Westlife Foodworld Ltd (BOM:505533) Q4 2025 Earnings Call Highlights: Navigating Growth Amidst ...

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Thu, May 15, 2025, 1:07 AM 4 min read

Same-Store Sales Growth (SSSG): 0.7% in Q4; adjusted SSSG excluding leap year impact at 1.7%.
Consolidated Sales: INR6 billion, up 7% year-on-year.
On-Premise Business Growth: 8% year-on-year.
Off-Premise Business Growth: 5% year-on-year.
Full-Year Sales: INR24.9 billion, growing by 16% on a three-year CAGR basis.
EBITDA: INR3.3 billion, growing by 17% on a three-year CAGR basis.
Cash Profit After Tax (PAT): INR1.9 billion, growing by 14% on a three-year CAGR basis.
Gross Margin: Approximately 70% in Q4.
Restaurant Operating Margin: Decreased by 30 basis points year-on-year.
Operating EBITDA Margin: Decreased by 50 basis points year-on-year.
Cash Profit After Tax in Q4: INR469 million or 7.8% of sales.
New Restaurants Opened in FY25: 47 new restaurants.
Total Restaurants as of March 31: 438 across 69 cities.
Net Debt Position: Stable at INR90 crores; net debt to equity at 0.15 times.
Digital Sales: Accounted for almost 75% of total sales in Q4.

Warning! GuruFocus has detected 3 Warning Sign with BOM:505533.

Release Date: May 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Westlife Foodworld Ltd (BOM:505533) reported a 7% year-on-year increase in consolidated sales, reaching INR6 billion.
The company opened 47 new restaurants in FY25, aligning with their expansion guidance.
Digital sales accounted for nearly 75% of total sales, driven by self-ordering kiosks and mobile apps.
Westlife Foodworld Ltd achieved top ranking in India and fifth place globally in S&P Global's Corporate Sustainability Assessment.
The company maintained a stable net debt position with a comfortable net debt to equity ratio of 0.15 times.

Negative Points

Same-store sales growth (SSSG) was relatively low at 0.7%, with adjusted SSSG at 1.7% excluding the leap year impact.
The food retail sector faced challenges with soft demand and stagnant consumption trends.
Restaurant operating margin and operating EBITDA margin dipped by around 30 basis points and 50 basis points year-on-year, respectively.
Off-premise sales growth was slower compared to on-premise sales, accounting for 43% of total sales.
The company faced inflationary pressures, particularly in commodities like coffee, oil, and cocoa.

Q & A Highlights

Q: Can you give some idea about the demand through the quarter? Did you see it accelerating, and do you see that trajectory continuing? A: Akshay Jatia, Whole Time Director: We have been seeing sequential improvement, and our efforts are resulting in traction. While it's too early to call a major recovery, we are confident in achieving mid- to high single-digit same-store sales growth (SSSG) over the next couple of years.

Q: What are your thoughts on margins in light of comments by other QSR companies that a 3% to 4% SSSG is required to maintain current margins? A: Saurabh Kalra, Managing Director: While inflation is a reality, we handle it through multiple levers like product mix, pricing, and cost efficiency programs. Despite challenges, we are confident in managing these effectively.

Q: How has the SSSG been broken into the number of transactions and average value per transaction? A: Saurabh Kalra, Managing Director: Our growth is primarily driven by volume rather than value, thanks to our value offerings. While we don't provide specific breakups, the growth is largely volume-based.

Q: Are you seeing competition emerging specifically in the burger QSR space, and are there signs of consolidation? A: Akshay Jatia, Whole Time Director: Competition has always been present, which grows the market. We don't see anything new in terms of consolidation, but brands like Westlife that stand out will continue to lead.

Q: How should one look at the performance going ahead given the favorable base from last year? A: Saurabh Kalra, Managing Director: We focus on gaining traction and maintaining momentum rather than comparing to last year's base. We aim to continue growing and achieving better results.

Q: What kind of inflation are you seeing on the store staff level in terms of their salaries? A: Saurabh Kalra, Managing Director: Wage inflation is typically between 5% to 10% year-on-year, which is factored into our projections and remains stable.

Q: Are you holding on to the store guidance for 2027, and do you expect an acceleration in store additions? A: Akshay Jatia, Whole Time Director: We continue to hold on to our Vision 2027 guidance of 580 to 630 restaurants by 2027.

Q: Off-premise growth has been relatively muted. What steps are you taking to improve growth in this channel? A: Akshay Jatia, Whole Time Director: While delivery growth has slowed, we remain leaders in this category and plan to accelerate growth through partnerships and our own channels.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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