Mumbai: Westlife Foodworld, which runs McDonald’s restaurants across west and south India, has reported an adjusted loss for the second quarter, according to Reuters. The company posted a consolidated loss before exceptional items and tax of Rs 15.85 crore in the quarter ending September 30.
TradingView reported that stiff competition from local eateries and cafes, combined with soaring expenses, pushed the franchise operator into the red. This marks a significant reversal for the company that once rode high on India’s fast-food boom.
Market Screener noted that the company had already struggled in the July quarter, where profit plunged 62% to Rs 1.23 crore, missing analyst estimates of Rs 5.08 crore. Rising ingredient and labor costs weighed heavily on margins during that period as well.
Business Standard highlighted that the third quarter wasn’t much better either. Profit after tax fell 59% to Rs 7.01 crore for the three months ending December 31, as cost-conscious consumers cut back on discretionary spending amid persistently high food prices.
The troubles reflect a broader trend. Global fast-food giants that once drove India’s burger and pizza revolution have struggled to boost sales over the past two years. The Siasat Daily reported that weak wage growth has limited urban spending, while nimble local competitors are rapidly gaining ground.
Prestair Systems’ analysis revealed that Westlife’s first-quarter FY25 profit had already dropped a dramatic 88.7% – from Rs 28.83 crore to just Rs 3.25 crore. EBITDA fell 24.5% year-on-year, reflecting higher royalty costs and operational inefficiencies.
Yahoo News had earlier reported that the company’s fourth-quarter profit in May 2024 nearly vanished, sliding 96% – the lowest since a loss-making quarter in 2021. Same-store sales, which measure revenue growth from outlets open for at least a year, declined to just 5% during that quarter.
McDonald’s tried various strategies to attract customers, including promoting K-pop-inspired burgers starting at Rs 69. However, these efforts yielded only modest results, with same-store sales growth remaining sluggish.
The competition is fierce. Local cafes, online cloud kitchens, and regional chains are offering better value propositions. Rivals like KFC-operator Devyani International and Pizza Hut-operator Sapphire Foods have also reported challenges, with Sapphire even swinging to a loss in one quarter.
Despite the grim numbers, company Chairperson Amit Jatia remains optimistic.
Westlife anticipates a gradual improvement in dining-out trends as inflation moderates,” he said in a statement. “We’re observing positive signals in the market.”
Prokerala’s report showed that by May 2025’s fourth quarter, net profit had dropped 78% to Rs 1.52 crore, with revenue declining 7.74% quarter-on-quarter.
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The company isn’t giving up though. Westlife recently crossed 400 restaurant locations and plans to open 45-50 new stores in FY25, focusing on South India, smaller towns, and drive-thru formats. New menu items like the Chicken Surprise burger and expanded McCafé offerings are part of the strategy to diversify and enhance the dining experience.
The company aims to achieve an 18-20% operating EBITDA margin by December 2027 through strategic expansion and operational improvements. Whether this strategy will work in an increasingly competitive market remains to be seen.
With retail inflation cooling to multi-year lows, corporate India hopes consumer sentiment will improve. However, some analysts warn that sharp disinflation might also signal weakening demand – a double-edged sword for restaurant chains trying to stage a comeback.
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