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Westlife Foodworld, the operator of McDonald's restaurants in West and South India, experienced an unexpected decline in quarterly earnings. This setback was caused by rising costs, overshadowing the increase in sales of their popular burgers and fried chicken.
Higher Expenses and Revenue
According to Reuters, consolidated net profit after tax for the July-September quarter fell to 223.7 million rupees ($2.7 million), down from 315.4 million rupees a year ago. Analysts were anticipating a profit of 319.6 million rupees.
The Economic Times reported that during the quarter, the prices of key commodities, such as cheese and vegetables, surged, leading to escalated expenses. Some restaurants had to remove tomatoes from their recipes due to the cost spike.
Despite this, Westlife witnessed growth in revenue, which rose by 7.4% to 6.15 billion rupees. This increase was mainly driven by the introduction of discounted meals and the opening of new stores.
Challenging Market Conditions
Chairperson Amit Jatia highlighted that McDonald's India operated in challenging market conditions with ongoing macroeconomic challenges. Nevertheless, the company remains committed to investing in new stores and expanding its business.
Shares of Westlife, which runs 370 restaurants across states like Maharashtra and Tamil Nadu, declined by 2.2%. As a result, their gains for the year were reduced to approximately 11.3%.
Westlife's disappointing earnings follow in the footsteps of fast-food competitor Jubilant FoodWorks, who reported a smaller-than-expected drop in earnings. This outcome resulted from their cost-cutting measures and the demand for more affordable pizzas.
Despite the current obstacles, Westlife Foodworld remains future-focused. With its extensive presence in Maharashtra and Tamil Nadu, Westlife Foodworld plans to overcome the prevailing macroeconomic challenges and achieve growth in the coming periods.
With plans to open new stores and expand its presence, the company is determined to overcome existing challenges and strengthen its position in the market.
Photo: Jayana Rashintha/Unsplash
