Higher expenses bite into McDonald’s India operator’s Q3 earnings

Business

Higher expenses bite into McDonald’s India operator’s Q3 earnings

Higher expenses bite into McDonald’s India operator’s Q3 earnings

Published On: Wed, 29 Jan 2025

17:07:42 PKT

(Reuters) – Westlife Foodworld, the operator of McDonald’s in India, reported a 59% drop in third-quarter profit on Wednesday, as expenses jumped amid rising store count and promotional spending.

Competition in the quick-service restaurant business is heating up as both regional and international players vie for market share.

Firms such as Burger King operator Restaurant Brands Asia are expanding to consolidate market share while pricing items more cheaply to attract inflation-weary customers.

“Consumption trends continue to remain soft,” Westlife said in a presentation to investors, adding that it expects an improvement in the dine-in segment to be gradual.

Westlife, which operates McDonald’s outlets in West and South India, added 15 restaurants during the quarter, taking its store count to 421.

It also spent more on promotions and offered inexpensive combinations, such as the ‘everyday McSaver Meals’ where consumers can get a snack and a drink for as little as 69 rupees, or less than $1.

Its same-store sales, or sales from restaurants that have been in operation for a year, rose 2.8% year-on-year.

The company’s revenue rose 9% year-on-year to 6.54 billion rupees in the three months to Dec. 31.

Overall expenses rose 11.7% due to inflationary pressures on key commodities such as oil, coffee, and cocoa.

Westlife’s consolidated profit after tax fell to 70.1 million rupees ($810,123.66) for the December quarter, lower than 172.5 million rupees a year ago.

Nobody expects the Fed to move, but Treasury yields have been pricing in more cuts.

Core profit margin declined 200 basis points to 14% as advertising spending rose.

Shares of Westlife, which were up 1.3% before the results, closed 1.8% higher.

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