Westlife Foodworld Ltd Management Discussions

Economic Review

Global Economy

Global economic growth is expected to remain moderate over the near term, reflecting an uneven and evolving macroeconomic environment. According to the International Monetary Fund (IMF), global growth is projected at 3.1% in 2026 and 3.2% in 2027.

While easing trade tensions have provided some stability to global commerce, the broader macroeconomic environment continues to be shaped by a complex interplay of geopolitical developments, policy shifts, and technological transitions. Recent tensions in the Middle East, particularly the Israel-Iran conflict, have further influenced the near-term outlook through their impact on global energy markets, with the effects varying across economies depending on their energy dependencies and policy responses.

Net energy-importing regions, including the European Union and several major Asian economies, are likely to face heightened pressures from rising energy costs and potential supply disruptions. At the same time, elevated price levels and uneven inflation trends across regions continue to weigh on real incomes, driven by persistent supply-side disruptions, geopolitical uncertainties, and climate-related risks.

Outlook

Looking ahead, the global economic outlook remains cautiously stable but subject to downside risks. Growth is expected to remain subdued in the near term, with ongoing geopolitical tensions, energy price volatility, and tighter financial conditions continuing to shape the macroeconomic landscape.

Inflation is likely to gradually ease, although risks remain from supply disruptions and external shocks. In this environment, policy agility and structural resilience will be critical.

Over the medium term, advancements in technology, gradual normalisation of global supply chains, and stabilisation of geopolitical conditions are expected to support a more balanced and sustainable growth trajectory.

Indian Economy

Indias economy has remained resilient, supported by strong domestic demand, a stable financial system, and improving macroeconomic fundamentals, even as it navigates a phase of heightened global uncertainty.

Growth is expected to moderate to ~6.9% in FY 2026-27 from 7.7% in FY 2025-26, reflecting the impact of rising input costs, supply chain disruptions, elevated energy prices, and softer global demand. However, services activity and domestic consumption are expected to remain key growth drivers, supported by rising urban demand, improving rural sentiment, and steady discretionary spending.

The RBI has pegged FY 2025-26 growth at 7.7% while projecting a moderation in FY 2026-27 due to geopolitical tensions, elevated energy prices, and external demand pressures.

These headwinds, along with tightening global financial conditions, are contributing to inflationary pressures, currency volatility, and potential stress on trade balances. Despite this, Indias strong fundamentals, including robust forex reserves, a healthier banking sector, and ongoing structural reforms, continue to provide resilience.

Outlook

Going forward, Indias growth trajectory is expected to remain stable but cautious in the near term. Domestic demand, infrastructure investment, and improving capacity utilisation are likely to underpin growth, while inflation is projected to average ~4.6% in FY 2026-27, with upside risks from energy prices and weather- related uncertainties.

The RBI is expected to retain policy flexibility, prioritising macroeconomic stability amid evolving global conditions. Over the medium term, structural drivers such as digitalisation, manufacturing expansion, and continued policy reforms are expected to sustain Indias position as one of the fastest-growing major economies, despite intermittent global volatility.

QSR Industry Review

Global

The global quick service restaurant (QSR) market is estimated at $1.04 trillion in 2025 and is projected to grow from $1.14 trillion in 2026 to approximately $2.50 trillion by 2035, registering a CAGR of 9.16% over the period.

As a high-growth, high-velocity segment of the broader foodservice industry, the QSR sector is characterised by speed of service, consistent quality, affordable pricing, and high customer throughput, making it well-positioned to capitalise on evolving consumer lifestyles and increasing demand for convenience-driven dining options.

Key trends shaping the QSR market Value-driven consumption

Persistent inflation has made value a defining factor in consumer decision-making, with nearly 75% of QSR customers prioritising value-led offerings when choosing where to dine. In response, brands are strengthening their everyday value proposition through combo meals, targeted promotions, loyalty rewards and personalised digital offers, balancing affordability with quality to drive guest traffic, enhance customer loyalty and sustain long-term growth.

Convenience-led service models

The growing consumer preference for speed, convenience and seamless access has reshaped QSR store formats and service models. Brands are increasingly strengthening delivery, takeaway, digital ordering and other off-premise channels to improve accessibility, reduce wait times and serve customers across multiple consumption occasions.

Loyalty and personalisation

Digital ecosystems and data-driven insights are enabling QSR brands to implement targeted loyalty programmes, enhancing customer engagement, improving personalisation, and driving higher frequency and lifetime value.

Nutrition-conscious menu choices

Evolving consumer preferences are driving demand for more balanced and transparent menu options. In response, QSR players are expanding their menu with more nutritious offerings, allergen-free choices, and clean label ingredients.

Sustainability and ESG focus

Heightened consumer awareness and regulatory pressures are prompting QSR operators to adopt sustainable practices, including eco-friendly packaging, reduction in single-use plastics, and broader environmental and social responsibility initiatives.

Outlook

The QSR industry is rapidly evolving into a more tech-enabled, sustainable, and consumer-centric ecosystem. Convenience, speed, affordability, and consistent quality continue to shape consumer preferences, prompting operators to strengthen digital capabilities, delivery ecosystems, and operational efficiencies. Consolidation and strategic partnerships are gaining momentum as players seek to enhance scale, strengthen supply chains, and expand customer reach.

Investment activity remains strong, with focus on digital platforms, delivery infrastructure, and sustainable operations. Going forward, advancements in AI, automation, and data analytics, coupled with rising investor interest, are expected to drive innovation, improve service efficiency, and support long-term growth for the QSR industry.

Indian

Indias quick service restaurant (QSR) market is poised for strong growth, expanding from $27.8 billion in 2025 to $30.4 billion in 2026, and further to $47.3 billion by 2031, at a CAGR of 9.3%.

This growth is underpinned by structural shifts in urban consumption patterns, with digital channels increasingly driving transactions and reshaping customer engagement. The rise of delivery platforms and strong growth in order volumes are further accelerating market expansion.

Three key forces continue to drive momentum in the sector: the rising demand for convenience-led dining experiences that prioritise accessibility and seamless ordering, deep menu localisation that enhances relevance and competitiveness, and favourable demographic trends led by Gen Z consumers, who are shaping demand through digitally influenced consumption behaviour.

Collectively, these dynamics are supporting same- store sales growth, enabling rapid network expansion, and unlocking significant opportunities across tier 2 and tier 3 markets, even as operators navigate ongoing cost pressures.

The organised segment is expected to grow at nearly twice the pace of the unorganised segment, positioning it to surpass the latter by 2030. This shift will be driven by evolving consumer preferences, increasing formalisation, and stronger brand trust.

Key growth drivers Favourable demographics

Indias young population continues to support QSR demand, with the median age remaining under 30, indicating a large, consumption-driven cohort.

This demographic increasingly prefers convenient, affordable, and on-the-go dining, aligning well with the QSR value proposition.

Rapid urbanisation

Indias urban population has steadily increased over the years, with a rising concentration of consumers in cities driving demand for organised food services. Expanding urban infrastructure, such as airports and business hubs, continues to create high-footfall locations, enabling deeper QSR penetration.

Rising disposable incomes

Per capita disposable income has shown a consistent upward trajectory and is expected to grow further in the coming years. This increase in purchasing power is driving higher discretionary spending, boosting dining- out frequency while also supporting premiumisation and expansion into tier 2 and tier 3 markets.

Technological advancements

Strong growth in smartphone penetration and digital adoption is accelerating app-based ordering, digital payments, and personalised engagement. At the same time, AI-led analytics and automation are enhancing operational efficiency and enabling more targeted customer offerings.

Menu innovation & localisation

Evolving consumer preferences are driving demand for transparent and more balanced food choices.

QSR players are responding through more nutritional menu innovations, while also localising global menus to suit Indian tastes, delivering a balance of familiarity and novelty.

Omnichannel strategy

QSR marketing involves targeted communication across digital and offline channels to attract, engage, and retain customers.

Mobile apps have become central to building loyalty through convenience and personalised experiences. An omnichannel approach, spanning brand-owned delivery, third-party aggregator orders, drive-thru formats, and self-ordering kiosks, enhances accessibility and customer experience.

Convenience

Convenience is reshaping how QSR brands engage with customers. With the rise of mobile ordering, consumers expect seamless, fast, and intuitive digital experiences. Delivery has redefined dining choices, with a clear demand for speed, freshness, accuracy, and on-time service—anytime, anywhere.

Outlook

The QSR industry is transitioning towards a more disciplined and consumer-centric growth model. Success will increasingly be defined by the ability to deliver consistent quality, strong value perception, and seamless customer experiences, moving beyond a sole focus on speed and scale.

Brands are expected to sharpen core fundamentals, including unit economics, operational efficiency, and menu simplification, while maintaining relevance through localisation and continuous innovation.

At the same time, technology will play a pivotal role, with data analytics, AI, and digital ecosystems enabling personalised engagement, enhanced efficiency, and stronger customer loyalty.

In an increasingly competitive and value-sensitive environment, the ability to balance affordability with experience will be critical. Cultural relevance, shaped by social media and evolving consumer preferences, will further influence brand positioning.

Overall, the sector remains well-positioned for sustainable growth, led by players that effectively combine value, consistency, and innovation with disciplined execution.

Company overview

Westlife Foodworld is among the fastest-growing players in Indias quick service restaurant (QSR) sector.

Through its wholly owned subsidiary, Hardcastle Restaurants Private Limited (HRPL), the Company owns and operates McDonalds restaurants across West and South India.

Over the years, the Company has built a strong and expanding presence, with 478 restaurants across 78 cities. Its restaurant network is complemented by a range of customer-focused platforms, including McDelivery, McCafe, drive-thrus, dessert kiosks, McBreakfast, and select 24^7 restaurants.

The Company offers a wide menu portfolio comprising burgers, wraps, beverages, and desserts, with almost every restaurant featuring an in-house McCafe experience. Supported by a workforce of 10,473 employees, its operations are anchored in the core pillars of the McDonalds system: everyday value, convenience, local relevance, consistent quality, and disciplined execution.

Together, these pillars enable the Company to deliver a consistent, convenient, and customer-centric experience across its restaurant network.

Key strengths

Everyday value, Everyday choice

Despite a challenging operating environment, Westlife Foodworld has continued to prioritise affordability through a well-defined value platform and disciplined pricing strategy.

The introduction of Everyday Value Meals at Rs.99 drove strong dine-in traction, reflecting robust consumer response to accessible price points and reinforcing affordability credentials.

Strong digital ecosystem

A robust digital ecosystem continues to strengthen customer engagement and convenience, supported by growing app adoption and seamless omnichannel experiences.

Leveraging data-driven customer insights, the Company delivers personalised offers, targeted marketing campaigns and enhanced interactions that drive repeat visits, increase customer frequency and build long-term brand loyalty.

	FY 2025-26	FY 2024-25
Digital-led Sales	76%	75%
Monthly Active Users	3.5 mn	3.0 mn
Cumulative App Downloads	52 mn	41 mn

Building brand affinity through consumer-centric campaigns

We strengthened brand relevance through targeted marketing, digital engagement, cultural moments and merchandise-led campaigns that resonated with consumers. Complementing this, limited-time offerings and initiatives such as the #SipCheck and Merry Meal generated significant consumer engagement, with merchandise sales were well ahead of plan, underscoring the Companys ability to effectively combine value with compelling brand experiences, and thus, reinforcing brand affinity, consumer loyalty and McDonalds cultural relevance.

Expanding footprint across high-growth markets

Prudent expansion beyond metro cities, alongside continued densification in key markets, to capture emerging demand. Presence expanded across 9 cities in FY 2025-26, supported by a diversified portfolio of dine- in and drive-thrus, with 100% penetration of McCafes, and Experience-of-the-Future (EOTF) formats, ensuring a consistent experience across dayparts.

Store expansion

	FY 2025-26	FY 2024-25
Store Presence	478	438
Cities	78	69

Omnichannel approach

Advancement of the in-store experience, McDonalds App, self-ordering kiosks (SOKs), McDelivery and aggregator platforms to deliver a seamless, consistent experience across channels.

Better choices, Smarter nutrition

Collaboration with CSIR-CFTRI to develop scientifically backed, nutrient-rich offerings. Expansion of better-for-you options, including millet- based buns and a plant-based Protein Slice, aligned with evolving consumer preferences.

Business progress

FY 2025-26 was a year of disciplined execution, strategic investments and progressive recovery. We entered the year amid a subdued consumption environment, with discretionary spending and eating-out frequency remaining under pressure. While demand remained muted, we stayed focused on the levers within our control, strengthening our consumer value proposition, enhancing guest experience, improving operational efficiencies and investing behind long-term growth opportunities.

During the first half of the year, our priority was to reinforce the fundamentals of the business. We sharpened our everyday value platform, strengthened regional leadership to accelerate growth in South India, continued to invest in digital capabilities and expanded our network through a disciplined approach to site selection. Despite a challenging operating environment, we consistently outperformed the broader market, gained market share and delivered resilient financial performance supported by disciplined cost management and supply chain efficiencies.

As the year progressed, our strategic initiatives began translating into encouraging operating trends. A stronger focus on everyday value, supported by product innovation, sharper digital engagement and hyperlocal marketing, helped stabilise guest counts and improve consumer traction. Our omnichannel ecosystem continued to deepen customer engagement, while self-ordering technologies and our delivery platforms enhanced convenience, personalisation and repeat visits. At the same time, prudent cost governance enabled us to sustain healthy margins while continuing to invest in longterm brand building.

The second half of the year marked a clear turning point. Guest count momentum steadily improved, driven by the successful rollout of our everyday value offerings and stronger consumer engagement initiatives. Positive comparable guest growth during the latter part of the year reinforced our confidence that the strategic actions undertaken earlier were beginning to deliver tangible results. Importantly, these gains were achieved while maintaining profitability, expanding our restaurant network and preserving financial discipline.

We concluded FY 2025-26 from a position of greater strength. Revenue growth remained resilient, guest counts returned to positive territory, digital engagement reached new milestones and our store network expanded at a record pace. Continued investments in technology, McCafe, modern store formats and delivery capabilities further strengthened our competitive position while enhancing the customer experience across every touchpoint.

Outlook

As we move into FY 2026-27, we are encouraged by the improving demand environment and the positive guest count momentum witnessed towards the close of FY 2025-26. While we remain mindful of the evolving macroeconomic landscape, we believe the foundations built over the past year position us well for sustained growth.

Our priorities remain clear—accelerating guest count-led growth through a compelling everyday value proposition, strengthening brand affinity through relevant innovations and consumer engagement, scaling our digital ecosystem, prudently expanding our restaurant footprint, and driving operational excellence across the business. Supported by a strong omnichannel platform, robust unit economics and a disciplined execution framework, we are confident of building on the momentum achieved in FY 2025-26 and delivering sustainable, profitable growth over the long-term.

Strategy

Menu relevance and marketing

Westlife aims to strengthen leadership across key dayparts by enhancing brand relevance through focused menu strategy and targeted marketing. By evolving core offerings and introducing occasion- led products, the Company seeks to increase guest frequency and expand share of consumption across breakfast, lunch, dinner, and snacking occasions.

Omnichannel experience

The Company is advancing its omnichannel presence by integrating dine-in, drive-thru, takeaway, and digital channels. This approach ensures a seamless and consistent customer experience, while leveraging data and technology to enable personalised engagement and improve customer lifetime value.

Network expansion

Westlife is accelerating store expansion with a focus on underpenetrated markets, beyond metro cities, while strengthening its presence in existing markets. A balanced mix of formats, including drive-thrus and EOTF stores, supports scalable and efficient growth.

Lead with performance

The Company continues to prioritise operational excellence through strong unit economics, disciplined cost management, and technology-led efficiencies. This performance-driven approach supports sustainable margin expansion, enables reinvestment into growth, and drives long-term value creation.

Financial highlights

FY 2025-26 revenue grew by 5.4% year-on-year to Rs.26.3 billion, demonstrating the resilience of the business model amid a challenging operating environment. Reported gross margin stood at 69.9%, compared to 70.1% in FY 2024-25. The optical reduction in reported gross margin was primarily due to the regrouping of processing charges from other operating expenses to cost of goods sold, with no impact on EBITDA or PAT. On a like-for-like basis, gross margin improved by 140 basis points, from 66.3% to 67.7%, supported by supply chain efficiencies and robust cost governance. Restaurant operating margin expanded by 100 bps to 20.3%, while operating EBITDA margin remained stable at 13.2%. Cash profit after tax stood at ~ Rs.2.4 billion, representing 9% of sales.

Financial ratios

	FY 2025-26	FY 2024-25	Change
Debtors Turnover (x)	145.1	137	5.7%
Inventory Turnover (x)	10.5	10.4	1.0%
Interest Coverage Ratio (x)	1.2	1.9	-35.8%
Debt Equity Ratio (x)	0.5	0.4	20.9%
Operating Profit Margin (%)	13.2%	13.2%	0.0%
Net Profit Margin (%)	1.2%	0.5%	146.3%
Return on Net Worth (%)	5.3%	2.2%	140.4%

Financial overview

Particulars	FY 2025-26	%	FY 2024-25	%
Sales	26,255.6	100.0%	24,911.9	100.0%
Y-o-Y Sales Growth %	5.4%		4.2%
Food & Paper	7,908.7	30.1%	7,452.8	29.9%
Gross Profit	18,346.9	69.9%	17,459.2	70.1%
Payroll & Benefits	2,808.5	10.7%	2,581.5	10.4%
Royalty	1,252.2	4.8%	1,269.9	5.1%
Other Operating Expenses	8,958.4	34.1%	8,789.7	35.3%
Restaurant Operating Profit	5,327.8	20.3%	4,818.0	19.3%
General & Admin Expenses	1,857.3	7.1%	1,524.8	6.1%
Operating EBITDA	3,470.5	13.2%	3,293.2	13.2%
Y-o-Y EBITDA Growth %	5.4%		(12.9%)
Depreciation	2,262.1	8.6%	2,041.0	8.2%
(Other Income)/Expense, Net	(293.2)	-1.1%	(241.5)	-1.0%
Financial Expense	1,454.9	5.5%	1,271.3	5.1%
Exceptional items*	(350.0)	-1.3%	91.9	0.4%
PBT	396.7	1.5%	130.5	0.5%
Tax	73.4	0.3%	9.0	0.0%
PAT	323.3	1.2%	121.5	0.5%
PAT (pre-Ind AS 116)	701.6	2.7%	461.5	1.9%
Cash Profit After Tax	2,350.8	9.0%	1,905.2	7.6%
SSSG (%)	(1.1%)		(2.9%)
New Store Openings	48		47

Note: *Exceptional Items include one-time gain/ expense on account of assets written off pertaining to restaurants relocation/closure, income from sale of assets and incremental gratuity impact. (Refer to Notes 5, 6 & 7 in Financial Results for details).

Risks and concerns

Westlife Foodworld adopts a proactive and structured approach to risk management, integrating robust governance frameworks, internal controls and targeted mitigation strategies across its operations.

The Company continuously identifies, assesses and manages key risks spanning food safety, human rights, responsible sourcing, nutrition and responsible marketing, supplier practices, ethics and compliance, climate action, and data security.

Through stringent quality standards, responsible business practices, supplier oversight, cybersecurity measures and sustainability initiatives, the Company strengthens operational resilience, safeguards stakeholder trust, ensures regulatory compliance and supports sustainable long-term growth.

Consolidated operating results

In FY 2025-26, Westlife Foodworld delivered a steady operating performance amid a challenging consumption environment. The Company continued to focus on disciplined execution, supply chain efficiencies and cost governance across restaurants. While reported gross margin remained broadly stable, like-for-like gross margin improved by 140 basis points during the year, indicating stronger underlying operating efficiency.

Restaurant Operating Margin expanded by 100 basis points year-on-year, while Operating EBITDA margin remained stable despite inflationary pressures and investments in growth initiatives. Cash Profit After Tax increased to approximately Rs.2.4 billion, representing 9.0% of sales.

The Companys digital ecosystem continued to strengthen, with digital channels contributing 76% of total sales, an increase of over 100 basis points year-on-year.

This growth was driven by higher customer engagement across the McDonalds App, McDelivery platform and selfordering kiosks, enhancing convenience, personalisation and operational throughput. During the year, cumulative app downloads surpassed 52 million, while monthly active users reached approximately 3.5 million, registering healthy double-digit growth and reinforcing the Companys omni-channel strategy.

People

Westlife Foodworld continues to strengthen its organisation by attracting and nurturing high-quality talent, robust processes, and a culture of excellence. The Company remains focused on enhancing both individual and collective capabilities through targeted learning and development programmes, enabling employees to deliver faster and more efficient customer service.

As of March 31, 2026, the Company employs over 10,473 individuals, reflecting continued investment in building a strong and future-ready workforce.

Health, Safety and Environment (HSE)

Westlife prioritises employee health, safety, and wellbeing through a holistic approach that integrates safe work practices, employee engagement, and continuous capability building. The Company fosters a supportive and inclusive workplace, backed by fair policies and strong leadership involvement. A comprehensive safety framework, aligned with global standards, is reinforced through regular audits, risk assessments, and well-defined SOPs. Restaurants are equipped with essential safety infrastructure, including fire protection systems and first aid readiness, ensuring emergency preparedness. Ongoing training, including onboarding sessions, periodic drills, and expert-led workshops, further strengthens awareness and operational safety.

Corporate social responsibility

Westlife recognises that its growth is closely tied to the well-being of the communities it serves, and continues to invest in healthcare, education, and social impact initiatives. Through Ronald McDonald House India, a Section 8 non-profit and part of a global network, Westlife Foodworld provides free accommodation and supportive care to families of children undergoing medical treatment. During the year, the Ronald McDonald Family Room at Government Cancer Hospital, Aurangabad, celebrated its first anniversary, marking a year of providing comfort, care and togetherness while easing the emotional and financial burden on families. Extending this commitment, Community Month 2025 initiatives such as partnerships with Catalysts for Social Action and the Round-Up Your Bill 4.0 campaign further engage customers and communities, turning everyday moments into opportunities to spread joy and support families in need.

The effectiveness of internal control systems

WFL has a robust internal control system meticulously designed to ensure comprehensive adherence to all policies, diligent execution of all procedures, and full compliance with all legislative obligations. The processes for authorisations, approvals, and audits, are thoroughly documented and executed. Every facet of financial and operational control is comprehensively covered by an all-inclusive internal audit framework. The internal audit team comprises highly experienced professionals drawn from finance and audit departments, including senior management members of Westlife Foodworld Limited. This team actively oversees the restaurant operations and all other essential support functions.

The adequacy of internal control systems

The internal control framework is designed to monitor the efficient utilisation and protection of resources, as well as to ensure unwavering compliance with all legal and internal policy requirements. The Companys well-documented guidelines form an integral component of the overall governance structure, encompassing every aspect of the business. The Internal Control department provides robust support to the Audit Committee, operating independently by reviewing procedures, assessing operating systems, and conducting internal audits with the assistance of external co-sourced auditors.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectations and estimations which may be forward-looking statements within the meaning of applicable Securities Laws and Regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual results could differ materially from those expressed in the statements or implied due to the influence of external factors that are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements based on any subsequent development, information or events.