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    Westlife Food

    WESTLIFE
    Consumer Services·23 Jul 2025
    Management Summary

    Westlife Foodworld reported a resilient Q1 FY26 with 7% revenue growth and a historic 71.6% gross margin, despite a soft market and modest 0.5% SSSG. The company is strategically investing in its South region and long-term initiatives, which led to higher G&A costs this quarter. Management remains optimistic about improving momentum and achieving its Vision 2027 targets, backed by strong digital engagement and continued store expansion.

    Highlights

    5

    • Gross margin improved by over 160 basis points sequentially to a historic high of 71.6%.

    • Consolidated revenue grew 7% Y-o-Y to ₹6.6 billion.

    • On-premise business grew by 8% Y-o-Y.

    • Operating EBITDA was higher by 7% over last year at ₹855 million.

    • Declared an interim dividend of ₹0.75 per equity share.

    Concerns

    4

    • Operating environment remains soft with continued pressure on discretionary spending.

    • Same-store sales growth (SSSG) was modest at 0.5%.

    • Higher G&A expenses this quarter due to upfront costs for strategic projects.

    • South region is currently underperforming and dragging down overall SSSG.

    What Changed1

    vs Q2 FY26

    Risks discussed4 → 3 (-1)

    Key financials

    Single quarter

    12 metrics
    1. 01Consolidated Revenue6,600 Mn+7.0%YoY
    2. 02Same-Store Sales Growth50%
    3. 03Gross Margin71.6%
    4. 04Restaurant Operating Margin—
    5. 05Operating EBITDA855 Mn+7.0%YoY

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Dividend

    ₹0.75/share (interim)

    Guidance & targets

    6
    CategoryTargetPriority
    Store Count
    Total Restaurants
    580 to 630 restaurants
    		High
    Profitability
    Gross Margin
    71.6% sustainable and potential to improve
    		High
    Profitability
    EBITDA Margin
    18% to 20%
    		High
    Growth
    Same-Store Sales Growth (SSSG)
    high single-digit beyond median of 5% - 6%
    		Medium
    Growth
    Overall Business Momentum
    progressively improving
    		Medium
    Strategy
    Holistic Value Initiatives
    accelerate momentum
    		Medium

    South Region SSSG improvement

    Next quarter / coming quarters
    CurrentUnderperforming, dragging overall SSSG
    TargetImproved traction, contributing to overall growth

    Why it matters

    Critical for overall SSSG and achieving Vision 2027 targets, as management has implemented specific strategies and expects 'green shoots'.

    some experiments, which we were doing in south, which seem to be leading some green shoots.

    How to verify

    key_financials.metrics[label='Same-Store Sales Growth']

    Risks & concerns

    3
    RiskSeverity

    Soft Business Environment & Discretionary Spending Pressure

    The operating environment remains soft with continued pressure on discretionary spending, impacting same-store sales growth. — Management acknowledged

    medium

    Higher G&A Costs from Strategic Investments

    Upfront costs for strategic projects and people-related expenses have led to higher G&A this quarter, though benefits are expected in future quarters. — Management acknowledged

    medium

    Underperformance of South Region

    The South region is currently experiencing slower traction and is dragging down overall SSSG, requiring specific interventions and augmented leadership. — Management acknowledged

    medium

    Q&A highlights

    7

    “Is it dragging down the SSSG? Absolutely. So, while we are doing quite well in west, we are not doing as well in south. We did put a few experiments in. Some of them are being green shoots and we need to develop our execution excellence in south specifically, which is what Akshay talked about, when he said that we are putting up a team, including a Business Officer who will directly work with us to ensure that this execution excellence happens in south.”

    Management acknowledged the underperformance of the South region and detailed specific strategic and organizational changes being implemented to address it, indicating a key focus area for future growth.

    asked by Devanshu Bansal

    2 min read5 chapters

    Detailed Narrative

    01

    Q1 FY26 Performance Overview

    Westlife Foodworld reported a consolidated revenue of ₹6.6 billion, marking a 7% year-on-year growth, despite a persistent soft business environment. The company achieved a same-store sales growth (SSSG) of 0.5%, maintaining stable guest counts and average checks amidst pressure on discretionary spending. Gross margin reached a historic high of 71.6%, improving by over 160 basis points sequentially, primarily due to enhanced supply chain efficiencies.

    02

    Profitability and Operational Efficiency

    Operating EBITDA for the quarter stood at ₹855 million, a 7% increase over the previous year, while cash profit after tax was ₹474 million, contributing 7.2% to sales. Restaurant operating margin also saw an increase of approximately 80 basis points, reflecting a strong focus on operational excellence and cost governance. However, G&A expenses were higher due to upfront investments in strategic projects, with benefits expected in subsequent quarters.

    03

    Strategic Focus on South Market and Long-term Growth

    The company acknowledged slower traction in the South region, which is currently impacting overall SSSG. To address this, Westlife has augmented its regional leadership team in the South, including dedicated HR, operations, and marketing support, to better understand customer preferences and accelerate decision-making. Additionally, a new vertical focused on 'Horizon 2' long-term initiatives with a strategic outlook beyond 2027 has been established to ensure sustained market leadership.

    04

    Digital and Omni-Channel Strength

    Westlife's digital business continues to be a significant growth driver, contributing around 75% of total sales. The company maintains strong traction across its self-ordering kiosks, McDelivery app, and My McDonald's reward program, boasting over 44 million cumulative downloads and more than 3 million monthly active users. The off-premise channel contributed 41% of total sales, consistent with its three-year average.

    05

    Expansion and Shareholder Returns

    During the quarter, Westlife opened nine new restaurants, bringing its total store count to 444 across 71 cities. The company remains on track with its Vision 2027 target of 580 to 630 restaurants. In line with its commitment to shareholder value creation, the Board of Directors approved an interim dividend of ₹0.75 per equity share. Management expressed optimism for progressively improving momentum throughout the year, believing the business has passed its bottom.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.