Westlife Foodworld Limited

Westlife Food reported consolidated revenue of ₹670 crores for Q3 FY26, marking a 2.6% year-on-year growth. Despite this, same-store sales growth (SSSG) for the quarter was negative at 3%. However, the company observed encouraging guest count momentum from November, leading to flat to positive comparable guest count growth in November and December, and positive SSSG with healthy mid-single-digit guest count growth in January.

The company's core strategy in Q3 FY26 was anchored in strengthening guest count momentum by sharpening its consumer value proposition. This involved a deliberate focus on accessible everyday value, exemplified by the launch of an INR99 value meal in the West in December, which generated healthy dine-in footfall. Management emphasized five pillars: predictable value, seamless experience, cultural relevance, volume-led profitability, and consistent execution.

Digital sales remained stable, contributing approximately 74-75% of total sales. While the on-premise business grew 6% year-on-year, the off-premise segment experienced a slight decline due to volatility in third-party aggregator numbers. The company is actively working with aggregators to improve performance but has seen significant uptick and healthy growth on its own McDelivery platform in December and January, supported by strong customer acquisition and a 20-minute delivery promise.

Westlife Food demonstrated strong margin performance, with restaurant operating margin improving by 150 basis points year-on-year and operating EBITDA margin improving by 70 basis points year-on-year. This was achieved through internal cost optimization initiatives and supply chain efficiencies, despite higher advertising and promotion spends. An optical impact of 400-500 basis points on gross margin was noted due to regrouping of processing charges. Cash PAT for the quarter stood at ₹58.3 crores, representing 8.7% of sales.

The company opened 10 new restaurants during the quarter, bringing the total count to 458 across 73 cities. All eligible restaurants now feature McCafé, and 24% of the network offers drive-thru facilities. Westlife Food remains on track to reach its target of 580 to 630 restaurants by 2027, with plans to open 20-25 new restaurants in Q4 FY26. McCafé is now at 100% penetration, with focus on driving coffee consumption habits and product innovation like a new subscription plan.

The South India market continued to underperform compared to the West, which saw healthier footfall growth. However, management expressed confidence in a 'playbook' developed through experimentation (including value platforms and promotions) to drive guest counts across both regions, with positive signs observed in January. Product innovations like the Protein Slice were well-received, expanding offerings for health-conscious customers. The company also addressed challenges with Happy Meal toy imports due to BIS issues, acknowledging the negative impact of temporary book replacements.