McDonald's India operator to launch 20-minute delivery to boost sales

Westlife Foodworld, which operates fast-food chain McDonald's in west and south India, said on Monday it would launch a 20-minute food delivery model through its app to boost same-store sales by 3%-5% in the next two years.

The move is aimed at strengthening its delivery business and reducing reliance on "unpredictable" third-party performance, CEO Akshay Jatia said on a post-earnings call, without disclosing details.

McDonald's has its 'McDelivery' app and is also on platforms such as Swiggy and Zomato.

Delivery accounts for about 40% of Westlife Foodworld's total sales. The 20-minute model has undergone a pilot launch with strong results, Jatia said.

The company expects delivery sales through its own app to double in the next two years, adding 3%-5% to same-store sales growth, he added.

Westlife Foodworld also expects to generate about 400-500 million rupees ($4.55 million-$5.69 million) in cash flow over the next year from new initiatives.

Fast-food chains have been grappling with falling demand in India over the last two years amid rising living costs, especially in urban centers. Competition from local eateries has also risen in metro cities where Westlife has its largest presence.

Rival Jubilant Foodworks, which operates Domino's stores in India, is the only fast-food chain bucking the trend with lower pricing and a 30-minute delivery model.

Westlife reported an adjusted loss for the second quarter, also hurt by soaring expenses.

The company posted a consolidated loss before exceptional items and tax of 158.5 million rupees for the quarter ended September 30. It reported a profit of 7.1 million rupees for the year-ago quarter.

Westlife's same-store sales, which measure revenue from stores in operation for the last one year, fell 2.8% in the quarter. Rising ingredient and labour costs also weighed on margins, with expenses climbing 7%.

However, it recorded a one-time gain of 581.7 million rupees from selling a store property. Revenue rose 3.8% to 6.42 billion rupees.

Peer Sapphire Foods, which operates KFC and Pizza Hut restaurants in India, also posted a bigger quarterly loss.

($1 = 87.8950 Indian rupees)