Trusted QSRs will recover first, maybe in 6 months: Westlife's Amit Jatia

Amit Jatia, vice-chairman, Westlife Development, which runs McDonald’s stores in the West and South of India, believes that western quick-service restaurants (QSRs) will recover quickly in the post-Covid world. He says that consumers will accept the new pandemic-induced ‘normal’ and get on with their lives. Masks, he says, will be a regular feature and health and hygiene will be foremost on most people’s minds. In an interview with Viveat Susan Pinto, Jatia indicates the road ahead for his company against this backdrop. Edited excerpts:
 

How has Unlock 1.0 unfolded for you a week after launch?
 

We have 208 McDonald’s restaurants open right now out of a total of 319 outlets in the West and South of India. The good side is that we have a strong convenience platform as far as delivery, takeaway, and drive-throughs are concerned.
 

If you take these into account, our distribution points increase to 1,000. This has helped us with sales at a time when over 100 restaurants of our chain have shut down.
 

Do you see the environment improving anytime soon?
 

I see a bounce-back in six months. In my view, six months is enough. Consumers have to live their lives at the end of the day and will accept the new reality. What is needed is some consumer confidence and the rest, I believe, will fall in place.
 

Most retailers are factoring in the risk of contracting Covid for FY21. Your thoughts?
 

We will have to live with the risk till a vaccine or cure is found. Having said that, we believe that consumers will eventually want to step out because an extended lockdown can bring fatigue. However, consumers will do so with safety and hygiene in mind. Our study of international markets shows that consumers tend to flock to western QSRs when a new normal sets in.
 

Within QSRs, those with high brand trust codes gain the most, because consumers feel safe eating out at those places. We believe that McDonald’s has an advantage here because we are a large, organised player and will always keep the consumer’s safety at the heart of what we do. We are also affordable. So chances of us recovering first are higher.
 

Do you see an increase in operating costs as a result of the new normal?
 

There will be an escalation, no doubt, but it will be offset by savings that we will introduce in other areas.
 

We are working on it. Some areas that we are looking at include supply-chain and other fixed costs. Already, commodity prices are off, so that will help rein in expenditure to some extent. The incremental cost we incur to prepare ourselves for the new normal will be offset by savings elsewhere.
 

Also, we will be prudent with our workforce. We may, for instance, not hire new people for our new stores, but move existing staff to these new outlets. These are some of the measures we are looking at.
 

Will you be adding stores this year, given that the outlook for the sector remains weak?
 

Yes, we will be adding stores this year. That is because there were a few stores that were ready to open in March, but couldn’t because of the lockdown. Those stores, which are five in number, will open this year for sure. However, that does not mean that we will not open more stores this year. We will know by August-September how many new stores we can add.