Home delivery, on-the-go, drive-in formats come to McDonald's rescue amid COVID-19

For Westlife Development, the company which owns the McDonald's franchisee in West and South India, convenience platforms (home delivery, on-the-go and drive-in formats) have been a saviour through the COVID-19 months last year and even this year. Close to 60 per cent of the company's revenue in FY21 came from the three convenience platforms. "Just as Zoom and Teams meetings are here to stay, the convenience channels are also here to stay. As in-store business continues to build, convenience will drive strong same-store sales growth for us," explains Amit Jatia, Vice-Chairman, Westlife Development.

Even when the company clocked 100 per cent of its pre-COVID sales prior to the second wave, the convenience formats continued to dominate over in-store sales. As consumers are increasingly opting for home-delivery, Jatia says that there has been an increase in the average bill size too. "In out of restaurant consumption, the group sizes are bigger, therefore, the size of order is normally larger. We were pleased to see a healthy growth in our average share." The McDonald's franchise is, therefore, trying to push its premium products such as McSpicy Chicken and Maharaja Mac.

Though the company's revenues declined by 36.3 per cent in FY21 and it reported a consolidated loss of Rs 74.45 crore, its strong performance in the third and fourth quarter helped wipe away the losses in Q1FY21. The company reported a profit of Rs 2.09 crore in Q4FY21, as opposed to a loss of Rs 16.66 crore in Q4FY20. Its revenue in Q4FY21 increased by 6.3 per cent to Rs 357.59 crore. "Our restaurant operating margin was the highest we had in five years at 16.4 per cent," says Jatia.    

He is confident that the company is in a better place even though the country is in the midst of another lockdown. "We have started with a new cost structure, we have gained on our balance sheet from last year and most importantly, the government has been clearer on regulations. The delivery business has not been disrupted. While in-store is completely down, there is consistency around delivery. This quarter will definitely be better than last year's same quarter." 

Jatia says that volatility is a reality in today's world, and the company's FY22 plans are completely geared for it. "We have put a strong plan for FY-22. Not only did we open five stores last year, we currently have 5-6 restaurants in the pipeline. The plan is to not just get back to our old growth plans, but to see if we could aggressively do more," he added.

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