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The year 2022 was sombre—even stormy in parts—for India’s stock market. The Nifty 50, a key index, rose a mere 4%, following a 24% surge in 2021. But Westlife Foodworld Ltd couldn’t have asked for a better year. The McDonald’s India franchisee’s shares shot up by 40% in 2022, far outperforming those of every other fast-food-chain operator.
It was Westlife’s best year on the bourses since 2017, with its market capitalisation now at Rs 12,000 crore (~$1.4 billion).
For years, rival Jubilant FoodWorks Ltd, which runs
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in India, was the go-to fast-food company for public-market investors. But that changed in 2022 when Jubilant’s shares tanked by almost 30%, and Westlife became an investor favourite, even beating the two franchisees of
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and KFC—Devyani International Ltd and Sapphire Foods India Ltd—that listed in 2021.
This rally is a result of multiple shifts in Westlife’s business in recent years. First, its decision to expand its coffee-house-style kiosk McCafe to more than four in every five McDonald’s stores from just one in every three in 2016. This is significant because McCafe beverages enjoy gross margins of over 80%, according to Preeyam Tolia, an analyst at brokerage Axis Securities Ltd. On the other hand, burgers—McDonald’s mainstay—offer 60-70% gross margins depending on their prices.
Then, there were the fortuitous gains brought on by the pandemic. Unlike pizzas, burgers were not considered delivery-friendly. But that changed with the Covid-19-induced lockdowns. “Delivery was maybe 15% of their revenue three years ago. They wouldn’t have thought it would go up to 35%,” says a second analyst with a domestic brokerage. They and a few others The Ken spoke with for this story did not want to be named as they’re not authorised to speak to the media.
The most fascinating, and perhaps even the most consequential in the long term, among the factors driving the rally was the addition of one item to the McDonald’s menu—fried chicken. But it’s not just fast food; it’s a category in its own right in a country where chicken is the
meat of choice
meat of choice
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Westlife rolled out McSpicy Fried Chicken in the southern states in May 2020, and the diversification has since become a key point of discussion during the company’s quarterly earnings calls.