Edited Transcript of WEST.NS earnings conference call or presentation 30-Jul-20 12:00pm GMT

Aug 2, 2020 (Thomson StreetEvents) — Edited Transcript of Westlife Development Ltd earnings conference call or presentation Thursday, July 30, 2020 at 12:00:00pm GMT

Batlivala & Karani Securities India Pvt. Ltd., Research Division – Research Analyst

Ladies and gentlemen, good day, and welcome to the Westlife Development Limited Q1 FY ’21 Earning Conference Call. (Operator Instructions)

I would now like to hand the conference over to Ms. Devanshi Dhruva, Investor Relations. Thank you, and over to you, ma’am.

Thanks, Jane. Welcome, everyone, and thank you for joining us on Westlife Development Limited Earnings conference call for the quarter ended 30th June 2020. We are joined here today by Mr. Amit Jatia, Vice Chairman; Ms. Smita Jatia, Director; and Mr. Pankaj Roongta, our CFO and VP Finance and Accounts for Westlife Development Limited.

Please note that our financial results and investor presentation have been mailed across to you, and these are available on our website, www.westlife.co.in. I hope you had the opportunity to browse through the highlights of the performance. We shall commence today’s call with key thoughts from Amit, who will provide a strategic overview, which shall be followed by Smita to take you through the key business initiatives with overall operational progress, the impact and response to COVID-19 and the strategic imperatives that ahead.

Pankaj will cover analysis of the financial performance and highlights during the review period. At the end of the management discussion, we will have a Q&A session. A request to all participants. Given the disruption due to COVID-19, members of the management are joining the call remotely, and there could be some lag when responding to your queries. I urge you, therefore, to kindly bear with us.

Before we start, I would like to remind you that some of the statements made or discussed on this call today may be forward-looking in nature and must be viewed in conjunction with the risks and uncertainties we face. A detailed statement and explanation of these risks is available in this quarter’s press release and investor presentation and in our annual report, which is available on our website. The company does not undertake to update these forward-looking statements publicly.

With that said, I would now turn the call over to Amit to share his views. Thank you, and over to you, Amit.

Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [3]

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Thank you, Devanshi. Good evening, everybody, and thank you for joining the call today. I hope that you and your families are safe and doing well. The first quarter of FY ’21 was marked by a completely unanticipated and unprecedented black swan event that impacted the eating out industry, not just in India, but across the world. The nationwide lockdown led to a complete closure of restaurants, reducing revenues to a trickle for over 2 months. Even as markets started opening up, the situation remained volatile with cities opening and then closing again due to rising virus cases.

At Westlife, our belief is that all situations are good as long as we are able to realign strategies to manage the situation at hand and emerge stronger [as a result]. We took this crisis as an opportunity to put our agility to test. We revisited our cost structures, further built on our digital platform, put in SOPs for a safe consumer experience, trained our people and adapted learnings from global markets to prepare for a strong revival. I am proud of our team that has improvised quickly and leveraged our strong digital backbone to decisively accelerate our omnichannel strategy.

This has given us an edge in the marketplace, and we have started seeing green shoots beginning June with many stores coming back to pre-COVID level business for Delivery, Take-out and Drive-Thru. We are confident that these initiatives will help us build completely new customer occasions, habits and use cases, leading to a strong competitive advantage and business leadership for the long term.

The pandemic will change certain consumer behaviors for the long term. Businesses need to take advantage of this behavior change and ingrain them into the business model so as to come out of this crisis stronger and be more relevant to the consumer. We believe Westlife has been able to do that, particularly with our convenience initiatives like Delivery, takeaway, Drive-Thru and the recently launched on-the-go service. The incremental sales from these initiatives will continue to bolster revenues even as the in-store business bounces back over the next 6 months.

Moving forward, we have focused on our 3 key priorities: ensuring safety and the well-being of our employees, maintaining financial stability and flexibility and ensuring that we are well positioned to bounce back strongly once the situation improves. With a robust strategy seated in deep consumer insights, strong pipeline of big bold initiatives and strong checks and balances for cost optimization, we believe that we have the springboard to drive quick recovery as and when the external environment improves.

I’ll now hand over to Smita, who will take you through the highlights for quarter 1 FY ’21.

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Smita Jatia, Westlife Development Limited – Non-Executive Director [4]

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Thank you, Amit, and good evening to all. I hope you and your families are safe and healthy. Like Amit said, we entered FY ’21 with a black swan event that had a significant bearing on our business, but we moved quickly to retool our business to the new reality, both at the back end and consumer-facing.

The highlights of the quarter were that we put in place a new reduced cost structure. Our convenience platform achieved new benchmarks in June, and we launched 2 new exciting products that we believe have the potential to expand our addressable market. On the cost front, we were able to relook at costs across all departments and put in place a reduced cost structure for the organization. We optimized our rental cost by renegotiating on rebates and deferments with our landlords.

We moved a lot of our maintenance and repair work in-house by training technicians and bringing down our AMC costs. We worked closely with suppliers to reengineer our supply chain and distribution costs. We also deferred our capital expenditure by putting new store openings on hold, cutting discretionary spends and optimizing working capital needs. As a result, we reduced all fixed costs.

Moving into the details of quarter 1 FY ’21 results, as you can see on Slide #7, the nationwide lockdown through the months of April and May had a significant impact on our business. Pankaj will walk you through the details of our financial results shortly. We started seeing some very encouraging trends starting June, especially across our convenience platforms. The rupee value sales from convenience platforms in June was higher than the pre-COVID times, and we believe business from this platform is here to stay. As customers form new habits and discover new use cases, we are confident that they will get us incremental revenues even after the installed business comes back to normal in a few months.

As we move from the survival stage to revival, our efforts are centered around 3 key elements of customer strategy: assurance, convenience and access. McDonald’s globally has always been known for its world-class hygiene standards, and we have reinforced the same through our Golden Guarantee proposition, which we believe will inspire trust and confidence for customers to keep coming back to McDonald’s. You can find details of this on Slide #16 and 17.

Our levers of convenience have been the biggest business drivers. With Drive-Thru — with Delivery, Drive-Thru, Take-out and On the Go service, we activated our omnichannel strategy to ensure that customers can order from wherever they feel safe. Like I said, we are very encouraged by the performance of our convenience platform. In June per day per store sales from Delivery jumped back to 70% of pre-COVID levels. At the same time, Take-out business from operational stores zoomed 1.7x of our pre-COVID levels, and convenience platform sales came back to pre-COVID levels for the operational Drive-Thru stores.

We have also observed that wherever the restaurants are consistently open, it takes about 4 to 6 weeks for them to achieve their pre-COVID level businesses. As a result, our stores in smaller cities, such as Nadiad, Anand, Aurangabad have been able to chart strong recovery. We launched the unique On the Go service. Using this feature, customers can order their food on the app and collect it from a spot close to the store, which is on their way, without ever leaving the safety and comfort of their vehicles.

With this, we have virtually converted all our restaurants into Drive-Thru stores at almost no cost. We are seeing the number of orders surge every day from this service. We believe this will enable us to create a new habit, especially for daily commuters who always look for quick and convenient pickup options. Access was an important element of business continuity. We ensured that we operated all restaurants that the government statutes allowed us to. By the end of June, we had 82% stores operational.

In addition to ensuring serviceability across locations, we have also been able to stay relevant to our customers by tapping into occasions and offering customers a range of new combos and offers, both on Delivery as well as through our McDonald’s app. The app has been seeing great traction and has been helping us build in-store GCs too. This quarter we added 2 new products, Schezwan Burgers in the West and McSpicy Fried Chicken in the South. With the McSpicy Fried Chicken, we have launched a new platform and entered a huge fried chicken market in the South. The feedback so far has been very encouraging, with the products scoring 9 out of 10 on the parameters of taste. We are confident that the products will help us recruit new customers, both from the unorganized and the organized sector, leading again to incremental sales.

A swift, timely and strategic response to this unprecedented crisis was possibly — was possible only because of the conviction and commitment of our people. Our people went the extra mile to continue serving not just our customer, but also our community. We are proud of the fact that we managed to keep our close to 10,000 people with us who are helping us revive the business and retain our leadership. This year, we were once again named among the Best Places To Work in India.

I now hand it over to Pankaj, who will take us through the financial highlights.

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Pankaj Roongta, Westlife Development Limited – CFO & VP Finance and Accounts [5]

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Thank you, Smita. Good evening, ladies and gentlemen. I hope all of you and your families are keeping safe. I’ll be now sharing our financial results for Q1 FY ’21. As Smita highlighted earlier, as soon as the COVID-19 crisis hit us, we quickly realigned our strategies to ensure survival, and the team showed tremendous agility to adapt and overcome. The months of April and May were a complete washout because of the entire nation lockdown and the stores were shut. However, we started operating Delivery as soon as it was brought under the ambit of essential services across all our markets.

June brought some good news, and we managed to open stores in states like Karnataka and Gujarat, but states like Maharashtra and Tamil Nadu, that constitute 36% of our stores, were still under complete lockdown due to increased number of cases.

All of above resulted in a minus 54% decline in the same-store sales growth and a 75.5% decline overall, with sales at INR 939 million for this quarter. On the profitability front, gross margin landed at 56.8% due to lower volumes. Our focus in Q1 was ensuring timely supply chain to our operational stores on one hand, in a safe and healthy manner, while controlling the supply chain cost on the other hand. What is encouraging to share, the increasing trend of gross margin in June at 61% as the panic started slowing to move towards caution.

Our focus in Q2, and FY ’21 hence, would be to [attain] on average pre-COVID gross margin levels by continuing to optimize our food cost and re-engineer our supply chain cost to help us on short-term as well as on long-term basis. As always, we stood strong during this crisis and turned this situation into an opportunity for us to improve on our operating cost.

We looked into each of our main cost lines, for instance, rent, utilities, advertising and promotions, other fixed costs, and I’m very happy to share that we were able to reduce our average peak of our monthly fixed cost by about 30% to 35%, which helped in arresting a further decline of our restaurant operating margins. Hence the restaurant operating margin for this quarter stood at a loss of INR 401 million.

Our efforts to preserve liquidity have been focused on key areas. This is reducing operating expenses, curtailing capital expenditure, managing working capital and enhancing our overall financial flexibility. We halted our discretionary expenses. We also significantly curtailed our advertising spends while continuing to drive brand awareness through our own channels. Additionally, we were able to closely work with our landlords to secure rent abatements and deferrals. We also made cuts in capital expenditures.

We continue to roll out our omnichannel strategy, which is a high priority for us. We have worked extremely quickly to accelerate our omnichannel offering at a very limited incremental cost. As we navigate through these uncharted waters, we are taking a disciplined approach to decision making. This includes reviewing all our investments, reducing or deferring spends as we rescope the priorities in some areas and redirect it to other priorities.

Coming to operating EBITDA. As mentioned above, our efforts and success to reduce the average monthly fixed cost result in optimization of Q1 G&A by about 20% to 25% over the similar quarter last year on discretionary spends. These efficiencies, partly offsetting decline in restaurant operating margin, resulted into an operating EBITDA loss of INR 577 million.

As every cloud has a silver lining, similarly, June trends were very encouraging, and we witnessed our operating margin at a loss of INR 150 million as volume started to go up coupled with our operating and cost efficiencies. All of this resulted into a Q1 loss of INR 768 million on profit before tax and INR 575 million on profit after taxes.

As an outlook for Q2 and FY ’21, our focus remains on survival during lockdown and revival as the normalcy restores, where cash conservation, reengineering our operating cost and targeting a healthy balance sheet remain our #1 priority.

We are seeing healthy sales volumes across all our channels: Deliveries, On the Go, Take-Out, and we believe with the right structuring of cost that we have achieved, we will be able to bounce back much better and stronger.

With that said, I will now hand it back to Amit, who will take us through our Q2 FY ’21 strategy. Thank you very much.

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [6]

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Thank you, Pankaj. As we move forward, we have a clear plan charted out for a quick recovery. We will continue to focus on assuring our customers of our safety and hygiene practices to keep their confidence intact. We will also leverage our strong digital backbone while keeping our costs under check.

Having said that, with the government continuing to extend and reimpose lockdowns in our key markets, I see uncertainty and a bit of a fear psychosis, continuing to have an impact on the demand in the coming quarters. But we see clear advantages for us. Strong brand logo and resonance, with world-class safety, will continue to drive brand preference and give us an additional share of the market, especially from the unorganized segment.

Our omnichannel approach that combines the brick-and-mortar and the digital will enhance convenience, giving us yet another competitive advantage. Continued menu innovation will aid our retail gain and acquire strategy and widen the customer net. Our strong financial foundation will ensure business stability and continuity. With this, we are confident that we have all the elements to ensure a quick recovery, significantly grow market share and maintain category leadership.

With that, I now open up for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We take the first question from the line of Manoj Menon from ICICI Securities.

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Manoj Menon, ICICI Securities Limited, Research Division – Research Analyst [2]

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Just only one question actually, which essentially trying to understand the cost line items, let’s say, starting with rent. When we say you’ll be able to renegotiate at this point in time, I’m just trying to understand, are we 6 months, 1 year, [as far as the rent]…

(technical difficulty)

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [3]

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I have lost — hello?

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Operator [4]

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Yes, sir, we just lost the line for the current participant. So would you like to answer that or should we proceed to the next question?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [5]

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No. I only got part of the question, I’ll answer that, and then we can move on to the next in the interest of time. So essentially, I got a question around rent and the time frames. So I would like to reemphasize that in all malls, we typically have a revenue share. So that covers a very decent chunk of our portfolio. And irrespective of that, in the other places, we’ve been able to get 6 months to 1 year. And that’s the kind of negotiation we’ve been able to do with the landlords, who’ve generally been very supportive. And additionally, in certain other stores, we are continuing to work with them for a slightly more longer period. The idea is to restructure deals where we feel the sales are good, but the rent structure needs to be corrected. So that is where we stand on this.

Yes. We can move to the next question because that’s the only part I got.

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Operator [6]

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Sure. We’ll take the next question from the line of Avi Mehta from IIFL Securities.

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Avi Mehta, IIFL Research – Assistant VP & Lead Analyst of Consumer Discretionary [7]

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I just wanted to reconfirm 2 data points. One, if I heard Pankaj correctly, June was 61% of pre-COVID levels. Was that correct?

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Pankaj Roongta, Westlife Development Limited – CFO & VP Finance and Accounts [8]

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No. No, 61%, Avi, was the gross margin of June.

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Avi Mehta, IIFL Research – Assistant VP & Lead Analyst of Consumer Discretionary [9]

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Okay. 61% was the gross margin of June. So would you be — while we sought Take-Out, [as now] you’ve highlighted healthy recovery and some stores being above pre-COVID. Will you able to share how overall June was versus pre-COVID?

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Smita Jatia, Westlife Development Limited – Non-Executive Director [10]

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Avi, so as I had mentioned in my commentary, if I take all our convenience channels, which are Delivery, take-away and Drive-Thru. These are our traditional convenience channels. They are back to the pre-COVID levels of our operational stores. And currently, we have a 3-plus percent of our stores operational, also where there are times where because of state lockdowns or there are stores which are on and off closed and open. So all I can tell you just now, that if I look at my convenience channels, they are pretty much back to pre-COVID levels on all operational days.

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Avi Mehta, IIFL Research – Assistant VP & Lead Analyst of Consumer Discretionary [11]

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Okay. So I mean, you had highlighted 50% roughly in the last conference call as convenience, and you said 80% of that is open and that is back at pre-COVID. And the remaining would contribute sales some portion. Is that a fair way to look at it, Smita?

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Smita Jatia, Westlife Development Limited – Non-Executive Director [12]

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Yes. I would say that’s a fair way to look at it. And as I had again mentioned, that these are new habits which are getting formed. So we are pretty confident that this is going to be incremental sales once our in-store opens as the lockdown starts getting released.

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [13]

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Also, most recently, we launched On the Go, and we are very encouraged with that. That’s also a very important habit-changing digital transformation. And what we’ve seen in other markets, that these habits are here to stay. So essentially, we’ve converted every single restaurant into a Drive-Thru and traction in that started from June. So we are hoping that in the coming months that really gives us a good traction. In fact, Drive-Thrus, wherever Drive-Thrus have been open, the operational Drive-Thrus have pretty much come back to pre-COVID levels in most cases.

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Avi Mehta, IIFL Research – Assistant VP & Lead Analyst of Consumer Discretionary [14]

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And Amit, comment Smita said, that we have seen pickup in convenience further. That applies to in July as well, I mean even after fourth quarter, right, in — after the end of the quarter. So that has applied as for every opening. Is that understanding correct? What I was trying to basically get here, some insight if you could share on how overall sales levels are trending because while this is an extraordinary situation, the visibility is exceptionally low. Financial insights on here would be very helpful.

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Smita Jatia, Westlife Development Limited – Non-Executive Director [15]

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So Avi, how I would put it is that because India has still not gone into a new normal, we are still in the lockdown stage. So hence, it’s very difficult for anyone to give what predictability of new normal will be once the lockdown gets released. And hence, what we are saying is that all the channels which are operating today in the lockdown situation are pretty much back to pre-COVID levels. And these channels are pretty much our convenience channels, which are our Drive-Thru, MDS, Take-Out.

Take-Out has increased 1.7x of our pre-COVID levels. So we are seeing a very healthy pickup of Take-Out. And as what Amit mentioned, we are adding other initiatives like On the God, which will again add to our convenience channel while our in-store picks up, as the lockdown starts getting released. And this is what we are going to see moving forward in the second quarter, and also as our closed stores start getting operational.

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [16]

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The only one other point I would like to add is that wherever there has been consistently — consistency in the opening of the store, within the 4th to the 6th week we see it coming back to pre-COVID levels. So that is what gives us tremendous confidence that as long as there is some consistency in a city or in a market, there is a very good chance that within 4 to 6 weeks, it comes back to pre-COVID levels.

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Avi Mehta, IIFL Research – Assistant VP & Lead Analyst of Consumer Discretionary [17]

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Okay. Perfect. And just one from a consumer response point of view, wherever dine-in (technical Difficulty] how are things trending versus normal? If you could share that as well.

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Smita Jatia, Westlife Development Limited – Non-Executive Director [18]

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Avi, I would not comment on dine-in at all because there is hardly any stability in dine-in because there are — it’s open for a couple of days, and then again, it’s getting closed. So I don’t think we would like to give any predictability on that. But as I mentioned in my commentary, that in small towns like Nadiad, Bharuch, where there is stability and the dine-in has been opened, in those stores, we are seeing sales coming back to our pre-COVID levels. So this is the only predictability I can give. And one of the things I can tell you for sure is the convenience platform is being built on our goodwill of trust, our trust on quality and hygiene. So the minute the consumer is getting access to the brand, they are feeling confident to either walk-in or use us through our convenience platforms.

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Avi Mehta, IIFL Research – Assistant VP & Lead Analyst of Consumer Discretionary [19]

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Okay. [Not sure where you were coming from] is while sales have come back, I wasn’t sure whether dine-in has also recovered even back close to that level. That is right. So I was essentially trying to use that as an understanding on how you will look at it beyond this — the next few quarters is what there [are not as strong], right? I —

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Smita Jatia, Westlife Development Limited – Non-Executive Director [20]

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So dine-in, that’s what I said, wherever, like in certain small towns where dine-in has opened and we’ve got stability of 4 to 6 weeks, we are looking at them coming to positive comps and cutting to close to the pre-COVID levels.

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Avi Mehta, IIFL Research – Assistant VP & Lead Analyst of Consumer Discretionary [21]

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Okay. Okay. Perfect. And lastly, just bookkeeping. The 61% gross margin that we saw in June, that is more than [36] run rate? Obviously, April and May was impacted by a lot of headwinds. Would you — I missed that comment, Pankaj. You were saying that it could move closer to the 60-or-more to the higher average level that we’ve seen in the earlier period?

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Pankaj Roongta, Westlife Development Limited – CFO & VP Finance and Accounts [22]

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Yes. So Avi — I mean, what I said is that in June, we saw an almost 450 basis point improvement in gross margin over the quarterly average of 56.8%. And our focus in Q2 and FY ’21 is to hit the pre-COVID levels of gross margin, as all the efficiency measures and volumes have started to pick up.

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Operator [23]

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We will take the next question from the line of Anand Shah from Axis Capital.

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Anand Kumar Shah, Axis Capital Limited, Research Division – SVP of Consumer [24]

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Just a couple of questions. Firstly, I mean, there’s a difference between the sales growth [by and it is a big one], almost 20% difference. So I mean, you have excluded the like-on-like stores, which were closed completely for the quarter or something in the calculation? Or how was it?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [25]

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I didn’t understand that, Pankaj, if you got it, please?

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Anand Kumar Shah, Axis Capital Limited, Research Division – SVP of Consumer [26]

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So I said — Amit, I mean I think we was down 54%, your sales is down 75%. Typically, you always get some percentage growth from new stores. So your sales growth is always higher than your I mean what we have the sales decline is much higher than the SOP decline, right?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [27]

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Yes. So the [sales] at stores for the full month is excluded in the SSG calculation. Yes.

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Anand Kumar Shah, Axis Capital Limited, Research Division – SVP of Consumer [28]

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Is there a number you can share on that as to how many stores like were fully shut and were excluded?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [29]

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It was very, very, varying. I mean, suddenly, Pune was shut down…

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Anand Kumar Shah, Axis Capital Limited, Research Division – SVP of Consumer [30]

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On a month-on-month basis, you have done the calculation, and that’s how you arrived at it…

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Pankaj Roongta, Westlife Development Limited – CFO & VP Finance and Accounts [31]

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Yes. That’s true.

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Smita Jatia, Westlife Development Limited – Non-Executive Director [32]

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And month-on-month it can — in one of our slides, it’s shown month-on-month, the number of stores which were opened on an average.

So it’s very difficult to kind of give an average number on the whole, but this is the best we could do to calculate SSG in this scenario.

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Anand Kumar Shah, Axis Capital Limited, Research Division – SVP of Consumer [33]

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No, perfect, [Smita] that’s all fine. Second, also, anything you can share on the McCafe in terms of how it would have done, given that it’s a different form of consumption? And also the link on that to the gross margin? Is that one of the main reasons why your gross margin is also hit because the Cafes [wouldn’t have what it did]?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [34]

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Sure. So first, let me take the second question, that the gross margin has nothing to do with McCafé. It was more to do with logistics and the distribution center. And finally, you have to store cold and chilled products and things like that. And obviously, trucks are not going as efficiently as they were earlier. So McCafé has no role really to play in it. McCafé, obviously, the in-store, there is 0 business, but take-away is doing quite all right. I don’t know exactly what’s the thing, but what I know is that it is doing quite well, overall.

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Smita Jatia, Westlife Development Limited – Non-Executive Director [35]

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Yes. So basically, as the business started coming back once we started Delivery and say Drive-Thru, On the Go. Obviously, the first business to come back was with burgers and fries. And as the burgers and fries business is building, we are seeing that through take-away and On the God, McCafé is already starting to build. So it’s too early to comment whether McCafé is doing well or not. We are very confident that as take-away and on the business — On the Go business levers start building, which they already are, McCafé is going to build.

And it’s also about kind of communicating and advertising. As Pankaj has mentioned, in quarter 1, we were conservative to kind of conserve advertising cost because there was a lockdown. But as the lockdown gets released, and we start again building top of mind of McCafé, we are confident that this business is [healthy still].

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Anand Kumar Shah, Axis Capital Limited, Research Division – SVP of Consumer [36]

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Okay. Perfect. On this advertising also, I mean, you really spent about 5% plus of sales. Is there any mandate, I would assume from [the dollars] that you spend this much, and is there an exceptionals [line in there] where you can tinker on that percentage?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [37]

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Yes. Yes. I mean, see, the — my point is McDonald’s and us, it’s about what is right for the brand. And right now, there is no push around what commitments are in [MFA], rather it’s about what’s the right thing to do for business. So we are quite okay there.

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Anand Kumar Shah, Axis Capital Limited, Research Division – SVP of Consumer [38]

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Okay. And just lastly, on this 30% to 35% reduction of balance fixed cost. I mean, the Q1 obviously was difficult and business progresses, revenue resumes, some of these costs will also go up. So you think that you can sustain this 20%, 30% drop in sort of cost for the next few quarters as well?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [39]

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Well, yes, that is the plan. And as I had mentioned even in the previous call, Anand, that we are trying to work on a platform where a much lower sales, say, 10% to 15%, still give us the same margin. So the entire focus on the cost structure is structurally getting it right. There are some short-term gains as well, like on utilities. But even in utilities, we are reprogramming ourselves to keep it long-term as well. So about 10% to 15% lower sales, we are shooting for the same margin.

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Operator [40]

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We’ll take the next question from the line of Latika Chopra from JPMorgan.

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Latika Chopra, JPMorgan Chase & Co, Research Division – Senior Analyst [41]

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Amit and Smita, apologies if this is something you already shared, I missed the earlier part of the discussion. I just wanted a sense on the consumer behavior. Did you see whichever stores were open where you could get a recent sense of 4 to 6 weeks, how the ticket sizes moved for you? And the — and so that’s my first question. And the other one was on this whole Delivery perspective, did you see faster traction for your own digital assets versus the aggregators? Or the momentum was similar across the — both the channels?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [42]

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Okay. So the first — to answer to the first question is, yes, we are seeing far greater average [net]. And in the — particularly in the stores that are now pretty much at pre-COVID levels and more because surprisingly, we are seeing positive comps in those particular stores as well. So yes, the average check is much higher.

The second thing is, yes, our assets are doing quite well actually because there is a significant push from our side. We also see 3 [POS] struggling a bit due to various aspects. But as far as we are concerned, we are pushing our own assets and particularly On the God and take-away and Drive-Thru have been a pretty big boom that we had all of these platforms in place.

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Latika Chopra, JPMorgan Chase & Co, Research Division – Senior Analyst [43]

——————————————————————————–

Sure. And just one bit on the ticket size. Is this also — would lesser promotions or more pricing supported that in terms of —

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Smita Jatia, Westlife Development Limited – Non-Executive Director [44]

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No. Not really.

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [45]

——————————————————————————–

No, no, no. Because we’ve always built our platforms around long-term everyday value. So for example, the McSavers meal. So in that sense no, that has not changed. I think maybe options are limited, bigger family sizes are coming in, they’re buying more, they’re buying the more premium products. Maybe it’s also because of pent-up demand, maybe to some extent.

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Operator [46]

——————————————————————————–

We’ll take the next question from the line of Abneesh Roy from Edelweiss.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division – SVP [47]

——————————————————————————–

Sir, now we are seeing internal [dynamics] of the lockdown, the local lockdown. So are you getting any benefit of that in the rentals, for example, the weekends closed or suddenly, there is a closure, there are working hours closed. So you would have renegotiated the rent, but now this is a new development, right? 2 days closed in the weekend. So any benefit you get because of that?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [48]

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No, no. We are not going transactional in our rent negotiation. Obviously, it is all a master. So we are not going back. But essentially, what we’ve ensured — because who knows, lockdown may come back after 6 months or 3 months. So we are working on a concept with the landlord. And in many cases, we’ve gone to revenue share. So if suppose 2 days are off, then the revenue is not there, so the rent comes down automatically. That is how it is. As I mentioned earlier, in all the malls, we are on revenue share in any case. So that is factored in pretty much.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division – SVP [49]

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Right. And sir, in terms of the beverages, another fruit juice company said that because of the cold juices linkage with cough and cold, et cetera, fruit juice company, they have seen a big dip. So in your case, Smita said that now beverages are coming back. But within beverages, is it largely the hot beverages which are selling, so cold beverages would find much lesser takers versus the pre-COVID?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [50]

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I don’t think so. I feel it’s across the board. I mean, we are not seeing that as much. Essentially, in fact, on take-away and On the Go, we are pretty much back to pre-COVID levels on our McCafé sales. But I mean, at least, we’ve not noticed such a difference. It’s the same product mix as before.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division – SVP [51]

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Sir, in the small cities, you said that if there is a stability of 4 to 6 weeks, even in the dine-in, et cetera, you’re seeing recovery back to pre-COVID. So my question is in such small cities, also you would have seen the street food and the smaller restaurants getting impacted. So is that a market share benefit you’re getting in those small cities? Or such there the [sites] are limited there so not such a benefit?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [52]

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No. I think we are getting the benefit. I have a strong firm belief that there is going to be a structural shift in eating out after this COVID issue. And as I have maintained in all my calls, I see brands like McDonald’s that are known for trust, that have been around with our supply chain, et cetera, are going to gain from that. So while I do believe that overall eating-out may shrink a little bit. But remember, in India, a large part of the eating-out market is roadside vendors.

And for whatever reason, unfortunately, unbranded and roadside vendors are going to take a beating, because people are going to move towards safety and security and health. And that’s why we have had a significant focus in the recent launch of the Golden Guarantee. So basically, yes, we will gain market share. Yes, I think we are seeing some more traction because of the impact on the unorganized [yes].

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Abneesh Roy, Edelweiss Securities Ltd., Research Division – SVP [53]

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Sir, I had a question on your latest innovation On the Go. I wanted to understand the thought process. One is, are other markets or McDonald’s already seen this and have they seen a success here? And within India, what is the customer proposition here because you can either order at home or in the office when you start going? Or we have the Drive-Thru anyway. Or you did it because you were asserting your assets more. For the customer, what is the value-add?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [54]

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The customer value-add is, to my mind, phenomenal. And by the way, we’ve done this in some other markets, for sure. But essentially, what On the Go does, it becomes like a Drive-Thru. So as you are approaching the restaurant, you use the app to order. And by the time you reach the restaurant, we bring the food to the doorstep in the car. The customer don’t have to leave the car. And basically, it makes all our restaurants Drive-Thrus.

So On the Go to the consumer is an absolute phenomenal thing. And what COVID has done is, it’s bringing this habit in. While we worked on, On the Go earlier as well, in the past, to get consumer traction around that was getting difficult. But this is like how we are doing meetings on Zoom and on Teams, and that traction has come, it was always available. But I think that behavior is here to stay. Similarly, this On the Go behavior gets ingrained in the consumer, they see the use and the benefit of it, and then it becomes an incremental business long term. So it is here to stay, basically.

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Operator [55]

——————————————————————————–

(Operator Instructions) We take the next question from the line of Kunal Sharma from Perfect Relations (sic) [Research].

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Kunal Sharma, [56]

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Sir, I have a few questions. I’m listing them together. First, sir, what are your plans for scaling of Delivery, given historically, Pizza has been a more Delivery-savvy category. Example like fries and burgers not consumed within a short time as gone away from McDonald’s [ensues]. The second, sir, our listing process, we didn’t go for an IPO, but reverse merger in a promoter group company. Any reason for the — preferring this group? And the last — what’s the long run — long-term potential in number of stores and sales you see for the Westlife over the long run?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [57]

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So I think the first question was on Delivery. I think these are all sort of, in my view, to be honest, outdated questions. Burgers are being delivered around the world and in India. We’ve been doing burger delivery from 2005, and the consumer focus is on convenience. I mean, there are all different food types always taste better when you go to the restaurant and have it straight out of the oven or off the grill. And delivery takes but 10, 15 minutes, and there is food deterioration in whatever food category you talk about. So essentially, it is finally reflected in our sales growth, where we’ve grown our delivery business 4x over the last 3 years, and we do really significant volume. So finally, the consumer is the king and consumer has made that decision.

As far as the listing process is concerned, I don’t even remember what was the reason at that time, but it was 2013. And I think that we could take off-line. I’ll have to remember why [Shahid] had done that. We are 7 years out of that, and it’s sort of not even a question anymore.

And in terms of potential number of stores, again, we’ve discussed that earlier. In our estimate, pre-COVID about 800 stores was what we were looking at. But FY — our Vision 2022 talks of around 400 to 500 stores, but all of that has now got to be revisited.

——————————————————————————–

Kunal Sharma, [58]

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Okay. Sir, could you share the same-store sales growth for the quarter?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [59]

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It was there. Same-store sales, I think, minus 55% or something.

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Pankaj Roongta, Westlife Development Limited – CFO & VP Finance and Accounts [60]

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Minus 54%, yes.

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [61]

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Yes.

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Operator [62]

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We take the next question from the line of Aasim Bharde from IDFC Securities.

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Aasim Bharde, IDFC Securities Limited, Research Division – Research Analyst [63]

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Just one question. What is the difference between take-away and On the Go model? To me, they both sound the same.

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Smita Jatia, Westlife Development Limited – Non-Executive Director [64]

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Yes. So take-away in the traditional take-away was when you had to come into the store and you could take your food away. In the COVID just now, what we have done is, as we have shown in one of the slides, we’ve put a counter outside the restaurant where the person could come and take away the food. However, On the Go is when you can pre-order your food before you are approaching the store on our app. And by that — by the time you reach the store, your food will be ready, and it will be delivered to you in the car. So On the Go is our digital strategy of convenience, while take-away was our traditional strategy on convenience.

——————————————————————————–

Aasim Bharde, IDFC Securities Limited, Research Division – Research Analyst [65]

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Okay. So on — so when you say that you converted most of the stores to On the Go model, so I would assume in terms of cost, it will just be some changes in the app, right? Nothing at the store level?

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Smita Jatia, Westlife Development Limited – Non-Executive Director [66]

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Absolutely. Absolutely. There was no incremental cost in converting our stores into On the Go. And as what Amit has said that we converted them without any cost and pretty much have made all our restaurants like Drive-Thru restaurants.

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Operator [67]

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We take the next question from the line of Sharon [Pedravni] from Longview Finance.

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Unidentified Analyst, [68]

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Am I audible?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [69]

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Yes.

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Unidentified Analyst, [70]

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So this is in keeping with your On the Go model. You see in the U.S. Starbucks, you have launched a similar sort of model called curbside pickup, and in the store actually only have the kitchen. So they’re under 1,000 square feet. And you have a server coming out and delivering the food and the beverages to the customer in the car. So do you see adopting that model over here where you open stores where only have the kitchen and — a counter [where you can pick up]…

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [71]

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No, I don’t think that would be bulk of the stores. Okay, if you think of a few, maybe, but in the scheme of things and in — sorry?

——————————————————————————–

Unidentified Analyst, [72]

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No. In terms of driving future growth, opening —

——————————————————————————–

Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [73]

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No, that’s what I’m saying, driving future growth, basically, this is not the model that we feel we build the business and the brand on. As I’ve always maintained, these are kind of brand extensions. And when all the brand extensions come together, it makes McDonald’s a very powerful proposition for the consumer. So we, therefore, like the restaurant to have in-store, McCafé, Breakfast, Delivery, Drive-Thru, take-away, On the Go. And when all the platforms come together, our average volume keeps rising, and the customer convenience goes to quite very, very high levels. So it’s not going to be something where we do an only curbside type store, as I’ve mentioned that we will not be primarily doing back kitchens as well.

——————————————————————————–

Unidentified Analyst, [74]

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Right. Great. Okay. And my second question was on your app, what sort of growth have you seen on your app? You’re just taking your app in terms of deliveries?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [75]

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We don’t share the breakup. But what I can say is that actually, post-COVID, we’ve seen quite a decent jump in sales out of our app. Particularly in the recent past, as we’ve been pushing it hard because, obviously, that’s the only channel available to us. The good news is we had about 3 million, 4 million customers, and we’ve been able to do a bit of a push strategy to them, and we’ve improved their frequency, and we’ve been able to convert them into users rather than just having the app. So fortunately, the pre-COVID effort of recruiting these customers has helped us a lot.

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Operator [76]

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We take the next question from the line of Nirav from B&K Securities.

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Nirav Rajiv, Batlivala & Karani Securities India Pvt. Ltd., Research Division – Research Analyst [77]

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I just had one question. How do you compare the global McDonald’s currently and with India right now? The key trends?

——————————————————————————–

Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [78]

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I don’t think it’s comparable, although strategically, we are on the same direction. Globally, the Drive-Thru business is a very large part, and they have — their stores are very anchored towards Drive-Thrus. So in the U.S., 80%, 90% of the stores would be Drive-Thrus, of course, along with in-store. While in India, the whole portfolio is quite different. But typically, the whole global strategy is around digital platforms, around Delivery, around McCafé growth. So in that sense, we are fully aligned.

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Operator [79]

——————————————————————————–

We take the next question from the line of Manjeet Buaria from Solidarity Advisors.

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Manjeet Buaria, Solidarity Investment Advisors – Principal [80]

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It is Manjeet Buaria. I had one question. On the cash burn for the quarter, and what is the net cash balance at the end of this quarter, if you could please share that?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [81]

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I think Pankaj you may want to answer that?

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Pankaj Roongta, Westlife Development Limited – CFO & VP Finance and Accounts [82]

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So in terms of, Manjeet, in terms of the operating EBITDA, we have already shared the number, which is around a loss of EUR 577 million. We do have strong cash reserves in our balance sheet at the end of June, which will tide over to any adverse situation that we might face. So operating EBITDA you can translate to the cash reserves. That, that —

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Manjeet Buaria, Solidarity Investment Advisors – Principal [83]

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Sir, [thinking of 1Q] for net cash, if I adjust for your operating [debit in that sense] would that be fair?

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Pankaj Roongta, Westlife Development Limited – CFO & VP Finance and Accounts [84]

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Yes. Yes.

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Manjeet Buaria, Solidarity Investment Advisors – Principal [85]

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Okay. Okay. And just one more question. In terms of — are you planning to — sorry, am I audible?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [86]

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Yes. Yes. you are. Go ahead.

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Operator [87]

——————————————————————————–

Sir, we just lost the line for the current participant. Next question is from the line of Devanshu Bansal from Emkay Global.

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Devanshu Bansal, Emkay Global Financial Services Ltd., Research Division – Research Analyst [88]

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Sir, my question is on — are you getting any assistance from McDonald’s U.S. in terms of lower royalties due to loss of sales?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [89]

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So basically, we are getting a lot of support from McDonald’s and obviously, all the new procedures, the SOPs that are coming from them. So we are able to move around very quickly from a consumer point of view. The other big learnings we are getting from them is markets that are far ahead of us in the curve, like the Korea and Taiwan, we are seeing some good advice and ideas, which we are building in already, so that we can really accelerate our own growth curve. Other than that, they have been supportive on all measures, specifically on royalty and all, we’ve got some good deferrals from them. But we believe we are already on a pretty good royalty program of 4%, and that’s where we are at this point in time.

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Devanshu Bansal, Emkay Global Financial Services Ltd., Research Division – Research Analyst [90]

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And one more question for Amit. Is this kind of arrangement there in the rents as well? Or we have negotiated in terms of [actual] amounts?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [91]

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So it’s both. I mean, it’s a mixture. Finally, there are 320 restaurants. So essentially, in many places, we restructured, in some cases, it’s a 1-year plan. In some cases, it’s deferment for some time. So it’s a mixture of all of that. But essentially, by and large, landlords have been pretty supportive to our business and our work.

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Operator [92]

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We take the next question from the line of [Emon Patel from Alda Capital].

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Unidentified Analyst, [93]

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Just — could you give us some insights about the supply chain challenges that you have faced during this quarter? And you briefly touched upon logistics growth. Just wanted to know how you’ve managed to deal with that?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [94]

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No, supply chain challenges are there because there was disruption, but of course, luckily, we had a ton of stock from March, and then we were able to manage through that. But then what happened is that as we started running out of the stock, the first issue is that, obviously, we had to hold that stock. And our products are all refrigerated and chilled. So the distribution center was running as if nothing had changed. So we couldn’t let that product go to waste. So there were some incremental cost there.

The second cost incremental is that stores were on, off. So obviously, full trucks versus part trucks because the key was to deliver to customer, right? At that time was not about just cost. So therefore, that cost also came into the system. So therefore, you need a certain amount of consistency in order for us to be able to maximize our distribution cost and optimize them. So we are beginning to see, at least, some sanity and some predictability. Even though there is open and close, but now we have a decent base of stores that are running regularly. So that’s giving us some strength there.

Outside of which, there have been on and off like eggs, for example, it’s a short shelf-life product, very, very sensitive. So we have some disruptions in that. But I would say, by and large, 70%, 80%, we’ve done all right.

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Unidentified Analyst, [95]

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Okay. So would you say that the greater challenge at the moment still lies around on the demand side of the travels and supply? I mean, as you go into the…

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [96]

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Absolutely. No question about that.

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Unidentified Analyst, [97]

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Okay. And a quick take on employees. I just wanted to understand, given the fact that we have 80% of our sales happening from convenience models which are out of the restaurant. Just trying to understand how would you look at the employee factor moving for the business? I mean, would — over a period of time, employees per restaurant come down? And we can see more productivity gains out of it as we move on to the next couple of years?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [98]

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No. So we’ve been fortunate, in fact, other brands in the industry are following our norm, that even 10, 15 years ago we realized that during the weekends, we need more people and during the weekdays, we need less. So we’ve always had a very strong part-time base of workers. And because they are part-time, right, during these times, it has been very, very helpful to us in managing our cost structure better. By and large, we’ve tried not to sort of lay off people or anything. But because of this whole part-time situation, it has helped us dramatically to address it.

Longer term, yes, we always, irrespective of COVID, we have things in the pipeline to keep increasing our efficiency and our productivity. But the productivity gain is largely going to come from a growth in average unit volume. Because at our unit volumes, I feel we were quite all right in any case. So we’ve done a time and motion study, but that’s all sort of pre-COVID, which we, I believe, that once things settle down will continue to give us growth. And that is why in the last 2 to 3 years, we wouldn’t have seen labor cost change too dramatically.

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Operator [99]

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Next question is from the line of Amnish Aggarwal from Prabhudas Lilladher.

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Amnish Aggarwal, Prabhudas Lilladher Pvt Ltd., Research Division – Head of Research [100]

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I have a couple of questions on my side. If I look at McDonald’s as a business model it has a very strong throughput in the stores, very strong brand. Now with this entire scenario of COVID, now consumers shying away for some time. What sort of strategic changes do you think you would be undertaking to make the model much more resolute and much more, so steady for the long term?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [101]

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Sure. That’s what I think we’ve been sort of talking about through this call. The crux to us is pushing our convenience more channels out. And we talked about all the 3 and particularly the launch of On the Go, which convert all our restaurants into Drive-Thrus. The second big focus is around digital. So the customers are — everything is now digital. And therefore, digital strategy to recruit customers, retain them, communicate with them, to build demand and to use all digital channels, like On the Go is through an app, Delivery business is through an app. We have our own app, which have a lot of customers.

So how do you increase their frequency and convert them into regular users. So that is the second big challenge and things that we are doing. The third is, of course, around the reassurance. So we talked a lot of that. And if you — later on, take the time to read our earnings presentation, our Golden Guarantee is something that I feel is going to go a long way. And lastly, of course, the cost reduction. So while I do believe very strongly that the business is definitely going to bounce back to pre-COVID levels and will continue its growth, and we have to just handle this particular period.

And use this time to ensure that the new customer behavior is factored into the way the brand thinks and works, so we remain relevant to the consumer. And I [see our looks from to] this call and through our earnings presentation, you get that sense because we are quite pleased with the way the consumer is responding to all the work we’ve done in the past. So that is how we are structurally changing and adapting to the new reality as to the things I just talked about.

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Amnish Aggarwal, Prabhudas Lilladher Pvt Ltd., Research Division – Head of Research [102]

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Yes. I mean, if you look at some of the initiatives like, for example, at your entire convenience portfolio, convenience way of where you can say, committing the customers. So in that aspect, if you look at, for example, our breakfast menu, which has been there, but not being pushed to that extent. Now in the light of these where it is digital revenue, it is convenience, do you see what sort of changes do you see coming into the menu of McDonald’s?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [103]

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No, I don’t see any change. In fact, breakfast is a big convenience platform. The people in their offices will order breakfast. And our breakfast is very, very easy to travel and to go. So I don’t see any shift in the menu due to this. And by the way, this is all pretty standard part of Global McDonald’s. All these convenience channels globally do contribute to a significant part of our sales. The only thing is that in India has got accelerated because of COVID, which is great actually for us. Otherwise, the time to take the traction on all this was longer. So it has accelerated, and we feel that these business models are here to stay. And as in-store builds back, we think that our [central] sales will actually build up quite nicely.

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Amnish Aggarwal, Prabhudas Lilladher Pvt Ltd., Research Division – Head of Research [104]

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Okay. Finally, just one final bit as you said sometime back, the [strength the] royalty uses that McDonald’s is charging is 4%. But as far as I understand, I think [that seeing] down the line, it is going to increase significantly from the current levels. So given my understanding is there a possibility of that time line being pushed back, of that number being reduced?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [105]

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No. I think we are quite happy with the royalty plan. And I think it’s a very, very attractive plan. And globally, that is the royalty that McDonald’s charges everywhere else, and we get things that are worth it. So there is no discussion right now on all of that. I think as long as — particularly once we get over these couple of years, I feel business will be back to normal. And we need to work with the brand and also make them get their revenues.

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Operator [106]

——————————————————————————–

We take the next question from the line of Abneesh Roy from Edelweiss.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division – SVP [107]

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I had a few follow-ups. So gross margins explained the logistics and the refrigeration aspect. My question is, is the raw material cost per unit dynamics also linked to the scale? So if the number of burgers, for example, is lesser, does it become more expensive in that space per burger?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [108]

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No. As we’ve explained, we intend to stay at 61 and move back up, as Pankaj mentioned in his comments, we are expecting GM to get back to normal. And all of these factors, we are sort of dealing with. So that’s how we see it.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division – SVP [109]

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And in terms of food aggregate, it’s a critical part now of your business model. We have seen Amazon also enter in some of the cities. So could you tell us how has been the response or the impact on you? And are you getting a benefit because of the overall bargaining for reducing for these as more players come, it’s good for you from a bargaining power perspective?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [110]

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Well, I’ve always maintained that our bargaining power is pretty strong because we treat them as partners, and they treat us as partners. And yes, they have options. We have options as well, and that keeps the balance. But it’s finally about how you manage your relationship. And especially, at least from our point of view, we’ve had a good relationship with all our third-party aggregators, and we treat them as partners rather than suppliers and they treat us as partners. And therefore, even through the pandemic, we’ve been able to work together to grow our business for mutual benefit. So if more players come, that’s okay. For us, it’s neutral. As long as more business is coming from consumers, they are to all of these areas put together, that’s good for all of us.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division – SVP [111]

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And sir, we have seen malls come back in the smaller cities. So still consumer behavior wise, if you see, he doesn’t want to go to malls easily. So in those stores, are you seeing business when are they open? And second, is the response similar to how stores — in the outside mall cities, is it similar to that?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [112]

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No, basically, malls, the traffic is still thin in the malls. So I think it’s going to take a while for it to build as consumers get confidence. So right now, what we are seeing is that mall, the traffic is thin.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division – SVP [113]

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Right. And sir, final question. Earlier, we have seen your growth and overall QSR growth is linked a bit to the cricket properties. Now cricket obviously is not happening. But OTT consumption has increased significantly. So is there some data — anecdotal, say — that there is some benefit because of the OTT consumption going up, wherever stability in the market are there. Are you seeing that happening?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [114]

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No. I mean, we have not tracked it. But obviously, Delivery business is strong and with cricket delivery goes up. But there are different — I mean, these are all very incremental minor shifts to my mind. Because that’s not where bulk of our business comes from in any case. So I don’t see or we’ve not tracked that because of OTT, whether our sale has gone up or down, I don’t think I know the answer to that, Abneesh.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division – SVP [115]

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And sir, last question, one more. So multiplexes haven’t opened, but they are already taking the men over. They have brought in haldi drinks and all that. When they open, they will [drink], that is the thought process. In your case, you already had the health platform quite strong. But linked to the COVID, have you tailored your products in some way to make it more appealing?

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [116]

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No, I don’t think we have gone in that direction as yet.

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Operator [117]

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Ladies and gentlemen, due to time constraint, we take that as the last question. I would now like to hand the conference back to the management for closing comments.

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Amit Banwarilal Jatia, Westlife Development Limited – CEO & Vice Chairman [118]

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Thank you, everybody, for joining the call. I really appreciate it, and have a lovely day ahead. Thank you. Bye.

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Operator [119]

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Thank you. On behalf of Westlife Development Limited, we conclude today’s conference. Thank you all for joining. You may now disconnect your lines.

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