pointed out that the addition of new stores in the South amid ongoing inflation and weakened consumer demand will not affect the overall profitability of the company, considering the soaring growth exhibited by the region.
“We look at this as a better opportunity for profitability because while we continue to dominate in the West, extending our lead in the South, where the average unit volume is increasing, where brand relevance has become strong ..we expect profitability to improve in the long term..” said Akshay Jatia.
On the other hand, the company is also aiming at further uplifting the sales through efficient methods which have proved to be successful in the South market such as multilingual ad campaigns with popular celebrities and also the regionalisation of menu. Ad campaigns that featured Jr. NTR, the company said, has done exceptionally well in boosting the sales in the area.
“…McSpicy Chicken, McSpicy Chicken Wings, which were introduced as a part of implementing menu relevance, are already doing well in the South,” says Smita Jatia.
At the same time Sourab Jatia, managing director of Westlife Foodworld, pointed out that the company has no recent plans to implement the customisation of menu in the West.
“Regionalisation of the menu will remain concentrated in the South until the company feels that the customers from the west are ready for it,” he said.
On the widespread demand slowdown in India’s fast food industry, the company said it is “unfazed by the near-term challenges” which it sees as “largely transient” and it expects customer sentiments to improve during the festive season.
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