Westlife Development Ltd - Hardcastle Restaurants Pvt. Ltd. Corporate Presentation May, 2019
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Westlife Development Ltd.
Hardcastle Restaurants Pvt. Ltd.
Corporate Presentation
May, 2019
Westlife Development | 2019 | Confidential | May, 2019 | 1 www.westlife.co.in
Westlife Development Ltd.
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 realised. Some of these expectations may be
based upon assumptions or judgements 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 realised 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 | May, 2019 | 2 www.westlife.co.in
McDonald’s Leads Globally
Forbes 2018 Brand Ranking - World’s 11th most valuable brand
# 13. Mercedes-
# 1. Apple # 5. Amazon # 9. Toyota Benz
# 2. Google # 6. Coca-Cola # 10. AT&T # 14. Intel
# 3. Microsoft # 7. Samsung # 11. McDonald’s # 15. Louis Vuitton
# 4. Facebook # 8. Disney # 12. GE
Westlife Development | 2019 | Confidential | May, 2019 | 3 www.westlife.co.in
Recognised in India as well
Go Forth & Multiply Award 2017 Great Place to Work® Award - 2018
Best GTM concepts for Among Top 10 companies to work for in
new restaurant opening and EOTF Retail Industry – 2018
(4th year in a row)
Won the PCI* Award, 2019
for being among the Best
Fulcrum Gold Award - 2018
50 PCI Companies
Best Consumer Products
and Retail sector campaign
for ‘Flavours without
Borders’ campaign
Fortune India ‘Next 500’- 2016
*Note: PCI is People Capital Index Giants of Tomorrow
Westlife Development | 2019 | Confidential | May, 2019 | 4 www.westlife.co.in
WFF - A nascent but rapidly growing category
Estimated growth rates IEO Monthly
over 2017-22 Frequency 15 Year
CAGR 4.7%
8.9% 20
15 Year 18
CAGR 9.7%
9.2%
12.1
8.8% 10
8.6
13.4%
2003
2013 3
IEO USD 131 bn IFF USD 19.8 bn 2018
QSR USD 21.6 bn WFF USD 1.8 bn Mumbai Benchmark Asian City
Source: Euromonitor
IEO: Informal Eating Out; IFF: Indian Fast Food; WFF: Western Fast Food Source: Brand Track, Mumbai and Internal McDonald’s sources
Westlife Development | 2019 | Confidential | May, 2019 | 5 www.westlife.co.in
About Westlife Development Limited
WDL through its One of the fastest grow-
296* restaurants
subsidiary HRPL operates ing players in India’s
across 41 cities
McDonald’s; 62% Quick Service Restaurant
(as of Mar, 2019)
promoter holding (QSR) sector
Modern and contemporary store 190 McCafé's and
designs enhancing customer 216 McDelivery
experience (as of Mar, 2019)
Wide range of menu Good Food Story-
Robust Supply Chain;
offering, servicing all Continuous improvement
Integrated
day and providing value to provide wholesome and
Farm to Fork model
for money nutritious food
Note: WDL: Westlife Development Ltd; HRPL: Hardcastle
Restaurants Private Ltd.
* System-wide HRPL stores
Westlife Development | 2019 | Confidential | May, 2019 | 6 www.westlife.co.in
Evolution of WDL and Key Milestones
STORE ADDITIONS
FY95 – FY97 FY01 – FY03 FY13 – FY15
FY07 – FY09
1995 - Started as a Joint Dec, 2001 - Drive-thru Oct, 2013 - McCafe started in
Sept, 2007 - 50th HRPL
Venture Oct, 1996 - 1st store started at Mumbai Mumbai Jun, 2014 - 200th
store in Mumbai
in Mumbai (Kalamboli) HRPL store in Mumbai
FY04 – FY06 FY10 – FY12 FY16 – FY19
Mar, 2004 - MDS started in May, 2010 - Ownership Sept, 2015 - 50th McCafe
Mumbai Oct, 2004 - Entered status changed to DL* Mar, 2016 - 250th HRPL store in
south market Oct, 2010 - 100th HRPL Mumbai Dec, 2016 - 100th
Note: *DL – Development License
store in Bengaluru McCafe
Stores are system-wide HRPL stores Mar, 2018 - 150th McCafe
Jan, 2019 – Launched
McDonald’s App
PRODUCT PLATFORMS and INNOVATIVE PRODUCT ADDITIONS
McAloo Chicken McFlurryTM McEggTM Veg Pops Chicken Wings Indi McSpicyTM Good Food
TikkiTM McNuggetsTM 2011 2012 2013 2014 2015 Journey; Rice
2004 2010 Bowls 2018
Breakfast McSpicyTM Spice Fest Masala Grill Royale Chicken Pops Maharaja MacTM
2010 2011 2012 2013 2014 2015 2016/17
Westlife Development | 2019 | Confidential | May, 2019 | 7 www.westlife.co.in
Strategic Levers
Our Restaurant Our Brand Our People
Running Great Food – Menu Talent
Restaurants and Value Management
Right Location and High Performance
Brand Extensions
Right Economies Culture
Modern and Trust and Training and
Contemporary Designs Permissibility Development
Financial Discipline
Westlife Development | 2019 | Confidential | May, 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 working 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 lakh hours in training programs at restaurant level and has
various structured training programs for senior management
Westlife Development | 2019 | Confidential | May, 2019 | 9 www.westlife.co.in
Vision 2022
BROADENING
GROW MARKET SHARE
GROW BASELINE SALES ACCESSIBILITY OF BRAND
AND MARGIN
McDONALD’S
$
• Sales growth to Rs. 20 - 25 bn • Mid to high single digit SSSG% • 400-500 restaurants
• Take EBITDA margin from low • McCafe: 75 to 300-350 Presence in 45+cities
to mid teens
• McDelivery: 124 to 300-325 • Investment of Rs. 5+bn
• Restaurant level cash on cash • 80-100 EoTF restaurants
returns >20%
• Leverage other brand
extensions and menu in future
Westlife Development | 2019 | Confidential | May, 2019 | 10 www.westlife.co.inOUR RESTAURANT
Broadening Accessibility of Brand McDonald's
Westlife Development | 2019 | Confidential | May, 2019 | 11 www.westlife.co.inOur Footprint
Total restaurants – 296*
Presence in 41 cities
(as of Mar, 2019)
0% 2%
MADHYA PRADESH 5 3%
2%
7%
GUJARAT 40 1% 14% 1%
CHHATTISGARH 2
MAHARASHTRA 129 19%
TELANGANA 28
KARNATAKA 55
9% 44%
GOA 2
ANDHRA PRADESH 5
PUDUCHERRY 1
Madhya Pradesh Gujarat Chhattisgarh
KERALA 8 Maharashtra Telangana Karnataka
Goa Andhra Pradesh Puducherry
TAMIL NADU 21
Kerala Tamil Nadu
Note: * System-wide HRPL stores. India map not to scale.
Westlife Development | 2019 | Confidential | May, 2019 | 12 www.westlife.co.inStore Additions
Over 3x stores in last ~9 years
FY-10 FY-11 FY-12 FY-13 FY-14 FY-15 FY-16 FY-17 FY-18 FY-19
87 107 129 161 184 209 236 258 277 296*
* System-wide HRPL stores.
Westlife Development | 2019 | Confidential | May, 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 ROP 2.0 ROP 2.0
• New external Façade 2013-14 Target Actual
• Pre-fabrication of parts of the building Avg.
structure Development 1x 0.8x 0.7x
Cost1
Equipment Options
• Localisation of seating and kitchen Cash 24 12-18 ~12
equipment, yet providing an upgraded Break-even1 Months Months Months
look
Positive
Negative Break margins
Operating Costs ROM %1 margins even and
cash flow
• Use of energy saving equipments
• 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 | May, 2019 | 14 www.westlife.co.inNew Business Unit Economics (ROP 2.0)
Average Investment
of ~ Rs. 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: Rs. 40-45 mn;
Cash ROI 20%+
Westlife Development | 2019 | Confidential | May, 2019 | 15 www.westlife.co.inOur Restaurant Designs
EoTF design enhancing customer experience
Modern and contemporary store designs
Westlife Development | 2019 | Confidential | May, 2019 | 16 www.westlife.co.inOUR BRAND
Grow Baseline Sales
Westlife Development | 2019 | Confidential | May, 2019 | 17 www.westlife.co.inServicing multiple segments –
A competitive advantage Burgers
Over 10 products with many
Menu: Strategic lever for driving AUV burgers that record annual sales
of Rs. 1+bn
Chicken
Wraps
Burger 5 wraps
Pizza
Beverages Sides
Strong sides offering
Desserts
Delivery
Desserts
Breakfast $130 mn category
Indian fast food
Breakfast
Others Only organised WFF player in this
McDonald’s globally has the highest space $2+ bn market
average unit volume of $2.4 mn1
McDonald’s India has wide exposure Beverages
to the different segments in QSR WFF player with the widest
variety in this space
1 – Fortune India 2011 $4+ bn market
* Graphs not to scale, for representational purpose only
Westlife Development | 2019 | Confidential | May, 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
$0.45b $1.75b
McDelivery, Drive-thru and
breakfast for convenience
$1.3b
McCafé for experience and
indulgence
Past market Delivery New market Coffee and Total market As we add brand extensions to each
segment market segment Specialty segment restaurant, the results are greater as a
exposure exposure beverages exposure whole than the individual parts resulting in
* Source: Euromonitor International - QSR Food Service Market, HRPL proprietary third party market segmentation study 1+1+1=5
Past market segment - Chicken, burger, pizza, other cuisine fast food + ice cream parlours
Westlife Development | 2019 | Confidential | May, 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 Wheat Buns Egg Festival - McBreakfast
new new
National Basketball
Introduced McSaver Combos Introduced Fruit Splash
Association Partnership
Westlife Development | 2019 | Confidential | May, 2019 | 20 www.westlife.co.inGrowing baseline sales through brand extensions
McCafe’s goal is to become a cafe destination built around premium coffee at affordable prices
while also offering unique relevant food options
• Organised cafe market is expected to be $2.25 bn by 2020 from USD 1 bn in 2014
• McCafe brings premium coffee to India - 100% Arabica and handcrafted 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 its opportunity beyond
the QSR industry
• Serves ~45 hot & cold beverages - cappuccinos, smoothies, share shakes,
frappes, iced teas & more
• Overall the Company has 190 McCafes as of Mar 2019
Westlife Development | 2019 | Confidential | May, 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 $ 1.6 bn in FY2019-20 and is likely to double to
$ 3.2 bn in FY20-21
• 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:
o Operations (Out time and delivery time is lot lower than most other QSR),
o Variety of food and beverages (most of the QSR don’t have full-fledged beverage
and breakfast play),
o Strong reach and penetration
o Food offers
Westlife Development | 2019 | Confidential | May, 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 | May, 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 customised just for them. Based on their past orders, it puts
together all their favourites 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 and 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 | May, 2019 | 24 www.westlife.co.inBuilding trust and permissibilit
…By constantly improving our food
McAloo TikkiTM is a McVeggieTM has Whole Wheat Buns Up to 20% less sodium
balanced meal 25% more dietary with sesame lining in our products
fibres
40% less oil in our No artificial colour, Soft serve is 100% Most breakfast
mayo; Up to 11% less preservatives or flavours in milk 96% fat free patties are grilled or
calories in our burgers our patties steamed
Westlife Development | 2019 | Confidential | May, 2019 | 25 www.westlife.co.inCultural Sensitivity & Menu Localisation
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 | May, 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 Centre Transportation
Radhakrishna Foodland is sole service provider
• Lettuce growers Strong long-term Dedicated fleet • Noida Dedicated fleet of 296* restaurants
• Potato growers relationships with of refrigerated • Mumbai multi-temp and across 41 cities
• Poultry most of our trucks • Kolkata single temp *System-wide
• Coating systems suppliers / vendors • Bengaluru trucks HRPL stores
Differentiating Factors
• Temperature controlled movement and storage - utmost care taken of perishability and shelf life of each product
• Major supply points network optimised - 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 | May, 2019 | 27 www.westlife.co.inOUR PEOPLE
High Performance Culture
Westlife Development | 2019 | Confidential | May, 2019 | 28 www.westlife.co.inOur People - Our Employees
• Total employee count - Over 9000
Talent Management and High Performance Culture
• High potential assessment - Program to identify and train future leaders of the organisation
• Building a succession and 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 and Development
• Company incurs ~1.25 lakh 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 | May, 2019 | 29 www.westlife.co.inFINANCIAL DISCIPLINE
Grow Market Share and Margin
Westlife Development | 2019 | Confidential | May, 2019 | 30 www.westlife.co.inStrong SSSG momentum leading to
strengthening of baseline
Healthy SSSG for 15 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) and operational profitability
across Delivery, McCafe and Breakfast
FY15* FY16 FY17 FY18 FY19
25.7%
25.1%
24.1%
20.7%
14.5%
149.8
147.6
144.6
136.9
132.6
8.7%
130.8
8.4%
8.4%
6.5%
5.6%
117.4
5.1%
109.5
108.4
108.4
108.3
3.4%
106.9
3.1%
103.1
101.7
1.7%
100.0
100.0
100.0
100.0
1.0%
98.3
95.1
Q2 FY16
Q3 FY16
Q4 FY16
Q1 FY17
Q2 FY17
Q3 FY17
Q4 FY17
Q1 FY18
Q2 FY18
Q3 FY18
Q4 FY18
Q1 FY19
Q2 FY19
Q3 FY19
Q4 FY19
Q1 Q2 Q3 Q4
NOTE: *FY15 SSG normalised to base of 100
Westlife Development | 2019 | Confidential | May, 2019 | 31 www.westlife.co.inTrend in Sales & SSG
(Rs. in mn)
16,000 20%
14,016
14,000
17.0% 15%
15.8%
12,000 11,349
10%
10,000 9,308
8,334
8,000 7,403 7,643 5%
4.0%
6,000
1.8% 0%
4,000
-5%
2,000
-6.4% -5.9%
- -10%
FY14 FY15 FY16 FY17 FY18 FY19
Westlife Development | 2019 | Confidential | May, 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 FY19
Westlife Development | 2019 | Confidential | May, 2019 | 33 www.westlife.co.inTrend in ROM & Op. EBITDA
Restaurant Operating Margins (ROM)
14.6%
12.6% 13.1%
11.9% 11.0%
8.7%
FY14 FY15 FY16 FY17 FY18 FY19
Operating EBITDA Margins
9.1%
7.3% 7.5%
5.9% 5.3%
2.7%
FY14 FY15 FY16 FY17 FY18 FY19
Westlife Development | 2019 | Confidential | May, 2019 | 34 www.westlife.co.inTrend in PAT & Cash Profits
(Rs. in mn)
Profit After Tax (PAT) Cash Profits
1,258
403
889
129
10
560
488
438
-121 273
-206
-291
FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY18 FY19
Westlife Development | 2019 | Confidential | May, 2019 | 35 www.westlife.co.inShareholding Pattern of WDL
Strong Promoter Commitment
Shareholding Pattern*
FII and
Public
Promoter 38%
Group
Westlife Hardcastle
100% 62%
Development Ltd. Restaurants
(BSE: 505533) Pvt. Ltd.
• Major Public Institutional Shareholders
• Arisaig India Fund Limited
• SBI Mutual Fund
• Bay Capital Investments
• Tree Line Investment Management
• Wellington Management Company
*Shareholding Pattern as on Mar 31, 2019 • ICICI Prudential Life Insurance Company
Westlife Development | 2019 | Confidential | May, 2019 | 36 www.westlife.co.inTHANK YOU
IR Contact
For additional information:
Devanshi Dhruva
Investor Relations
(+91 22) 4913 5306
devanshi.dhruva@mcdonaldsindia.com
www.westlife.co.in
Westlife Development | 2019 | Confidential | May, 2019 | 37 www.westlife.co.inYou can also read
