McDonald's India operator posts Q3 profit drop as expenses rise

McDonald's India operator posts Q3 profit drop as expenses rise

Westlife Foodworld, the operator of McDonald's in India, reported a 59% drop in third-quarter profit on Wednesday, as expenses rose amid store count expansion and higher advertising spending.

Quick service restaurant operators have seen demand falter as persistently high food inflation and subdued wage growth have led consumers to cut back on discretionary spending.

Westlife, which operates more than 400 McDonald's restaurants in west and south India, is facing high competitive intensity, as both regional players and international franchisees vie for market share with store expansions and aggressively low-priced menu items.

As a result, the company has ramped up promotional spending and store count expansion.

Its expenses rose 11.7% year-on-year in the third quarter.

Consolidated profit after tax fell to 70.1 million rupees ($810,123.66) for the three months to Dec. 31, lower than 172.5 million rupees a year ago.

Westlife added 15 restaurants in the third quarter, taking its total store count to 421 restaurants and launched value combinations, that include a burger and a beverage, for less than $1.

Same store sales grew 2.8% year-on-year amid soft consumption trends, the company said.

Revenue for the third quarter rose 9% year-on-year to 6.54 billion rupees.