WESTLIFE - WESTLIFE FOODWORLD LIMITED Share Price

In the Q4 FY25 earnings call, management of Westlife Foodworld Ltd. provided a positive outlook for the company's future. Mr. Akshay Jatia, the President & CEO, noted that same-store sales growth (SSSG) was 0.7%, with adjusted SSSG of 1.7% when excluding leap year effects. This marks the second consecutive quarter of positive comparable sales, reinforcing management's confidence in sustaining this momentum into FY26.

Key forward-looking points include:

• The company opened 47 new restaurants in FY25, with a milestone achievement of completing its 100th drive-thru location, and plans to continue expanding its restaurant network.
• Management sees significant growth potential in India's organized fast-food sector, projected to grow in double digits over the next five years.
• Westlife Foodworld aims to meet its Vision 2027 target of having 580 to 630 restaurants. Expansion will focus on South India, where the company is under-indexed, particularly in cities like Hyderabad, Chennai, and Bangalore.
• For FY25, consolidated sales reached INR 6 billion, up 7% year-on-year, while EBITDA and cash PAT grew by 17% and 14%, respectively, on a 3-year CAGR basis.
• The management anticipates that margins will stabilize and believes its operational efficiencies will aid in maintaining profitability despite a challenging environment.
• Finally, the company received recognition as the top ranked restaurant sector company in India in S&P Global's Corporate Sustainability Assessment, indicating a strong commitment to sustainable practices.

Overall, management expressed optimism about gradually improving demand and the execution of their strategic initiatives to foster long-term growth.

Q1: Can you give some idea about the demand through the quarter? Did you see it sort of accelerating and do you see that trajectory continuing?

Akshay Jatia: We have seen sequential improvement reflected in our quarterly results, indicating traction and green shoots. While I can't confirm specifics about the current quarter, the last couple of months showed good outcomes, and we're optimistic about achieving mid- to high single-digit SSSG in the coming couple of years.

Q2: What are your thoughts on margins in light of a comment by another QSR company regarding SSSG being required to maintain current margin levels?

Saurabh Kalra: There is indeed inflation every year necessitating sales to cover costs. However, we utilize multiple levers such as pricing and cost efficiencies to navigate inflation. Although some commodity costs have surged, we remain confident in managing our profitability through strategic actions.

Q3: How has the SSSG been broken into the number of transactions and average value per transaction?

Saurabh Kalra: The growth in SSSG primarily stems from volume rather than value; our current numbers show that growth is driven by increased customer count rather than a growth in transaction value or pricing.

Q4: Are you seeing some competition emerging specifically in the burger QSR space?

Akshay Jatia: Competition in the Western fast-food market has always existed and contributes to overall growth. While there's activity among smaller players, established brands like Westlife with strong offerings are well-positioned to take the lead as the market evolves.

Q5: How is SSSG trending across different regions?

Akshay Jatia: While we don't provide specific figures, our West region has consistently performed well due to strong brand building. In the South, we are also gaining traction through strategic offerings and increasing store footprint, and I'm optimistic about our continued growth there.

Q6: How should one look at performance going ahead, considering the favorable last year base?

Saurabh Kalra: We advise focusing on current growth momentum rather than past performance. We've successfully gained traction in the last few quarters, and we plan to maintain this positive trajectory moving forward.

Q7: Given the productivity changes impacting employee costs, how are you managing expenses strategically?

Akshay Jatia: We've been optimizing our labor and continually improving productivity to enhance efficiency as we scale. This approach has allowed us to maintain costs effectively while managing our employee base.

Q8: Can you comment on the impact of high demand of human resources on your store staff salaries?

Saurabh Kalra: High demand has stabilized wage fluctuations, generally ensuring a salary increase of about 5% to 10% yearly, and we've effectively managed productivity levels to mitigate costs.

Q9: What impact has the leap year had on your growth numbers?

Hrushit Shah: The leap year resulted in a one-day reduction this year compared to last. This one-day impact approximately accounts for about 1% adjustment needed when comparing growth numbers quarter-over-quarter.

Q10: How was the response to the limited-time Korean menu, and is it intended to become a permanent offering?

Hrushit Shah: The Korean range is currently a limited-time offering, and while we've received positive feedback, there are no plans to make it permanent at this time. We continue to evaluate based on performance and customer response.