Westlife Development, which runs McDonald’s restaurants in west and south India, reported on Tuesday same-store sales growth rate of 8.7 per cent for the June quarter of 2017-18. This is Westlife’s highest comparable sales growth in over four years. It also comes at a time when McDonald’s restaurants in the north and east territories, run by Connaught Plaza Restaurants, led by Vikram Bakshi, have languished on account of a dispute between the two partners. Amit Jatia, vice-chairman, Westlife Development, tells Viveat Susan Pinto how he has managed to handle the multinational over the past two decades. Edited excerpts:
The dispute between Vikram Bakshi and McDonald’s has made both national and international headlines. Has that affected your work in the south and west?
Absolutely not. And why I say this is because of the numbers we have delivered this quarter. If there was any confusion in the mind of the consumer, it would have reflected in sales growth for the quarter. We have delivered positive same-store sales growth (SSG) for the past eight quarters. The June (2017) quarter, in particular, has seen us deliver the highest comparable sales growth in over four years. Also, the 8.7 per cent SSG has come on a base of 3.4 per cent SSG in the June quarter last year. These numbers could not have come if the consumer didn’t trust us. An average Mumbai consumer does not travel to Delhi every day. His or her brand of McDonald’s is built on what he or she sees here.
As a partner, what do you think has worked for you and not for Bakshi in the north and east?
I can only speak for myself. When you are in a partnership, you build trust and integrity. There is a brand framework that also governs the relationship. While there is freedom within the brand framework, that is where you stay. We engage and do things with McDonald’s. It can get as radical as you can imagine, a dosa-masala burger for instance, which is on our menu. So while we do what we want to, this is built on a solid relationship. Representatives from McDonald’s come every other quarter and see what we are doing. They can see the platforms we have built, the engagement with consumers, and the re-imaging of stores we are undertaking. All of this adds up to build trust in the relationship.
Are you contemplating expanding your relationship with McDonald’s. Would you, for instance, look at territories outside of India?
I have set a goal for myself as part of my company’s vision 2022, that I would like to double my base of restaurants, which currently stands at 260. So I am looking at restaurants between 400 and 500 in the next five years. I am looking to double McCafes from 120 to 240 in the same time period. We want to grow top line two-and-a-half to three times of where we currently are in the next five years. We have spelt that out in our vision document. It makes no sense taking my eye off the goals that have been set. My energy will be devoted to developing west and south (India). I am not interested in other brands or taking up McDonald’s franchises in other countries. My hands are full with the work I have.
What contributed to the 8.7 per cent SSG your company delivered in the June quarter?
I have always taken the call that I will not offer deals to buy customers in the short term. Instead, my attention has been on building platforms and investing in them. What I mean by platforms is, building McCafe as an occasion at McDonald’s, building the delivery business at McDonald’s through web ordering, and via the app and finally the work we have done around the menu. What this quarter incrementally added (to sales) was the Happy Price combos, which was introduced on April 1. This is part of our everyday value philosophy, which has evolved from our Happy Price menu base. While earlier the consumer would get one product (burgers) at attractive prices as part our Happy Price menu, now the value is derived when he or she combines two products - a burger and beverage. This has excited consumers because they can pick up any burger and any beverage, which are available at attractive prices as part of the Happy Price combos.
How much do platforms such as McCafe and your delivery business (McDelivery) contribute to sales? Will you look at building new platforms in the future?
I cannot give you the current break-up of the two, but what I can tell you is that in the next three to four years, I see McCafe and our delivery business together to be anywhere between Rs 600-750 crore in sales. A couple of years ago, Rs 650-700 crore was the total turnover of my company. We now see enough potential in these platforms to together deliver what was total sales for my company earlier. That is a big jump in expectation and speaks of how we’ve building these platforms. Additionally, we have been building platforms for the future such as the breakfast menu or lunch or even the next-generation stores we introduced in March this year. These are building blocks for the future.