Combo Deals Can’t Save Q1: Westlife’s Profit Sizzle Fades in a Competitive Frying Pan

Westlife Foodworld, the operator of McDonald’s outlets in West and South India, reported a sharp decline in quarterly earnings, missing analyst expectations as competitive pressures and inflationary costs weighed heavily on margins.

Key financial highlights:

- Consolidated profit after tax fell to Rs 12.3 million for Q1 FY26, down from Rs 32.5 million a year earlier

- Analysts had projected a profit of Rs 50.8 million, according to LSEG data

- Revenue rose 9 percent year-on-year to Rs 6.54 billion, driven by new store additions and modest same-store sales growth of 2.8 percent

- Core profit margin declined by 200 basis points to 14 percent

Competitive landscape and cost pressures:

- Westlife added 15 new restaurants during the quarter, bringing its total count to 421

- The company ramped up promotional spending, including low-cost combos like McSaver Meals priced under Rs 69

- Rising costs of key commodities such as oil, coffee, and cocoa pushed overall expenses up by 11.7 percent

- Regional and international quick-service rivals, including Burger King’s parent Restaurant Brands Asia, intensified pricing competition

Consumer sentiment:

- Discretionary spending remains subdued amid high food inflation and soft wage growth

- Westlife expects gradual recovery in dine-in traffic but acknowledges ongoing pressure from online kitchens and local cafés

The results reflect a challenging quarter for India’s fast-food sector, where aggressive pricing and evolving consumer habits are reshaping the competitive dynamics.

Sources: Reuters, Economic Times, Business Standard, ThePrint, Yahoo Finance