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Westlife Development Ltd.

BSE: 505533 Sector: Services
NSE: WESTLIFE ISIN Code: INE274F01020
BSE 13:56 | 17 Aug 622.25 -13.20
(-2.08%)
OPEN

635.35

HIGH

639.15

LOW

621.15

NSE 13:44 | 17 Aug 621.55 -13.40
(-2.11%)
OPEN

636.00

HIGH

639.90

LOW

621.10

OPEN 635.35
PREVIOUS CLOSE 635.45
VOLUME 9328
52-Week high 683.55
52-Week low 402.05
P/E
Mkt Cap.(Rs cr) 9,704
Buy Price 622.60
Buy Qty 1.00
Sell Price 623.90
Sell Qty 3.00
OPEN 635.35
CLOSE 635.45
VOLUME 9328
52-Week high 683.55
52-Week low 402.05
P/E
Mkt Cap.(Rs cr) 9,704
Buy Price 622.60
Buy Qty 1.00
Sell Price 623.90
Sell Qty 3.00

Westlife Development Ltd. (WESTLIFE) - Chairman Speech

Company chairman speech

Overview

When we went into business about 25 years ago excited about the powerof an organised global QSR brand in an under-penetrated India we recognised that whilethe future would be robustly attractive there would be years when our patience would betested.

So we aimed to build a business that would be agile enough to addressthe widening opportunities of a relatively virgin marketplace on the one hand andresilient enough to withstand unforeseen sectoral setbacks on the other.

The year under review was precisely the kind for which we had preparedthe company across the last couple of decades - a year when we would encounter theunforeseen rebound with speed reinforce our growth and strengthen our competitiveadvantage.

Our company concluded the year with close to 65% recovery in revenuesdespite all regulatory headwinds and the lockdown imposed by the government to protectcitizens from the pandemic. Interestingly our EBITDA margin in FY20-21 comparedfavourably towards the second half of the year which should tell you that even as anumber of things were outside our control we did our best with the various factors withinour influence and delivered a qualitatively superior business.

The pandemic

It would be fair to state that the pandemic (and subsequent lockdownacross India) was the most challenging single event encountered by our company in the last25 years.

As personal safety was threatened and people were asked to stayindoors one of the first casualties was the eating-out industry. There was a completeclosure of restaurants across India eliminating the prospect of revenues while overheadsneeded to be continuously incurred. This posed an unprecedented challenge for ourindustry.

The pandemic put a premium on our corporate response. The companypossessed no play book of a similar event in the past the data available was limited andthe fear of the unknown was possibly (and understandably at that point) larger than thereality itself.

I would not say that we possessed all the answers during thatchallenging period. All I will say is that we trusted a few convictions: whenever thelockdown was lifted people would need to engage with organised brands they trusted. Soona more vital realisation began to dawn upon us: that in the inactivity and uncertainty ofthe marketplace resided an unprecedented opportunity.

The core of that opportunity could be encapsulated in one sentence: 'Ifconsumers cannot come to McDonald's why don't we take McDonald's to our consumers.'

The game-changing 'C' word

During the last couple of decades whenever we were challenged bysluggishness in the consumer environment we didn't just respond by playing the gamebetter: we responded by changing the game itself. The result has been an unmistakablesequence of business unforeseens that were addressed with typical boldness at our company.

How Westlife responded during this challenge was no different. Ratherthan be cornered into inactivity we resolved to innovate our way through the slowdown; weresolved to restructure our business model to enhance nimbleness.

This is how: we recognised that the apprehension to step out wouldpersist. However we also recognised that a number of consumers (locked into theirpremises for more than a couple of months) would be waiting to drive into the open eathygienic non-home cuisine and seek a change from the routine. At Westlife we focused onmaking our engagement with that community of consumers safe swift and simple. We broughta new word into our every-day use: convenience.

This perspective accelerated the company's omni-channel strategy thatenabled access to our food - whenever wherever and however the customer likedtransforming our brand perception from that of a fixed brick and mortar fixture into avirtual corporate service provider that could be accessed with the flick of a finger. Wedesigned a contactless experience that would be safe secure swift and seamless.

We did not just focus on enhancing convenience for our consumers; wepioneered an entire workflow around it; we invested to make the transaction life-cycle -from contactless food ordering to contactless food delivery - sanitised contactless andassuring. Our employees responded to the new normal through their willingness to bere-trained around a new way of working. The result was a new dimension in India's QSRsector in sync with the prevailing environment.

At McDonald's we believe that the concept of On-the-Go virtuallytransforms the way we exist: the recall of our company will gradually evolve fromasset-heavy to asset-light; from product (as in food) to service. We believe that thisre-approach will shift the paradigm from 'I need to go and sit inside McDonald's to beserved' to 'McDonald's is making it easier for me to consume its food wherever I like'.This will accelerate our ability to serve and enhance profitability.

The 'T' word

The one thing that made this ubiquitous access a reality was ourproactive investment in technology.

A number of observers who tracked us through the last financial yearare aware that we had been increasing our investments to evolve from just a food companyinto a food technology brand. This evolution warranted changes in customer-facingengagement and back-end architecture making the role of technology seamless andtransformative. So when the pandemic broke we were caught unaware but not unprepared; wepossessed a technological solution that could be adapted to our immediate needs.

Our technology backbone provided us with

a chassis on which to build apps and digital interventions. It waspossible for the consumer to not just order food through a technology intervention; italso became possible to match the food provider and recipient at a specific location andtime (On-the-go); it was possible to collect food from McDonald's without entering ourpremises or engaging with anyone from our staff at all. Suddenly a completely contactlesstransaction was a reality

- possibly the first time in India's QSR sector

- that was safe and scalable. The combination of contactless takeouton-the-go contactless payments and digital receipts strengthened our recall as a brandthat did not just provide good food but a brand that cared.

/ Enhancing Trust

At Westlife we recognised that we needed to complement contactlessengagement with the provision of safety assurance in the event that the governmentpermitted restaurants to re-open. This led to the launch of our Golden Guarantee Promise(centred around complete safety) which played a confidence-enhancing role in bringingconsumers to outlets or making it convenient for them to take food home. We created acheck list of more than

40 parameters that maximised safety in our operations - betweenemployees on one hand and between employees and consumers at the other. The result is thatfollowing resumption there was a growing relief that McDonald's was one of the fewpublicly accessible eating-out places where people could come sit have a meal unwindand return home - without the fear of contracting an infection.

Moderating our break-even point

At a time when we were reporting virtually no revenues the only way wecould remain in business was by moderating our break-even point enhancing ourcompetitiveness across similar market cycles.

We engaged in a number of initiatives in this regard.

We entered into negotiations with landlords to securerent relief and deferrals together with revised contractual terms.

We rationalised supply chain costs through zero-basedbudgeting.

We reduced wastages and optimised distribution costs. Wereduced store operating costs.

We renegotiated our office rentals reduced

discretionary expenses like travel and shifted some services fromannuity to need-based.

We secured an increase in the revolving credit facilityto enhance liquidity.

We moderated our working capital outlay followingrenegotiated contracts with key suppliers.

The result of this austerity emphasis was optimised RestaurantOperating Margins enhancing liquidity on the one hand and moderating net debt on theother. We moderated our break-even point making it possible to remain resilient duringchallenging market cycles and post a quick rebound during market recovery.

) Outcomes

The result of these initiatives is that when revenues more than doubledin the second half of the year compared with the first our margins correspondingrecovered as well and we posted a presentable surplus that helped us overcome the loss ofthe first half.

Our convenience platform returned to its pre-COVID-19 revenue levels asearly as August 2020; within just three months of commencing our On the Go service thatmade it possible for food to be delivered right to our customers' vehicle outside ourrestaurant revenues from this channel tripled graduating from a stop-gap arrangementinto a competitive advantage.

Various initiatives we embarked on began to deliver positive outcomesby the third quarter

and attractive numbers during the fourth quarter.

The company reported a positive same-store sales at a 10.5% growth inthe last quarter.

There was close to 90% recovery in the dine-in segment; our conveniencechannels reported a 42% growth in the last quarter on a YoY basis.

McDelivery reported it's highest ever sales in March 2021.

The Drive-thru channel reported 81% growth in the fourth quarter YoY;On-the-Go emerged as a key competitive advantage The success of these 'Out-of-restaurant'channels provide us the confidence that the convenience cum assurance platforms are theway to our future.

Outlook

There is a lovely saying that I find myself using more frequently:never waste a good crisis.

It would have been simplistic to complain about what befell our sectorand company; on the contrary we recognised a number of realities to be opportunities indisguise and responded accordingly to emerge stronger.

For the foreseeable future we will remain flexible keep observing themarket for gaps listen carefully to what consumers are telling us (in addition to whatthey are not) protecting the integrity of our Balance Sheet and remaining tacticallynimble while never losing sight of why we are in business - to enhance consumer delight.

We see four pillars around which to build our business in a sustainableway.

One there is a strong love for our brand that we will continue toleverage; we are democratising global gastronomic preferences in India; we are recognisedas a modern and progressive food and food-tech company.

Two we are committed to drive world-class safety standards and carveaway demand from the unorganised food service segment Three we now possess a trulyomni-channel consumer access that complements the brick-and-mortar with the digitalproviding convenience with a 360-degree relevance.

Four we possess a broad based dynamic and hygienic menu platform thatappeals to those who relish taste and wholesome food around attractive value.

Five we moderated our new store break-even point; as revenues rise forthese upfront- expensed stores margins could strengthen.

Six we provide a wide complement of value across 305 outlets in Westand South India

225 McCafes 265 McDelivery outlets and 197 McBreakfast outletstranslating into more occasions to visit our outlets.

Seven we possess a robust shock absorber in our robust Balance Sheetthat remained unimpaired through the pandemic.

We are at the right place at the right time with the right consumervalue proposition to grow attractively and sustainably. In FY20-21 the conviction of ourWestlife family helped turn adversity into an inflection point. We are now optimistic ofemerging bigger better and stronger from the pandemic.

In line with this long-term optimism we will continue to open newoutlets in strategic locations invest in cutting-edge technology solutions deepen ouromni-channel experience and strengthen our brand. To ensure the safety of employees andcustomers we are facilitating the vaccination of our crew. We expect to drive revenuesand profitability through accessibility assurance convenience and digital accelerationmenu innovation network expansion as well as cost leadership and margins expansion.

We are optimistic that the complement of the three D's - Drive thruDelivery and Digital - will continue to strengthen our brand competitiveness andfinancials.

These realities ensure that we will not only live to fight another daybut live to win the next battle whenever it transpires The best is yet to be.

Amit Jatia Vice Chairman

.