Amit Jatia, Vice-Chairman, Westlife Development Pvt. Ltd. talks about third-quarter numbers of the financial year 2020-21, impact of bird flu on his business, product pipeline and commodity price hike and plans to raise prices of his products among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

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Q: How will you summarise the third quarter of FY21 and what were the important highlights? Also, tell us about the exceptional gain of Rs 4 crore that is visible in your result?

A: If you have a look at it, there has been a lot of processes month-on-month and from October, when Mumbai and Maharashtra opened these stores. The good news is while exiting the quarter in December, we were at 97% pre-COVID levels. Pre-COVID being February 2020. The in-store dining has also recovered almost 85%. The biggest thing about this quarter is that the sales of our convenience channels in not falling although our stores are recovering.

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So, I expect that in the coming quarters the when in-store will continue to grow, the convenience channels will be there, they are here to stay and with that our same-store sales will grow well in the coming quarters ahead. The other more important thing is the margins growth was also good. In fact, if you have a look on December then in the month, we delivered an operating EBITDA of 13.1% at 25% lower sales. It gives happiness that at lower sales we were able to maintain the operating EBITDA on a year-on-year basis. So, overall, I would say that it has progressed well in the quarter, the consumer confidence is looking good, and I have faith that recovery will start in the coming quarters, particularly from January onwards. You also talked about the profit, it stood at almost Rs 8 crore. So, from losing Rs 20 crore to Rs 8 crore and cash flow was also good at 35%. So, all-in-all, it was a good quarter.

Q: Has Bird Flu had any impact, if yes, then can you quantify it and what kind of footfalls is happening? Also, to what extent your restaurants are open at this point?

A: As far as bird flu is concerned, bird flu is something that has happened three-four times in the past. And, we have seen that consumers do not reduce their visits, so it does not have any impact on the total sales, but the product mix shifts. So instead of chicken, particularly at McDonald's, we have a favourite product called ' Filet-O-Fish', so many people move towards it and there is plenty of vegetarian options. Therefore, overall sales remain but the product mix shifts. So, we are quite hopeful that things will remain the same as far as there is a question related to bird flu.

When it comes to opening of the restaurants and the footfalls, then almost 100% of the restaurants' have been opened, in fact, we have opened three new restaurants in this quarter. And, I am very proud to say that we have also opened a McDonald's at the departure of the international airport in January. The growth momentum has started at our end and we have plans to start 25-30 new restaurants in FY22. So, we are quite bullish that going forward the business will remain good and consumer confidence will continue to be strong.

Q: Tell us about the product launch pipeline and what kind of new additions will be seen on the menu?

A: McDonald's is a brand that has launched two new products even in this lockdown, which is a difficult period, and it showcases the strength of our supply chain. We have also launched a gourmet line of products and we want to encourage it a lot. The whole idea is that now people understand burgers and can relate themselves with it. Now, when burgers are becoming standardised, consumers want new news in it, they want big products, different fillings in different toppings. And, on the same basis, we have started this gourmet burger line and we are quite excited about the consumers' response to that.  

Q: We are seeing a continuous rise in commodity prices. How it has impacted your business, and have you taken any price hike due to it or have plans to do so? Also, how will you summarise the calendar year FY22 and what special will be seen from McDonald's end?

A:  Even I feel that inflation may come in the future as it all depends on how the supply constraints will declog. And, if consumption comes at a fast pace then suppliers will have to deliver at that pace. But this is not something new because, in the 20 years of our business, there were several times when the inflation used to increase a lot. So, we have already factored that if the commodity prices increase by 2-3% then we are trying to adopt such cost initiatives that it can negate it.

Therefore, we have deep-dived the P&L of every line item, particularly, we are closely monitoring the supply chain cost. We are talking with every supplier having an eye on their P&L that how we can take out the cost in it so that our efficiency increases and if inflation occurs then how we can deal with it. Lastly, we also hedge under which the commodities, where it seems that its prices can go up in the future, we hedge them for the whole year, particularly in the case of edible oil. So, we will navigate in this manner and it seems that commodity prices may go up, but the business should be planned to address that, and we have factored-in that at HRPL.