Westlife Development Ltd - Corporate Presentation Hardcastle Restaurants Pvt. Ltd.
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Westlife Development Ltd.
Hardcastle Restaurants Pvt. Ltd.
Corporate Presentation
March, 2019
Westlife Development | 2019 | Confidential | February 01, 2019 | 1 www.westlife.co.in
Disclaimer This presentation contains forward-looking statements that represent our beliefs, projections and predictions about future events or our future performance. Forward-looking statements can be identified by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements. The forward-looking statements contained herein include statements about the business prospects of Westlife Development Ltd (‘Westlife Development’), its ability to attract customers, its affordable platform, its expectation for revenue generation and its outlook. These statements are subject to the general risks inherent in Westlife Development’s business. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, Westlife Development’s business and operations involve numerous risks and uncertainties, many of which are beyond the control of Westlife Development, which could result in Westlife Development’s expectations not being realized or otherwise materially affect the financial condition, results of operations and cash flows of Westlife Development. Additional information relating to the uncertainties affecting Westlife Development’s business is contained in its filings with various regulators and the Bombay Stock Exchange (BSE). The forward-looking statements are made only as of the date hereof, and Westlife Development does not undertake any obligation to (and expressly disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events. Westlife Development | 2019 | Confidential | February 01, 2019 | 2 www.westlife.co.in
McDonald’s leads globally
Forbes 2018 Brand Ranking - World’s 11th most valuable brand
# 1. Apple # 9. Toyota
# 2. Google # 10. AT&T
# 3. Microsoft # 11. McDonald’s
# 4. Facebook # 12. GE
# 5. Amazon # 13. Mercedes - Benz
# 6. Coca-Cola # 14. Intel
# 7. Samsung # 15. Louis Vuitton
# 8. Disney
Westlife Development | 2019 | Confidential | February 01, 2019 | 3 www.westlife.co.in
Recognised in India as well
Great Place to Work® Award
- Among Top 10 company to
work for in Retail Industry –
2018 (4th year in a row)
Go forth & Multiple Award
2017 – Best GTM concepts for
new restaurant opening and
EOTF
Fulcrum Gold Award - Best
Consumer Products and
Retail sector campaign for
‘Flavours without Borders’
campaign Fortune India ‘Next 500’
*Note: PCI is People Capital Index – Giants of Tomorrow
Westlife Development | 2019 | Confidential | February 01, 2019 | 4 www.westlife.co.in
WFF – A nascent but rapidly growing category
Estimated Growth
rates over 2017-22
IEO Monthly Frequency
IEO 8.9% 2003 2013 2018
USD 131 bn
15 year
CAGR 4.7%
QSR 9.2%
USD 21.6 bn 15 year 20
CAGR 9.7% 18
IFF 8.8%
USD 19.8 bn 12.1
10
8.6
WFF
USD 1.8 bn
13.4%
3
Source: Euromonitor
IEO : Informal Eating Out; IFF: Indian Fast Food;
Mumbai Benchmark Asian City
WFF: Western Fast Food
Source: Brand Track, Mumbai and Internal McDonald’s sources
Westlife Development | 2019 | Confidential | February 01, 2019 | 5 www.westlife.co.in
About Westlife Development Limited
WDL through its One of the fastest 292* restaurants
subsidiary HRPL growing players in across 40 cities
operates McDonald’s; India’s quick service (as of Dec 2018)
62% promoter holding restaurant (QSR) sector
Modern &
182 McCafé's and
contemporary store
210 McDelivery
designs enhancing
(as of Dec 2018)
Customer Experience
Wide range of menu Good Food Story –
Robust Supply Chain;
offering, servicing all Continuous improvement
Integrated Farm to
day and providing value to provide wholesome &
Fork Model
for money nutritious food
Note: WDL: Westlife Development Ltd; HRPL: Hardcastle Restaurants Private Ltd.
* System-wide HRPL stores
Westlife Development | 2019 | Confidential | February 01, 2019 | 6 www.westlife.co.in
Evolution of WDL and Key Milestones
STORE ADDITIONS
FY95 – FY97 FY13 – FY15
1995 - Started as a FY01 – FY03 Oct 2013 - McCafe started in
Joint Venture Dec 2001 - Drive-Thru FY07 – FY09 Mumbai
Oct 1996 - 1st store in started at Mumbai Sep 2007 - 50th HRPL Jun 2014 - 200th HRPL store in
Mumbai (Kalamboli) Store in Mumbai Mumbai
FY04 – FY06 FY10 – FY12 FY16 – FY18
Mar 2004 - MDS May 2010 - Ownership status Sept 2015 - 50th McCafe
started in Mumbai changed to DL* Mar 2016 - 250th HRPL store in
Oct 2004 – Entered Oct 2010 - 100th HRPL store Mumbai
south market in Bengaluru Dec 2016 - 100th McCafe
Note: *DL – Development License Mar 2018 - 150th McCafe
Stores are system-wide HRPL stores
PRODUCT PLATFORMS & INNOVATIVE PRODUCT ADDITIONS
Veg Pops CWT Indi Good Food
McAloo Chicken McFlurry McEgg
McNuggets 2013 2014 McSpicy Journey;
Tikki 2011 2012
2010 2015 Rice Bowls 2018
2004
Breakfast McSpicy Spice Fest Masala Grill Royale CPP Maharaja Mac
2010 2011 2012 2013 2014 2015 2016/17
Westlife Development | 2019 | Confidential | February 01, 2019 | 7 www.westlife.co.in
Strategic Levers
Our Our Our
Restaurant Brand People
Running great Food – Menu Talent
restaurants and Value Management
Right location and Brand Extensions High Performance
Right Economies Culture
Modern and Trust and Training &
Contemporary designs Permissibility Development
Financial Discipline
Westlife Development | 2019 | Confidential | February 01, 2019 | 8 www.westlife.co.in
Solid Foundation – A Competitive
Advantage
• Stores with contemporary design and the EOTF stores - ROP 2.0 platform
model
• Diverse portfolio of restaurants (Malls, Food courts, DT, High street &
Transit points) built through intelligent market planning and penetration
• Long term deals (normally 20 years vs. industry average of 9-12 years)
• Strong unit economics - cash on cash ROI of 20%+ in 24 - 30 months
• Menu innovation and launched strong product platforms
• Integrated “farm to fork” supply chain
• Economies of scale, high food safety standards and product
consistency
• Continuously work with farmers on an extensive agronomy program
• Delivering wholesome and nutritious food options – The Good Food
Story
• One of the most experienced management team in QSR industry
with deep knowledge of the business
• Strong people development and management processes in place
• Strong knowledge transfer from McDonald’s Corp
• Company incurs ~1.25 lac hours in training programs at restaurant level
and has various structured training programs for senior management
Westlife Development | 2019 | Confidential | February 01, 2019 | 9 www.westlife.co.in
Vision 2022
GROW MARKET SHARE BROADENING ACCESSIBILITY
GROW BASELINE SALES
& MARGIN OF BRAND MCDONALD’S
• Sales growth to Rs. 20 – • Mid to high single digit SSSG% • 400 – 500 restaurants
25 Bn • McCafé : 75 to 300-350 Presence in 45+ cities
• Take EBITDA margin to • McDelivery: 124 to 300-325 • Investment of Rs 5+
low to mid teens • 80-100 EoTF restaurants bn
• Restaurant level cash on • Leverage other brand extensions
cash returns >20% and menu in future
Westlife Development | 2019 | Confidential | February 01, 2019 | 10 www.westlife.co.inOUR RESTAURANT
Broadening Accessibility Of Brand
McDonald's
Westlife Development | 2019 | Confidential | February 01, 2019 | 11 www.westlife.co.inOur Footprint
Total Restaurants – 292*
Presence in 40 cities
(as of Dec 2018)
MADHYA PRADESH - 5
GUJARAT - 40
CHHATTISGARH - 2
1% 2%
MAHARASHTRA - 127 1% 9%
0% 14%
TELANGANA - 25
7%
KARNATAKA - 57 2%
GOA - 2
ANDHRA PRADESH - 4
20% 43%
PUDUCHERRY - 1
1%
KERALA - 8 Gujarat Maharashtra Goa
Karnataka Kerala Tamil Nadu
TAMIL NADU - 21 Puducherry Andhra Pradesh Telangana
Note: * System-wide HRPL stores Note: India Map not to scale
Chattisgarh Madhya Pradesh
Westlife Development | 2019 | Confidential | February 01, 2019 | 12 www.westlife.co.inStore Additions
Over 3x stores in last ~9 years
292*
277
258
236
209
184
161
129
107
87
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 9MFY19
* System-wide HRPL stores
Westlife Development | 2019 | Confidential | February 01, 2019 | 13 www.westlife.co.inAchievements under ROP 2.0
Initiatives under ROP 2.0 Results of ROP 2.0 significantly
outperformed our targets
Restaurant Design
• New External Façade ROP 2.0 ROP 2.0
• Pre-fabrication of parts of 2012 -14
Target Actual
the building structure
Avg
Development
Cost1
1x 0.8x 0.7x
Equipment Options
• Localization of seating and
kitchen equipment, yet Cash 24 12-18 ~12
providing an upgraded look Breakeven1 months
months months
Positive
Operating Costs Negative Break margins
• Use of energy saving ROM %1
margins even and cash
equipment flow
• Redesign of HVAC basis heat
map
• Improved labour productivity
Cash on Cash ROI1 to 10%+ in Year 1
Note: 1. Can vary basis restaurant type, region and presence of brand extensions
Westlife Development | 2019 | Confidential | February 01, 2019 | 14 www.westlife.co.inNew Business Unit Economics (ROP 2.0)
Average
Investment of
~INR 25 mn
Stores typically need 2-3
years to establish,
depending upon the brand
awareness in the city
Year 1: Positive
contribution to ROM%
Year 3: Sales: INR 40-
45 mn; Cash ROI:
20%+
Westlife Development | 2019 | Confidential | February 01, 2019 | 15 www.westlife.co.inOur Restaurant Designs
EOTF Design Enhancing Customer Experience
Modern and contemporary store designs
Westlife Development | 2019 | Confidential | February 01, 2019 | 16 www.westlife.co.inOUR BRAND
Grow Baseline Sales
Westlife Development | 2019 | Confidential | February 01, 2019 | 17 www.westlife.co.inServicing multiple segments – A competitive
advantage
Menu : Strategic lever for driving AUV Burgers
Over 10 products with many
burgers that record annual
Chicken sales of Rs 1+ billion
Burger
Wraps
Pizza 5 wraps
Beverages
Desserts Sides
Strong sides offering
Delivery
Breakfast
Desserts
Indian fast food $130 million category
Others
Breakfast
McDonald’s globally has the highest average unit
Only organized WFF player in
volume of $2.4 million1 this space
$2+ billion market
McDonald’s India has wide exposure to the different
segments in QSR Beverages
WFF player with the widest
variety in this space
1 – Fortune India 2011 $4+ billion market
* Graphs not to scale, for representational purpose only
Westlife Development | 2019 | Confidential | February 01, 2019 | 18 www.westlife.co.inBrand extensions increase addressable
market and add more occasions
Total market segment exposure for McDonald’s*
In-store for celebrations,
bonding and hanging out
$0.6b $2.35b
McDelivery, Drive Thru and
$0.45b $1.75b breakfast for convenience
$1.3b
McCafé for experience
and indulgence
1,723
As we add brand extensions to
each restaurant, the results are
greater as a whole than the
Past market Delivery market New market Coffee and Total market
segment segment Specialty segment individual parts resulting in
exposure exposure beverages exposure 1+1+1=5
* Source : Euromonitor International - QSR Food Service Market, HRPL proprietary third party market segmentation study
Past market segment – Chicken, burger, pizza, other cuisine fast food + Ice cream parlors
Westlife Development | 2019 | Confidential | February 01, 2019 | 19 www.westlife.co.inGrowing baseline sales by various
initiatives and menu additions
Some of the initiatives and menu additions in TTM
Introduced Rice Bowls What’s Your Spice Fest Introduced Whole Egg Festival -
Wheat Buns McBreakfast
Introduced McSaver Combos Introduced Fruit Splash National Basketball
Association Partnership
Westlife Development | 2019 | Confidential | February 01, 2019 | 20 www.westlife.co.inGrowing baseline sales through brand
extensions
McCafé goal is to become the café destination built around the premium coffee
platform at affordable price having unique relevant offering options of food
Organized café market is expected to be USD 2.25
bn by 2020 from USD 1 bn in 2014
McCafé brings premium coffee to India – 100%
Arabica and hand crafted barista coffee
With McCafe, HRPL gets an opportunity to serve
customers at all hours and not just during peak
lunch and dinner time
Enter the coffee and specialty beverages arena to
broaden it’s opportunity beyond the QSR industry
Serves ~45 hot & cold beverages – cappuccinos,
smoothies, share shakes, frappes, iced teas & more
Overall the Company has 182 McCafes as of Dec
2018
Westlife Development | 2019 | Confidential | February 01, 2019 | 21 www.westlife.co.inGrowing baseline sales through brand
extensions
IF YOU CAN'T COME TO McDONALD'S, McDONALD'S WILL COME TO YOU
Online food delivery business is USD 1.6Bn in
FY2019-20 and is likely to double to USD 3.2Bn in
FY20-211
Customer convenience is the core of all our operations,
so it’s a way of extending ease and convenience by
delivering food at customers’ doorsteps
McDelivery services are available through our own
channels as well as third party aggregators.
– Digital and tech initiatives aid in driving robust
growth of ~4.3x in sales over last 4 years
Our competitive advantage:
– Operations (Out time and delivery time is lot lower
than most other QSR),
– Variety of food and beverages (most of the QSR
don’t have full-fledged beverage and Breakfast play),
– Strong reach and penetration,
– Food offers
Source: 1) 2018, Redseer Consulting Research
Westlife Development | 2019 | Confidential | February 01, 2019 | 22 www.westlife.co.inGrowing baseline sales through brand
extensions
Breakfast category was launched in 2010. McBreakfast, the first ever branded breakfast
category in India was introduced in 2017
McBreakfast offerings aims at providing wholesome nutritious breakfast rich in protein
Primary purpose is to add convenience to the fast paced lives of our customers
New breakfast menu is a good blend between the classic Continental and Indian offerings
- Veg & Egg Muffins, Masala Dosa Brioche, Scrambled Eggs, Hot Cake and Waffles
Westlife Development | 2019 | Confidential | February 01, 2019 | 23 www.westlife.co.inImproving sales through technology
Launched Global McDonald’s App in India – feel a part of the crowd
Custom-made for Customer
Brings customers to unique offers that are customized just for them. Based on their past
orders, it puts together all their favorites in different combos at unbelievable prices
Store Locator
Convenient store locator to find the nearest McDonald’s around
Integrated App
McDelivery is also integrated with the McDonald’s Global App for customer convenience
Provides convenience & customer is updated
Customer gets exclusive deals on food they love, both in-store deals and deals on McDelivery.
Also, makes it easy to redeem and enjoy great offers from mobile device anytime and anywhere.
Westlife Development | 2019 | Confidential | February 01, 2019 | 24 www.westlife.co.inBuilding trust and permissibility
…By constantly improving our food
McAloo tikki is a McVeggie has Whole wheat buns Up to 20% less
balanced meal 25% more dietary with sesame lining sodium in our
fibres products
40% less oil in our No artificial colour, Soft serve is 100% Most Breakfast
mayo; Up to 11% preservatives or milk patties are grilled
less calories in our flavours in our patties 96% fat free or steamed
burgers
Westlife Development | 2019 | Confidential | February 01, 2019 | 25 www.westlife.co.inCultural Sensitivity & Menu Localization
Only country to have
SEPARATE Vegetarian and
Non Vegetarian Kitchens
Adapting
popular forms
Local tastes like “Aloo Tikki” & “Rice meal” in a uniquely McDonald’s form like PUFF
Westlife Development | 2019 | Confidential | February 01, 2019 | 26 www.westlife.co.inFarm to Fork Supply Chain Model
– A Competitive Advantage
Return logistics
(for plastic crates)
Tier 2 Supplier Tier 1 Supplier Distribution & Logistics Service Provider Restaurant
Grower / Processing unit Inbound Distribution Outbound
Processor Transportation Center Transportation
Radhakrishna Foodland is sole service provider
• Lettuce growers Strong Long term
• Potato growers relationships with Dedicated • Noida Dedicated 292
• Poultry most of our suppliers fleet of • Mumbai fleet of multi- restaurants
• Coating systems / vendors refrigerated • Calcutta temp and across
trucks • Bangalore single temp 40 cities
trucks
Differentiating Factors
Temperature controlled movement and storage - utmost care taken of perishability & shelf life of each product
Major supply points network optimized – either close to source of raw material or close to market – reduction in food miles
Significant economies to the system - A result of the partnering and long term approach with Suppliers
Over 95% local sourcing
Westlife Development | 2019 | Confidential | February 01, 2019 | 27 www.westlife.co.inOUR PEOPLE
High Performance Culture
Westlife Development | 2019 | Confidential | February 01, 2019 | 28 www.westlife.co.inOur People – Our Employees
Total employee count – Over 9000
Talent Management & High Performance Culture
High potential assessment – program to identify and train future leaders of the
organization
Building a succession & talent pipeline – Ensure readiness of our talent pool to source
future positions which may emerge
Management Development Program – managers trained on skills like Behavioural
Event Interviewing skills, Situational Leadership workshop among many others
Training & Development
Company incurs ~1.25 lac training hours annually for restaurant level operations
across different formats and work areas
HRPL also conducts various management training programs and workshops
enabling them to improve on required skills and knowledge and be future managers
Westlife Development | 2019 | Confidential | February 01, 2019 | 29 www.westlife.co.inFINANCIAL DISCIPLINE
Grow Market Share & Margins
Westlife Development | 2019 | Confidential | February 01, 2019 | 30 www.westlife.co.inStrong SSSG momentum leading to
strengthening of baseline
Healthy SSSG for 14 consecutive quarters by
Sustained momentum in same store sales
focusing on delivering great customer
resulted in higher average sales per
experience, menu innovation and growth
restaurant (AUV) & operational profitability
across Delivery, McCafe and Breakfast
25.7%
25.1%
24.1%
FY15* FY16 FY17 FY18 FY19
20.7%
14.5%
8.7%
8.4%
8.4%
6.5%
5.1%
149.8
147.6
3.4%
3.1%
1.7%
136.9
1.0%
132.6
130.8
117.4
109.5
108.4
108.4
108.3
106.9
103.1
101.7
100.0
100.0
100.0
100.0
98.3
Q2 FY16
Q1 FY17
Q4 FY17
Q3 FY18
Q2 FY19
Q3 FY16
Q4 FY16
Q2 FY17
Q3 FY17
Q1 FY18
Q2 FY18
Q4 FY18
Q1 FY19
Q3 FY19
95.1
Q1 Q2 Q3 Q4
NOTE: *FY15 SSG normalized to base of 100
Westlife Development | 2019 | Confidential | February 01, 2019 | 31 www.westlife.co.inTrend in Sales & SSG
(Rs. In mn)
12,000 25%
11,349
10,624
21.1% 20%
10,000
9,308
15.8%
8,334 15%
8,000 7,643
7,403
10%
6,000
5%
4.0%
1.8%
4,000
0%
2,000 -5.9%
-6.4% -5%
- -10%
FY14 FY15 FY16 FY17 FY18 9MFY19
Westlife Development | 2019 | Confidential | February 01, 2019 | 32 www.westlife.co.inTrend in Gross Margins
63.9%
62.6%
60.7%
60.0%
58.4%
56.9%
FY14 FY15 FY16 FY17 FY18 9MFY19
Westlife Development | 2019 | Confidential | February 01, 2019 | 33 www.westlife.co.inTrend in ROM & Op. EBITDA
Restaurant Operating Margins (ROM)
14.9%
13.1%
12.6% 11.9%
11.0%
8.7%
FY14 FY15 FY16 FY17 FY18 9MFY19
Operating EBITDA Margins
9.4%
7.5%
7.3%
5.9% 5.3%
2.7%
FY14 FY15 FY16 FY17 FY18 9MFY19
Westlife Development | 2019 | Confidential | February 01, 2019 | 34 www.westlife.co.inTrend in PAT & Cash Profits
(Rs. In mn)
Profit After Tax (PAT) Cash Profits
961
889
332
129 560
488
438
10
273
-121
-206
-291 FY14 FY15 FY16 FY17 FY18 9MFY19
FY14 FY15 FY16 FY17 FY18 9MFY19
Westlife Development | 2019 | Confidential | February 01, 2019 | 35 www.westlife.co.inShareholding Pattern of WDL
Strong Promoter Commitment
Shareholding Pattern*
FII and
Public
Promoter 38%
Westlife 100% Group
Hardcastle
Development Ltd Restaurants Pvt. 62%
(BSE : 505533) Ltd.
Major Public Institutional Shareholders
• Arisaig India Fund Limited
• SBI Mutual Fund
• Bay Capital Investments
• Tree Line Investment Management
*Shareholding Pattern as on Dec 31, 2018
Westlife Development | 2019 | Confidential | February 01, 2019 | 36 www.westlife.co.inTHANK YOU Westlife Development | 2019 | Confidential | February 01, 2019 | 37 www.westlife.co.in
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