McDonald’s India Operator Sees 59% Drop in Q3 Profit Amid Rising Costs
Westlife Foodworld, the operator of McDonald’s India, has reported a significant 59% decrease in third-quarter profits for the period ending December 31, 2024. This drop in earnings is primarily driven by increased expenses related to inflation and heightened promotional spending. Despite a 9% rise in revenue, the company’s profitability was heavily impacted by the growing costs associated with raw materials and marketing.
The quick-service restaurant industry in India is facing heightened competition, with both regional and international brands battling for market share. Companies like Restaurant Brands Asia, which operates Burger King in India, are expanding rapidly, focusing on offering budget-friendly meals to appeal to inflation-weary customers. Westlife has also adjusted its approach, offering value deals such as the ‘everyday McSaver Meals’ where consumers can enjoy a snack and drink for as little as 69 rupees, less than $1.
During the third quarter, Westlife added 15 new McDonald’s outlets, bringing its total store count to 421. While this expansion contributed to a 2.8% increase in same-store sales, the overall rise in expenses, which surged by 11.7% due to inflationary pressures on key commodities such as oil, coffee, and cocoa, outpaced revenue growth.
The company’s revenue for the quarter rose 9% to 6.54 billion rupees. However, its consolidated profit after tax fell to 70.1 million rupees ($810,123.66), down from 172.5 million rupees in the same period last year. This decrease in profit margins is also attributed to increased advertising spending, which saw a decline of 200 basis points in the core profit margin, dropping to 14%.
Despite the profit slump, Westlife’s shares saw a positive reaction, closing 1.8% higher post-results, indicating that investors remain optimistic about the company’s future growth potential in India’s competitive fast-food market.
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