Robust store rollouts in the works; focus on dine-in and delivery
Food service players such as Jubilant FoodWorks and Westlife Development are putting a blueprint in place that will see the two companies accelerate store launches and focus on both dine-in and delivery in the future.
The move comes as the fast-food business recovers fast amid a rapid shift from unorganised to organised and lockdown restrictions completely lifted across markets. Last week, Mumbai, among the last markets to reopen for dine-in services following a prolonged shutdown, permitted restaurants to remain open till 1 am.
Westlife Development, which runs McDonald’s restaurants in the west and south of India, will get back to adding 25-30 stores per annum from FY22.
“Store openings are on. Since real estate prices have rationalised, it gives us room to lock more properties. And our strategy has been to have a diversified real estate portfolio,” Amit Jatia, vice-chairman, Westlife Development said in a recent interaction with Business Standard.
Westlife Development is also expected to focus on both dine-in and deliveries as business recovers sharply.
“Dine-in sales for the month of December was 83 per cent of pre-Covid levels, which is a good sign. At the same time, sales from our convenience channels such as take-away, delivery and drive-throughs have remained robust. This to me indicates that the confidence in organised players, especially, western QSRs, remains intact,” Jatia said.
Jubilant FoodWorks, which is the master franchisee of Domino’s Pizza and Dunkin Donuts in India, said it had opened 57 Domino stores in the October-December period, the highest in a single quarter.
“We turned the corner decidedly in Q3 with Domino’s returning to growth, driven by strong momentum in delivery and takeaway channels,” Pratik Pota, chief executive officer and wholetime director, Jubilant FoodWorks, said. “We are now shifting gears and preparing for an exciting period of growth ahead,” he said.
In an investor call, Jubilant FoodWorks outlined its future plans including setting up over 110 stores in total in FY21. And indicating that it would add 3,000 stores in the future, up from 2,000 stores it had guided earlier.
Jubilant FoodWorks has a total of 1,314 stores right now, implying that the company will add three times the number in the coming years. On the other hand, Westlife Development operates 304 outlets currently, which it proposes to take to 500 by FY23. Then there is Burger King India, which listed in December, and has already said that it will open 700 restaurants by December 2026, up from 268 outlets now.
Analysts at brokerage Motilal Oswal say that the domestic food services industry, estimated to be Rs 4.2 trillion in size, is expected to grow by nine per cent over the next five years. Of this, the quick-service restaurants (QSRs) or fast-food chains have been the fastest growing and will remain so for the foreseeable future.
QSRs are expected to grow at the rate of 19 per cent over the next five years, driven by affordability, globally well-known and aspirational brands and benefits of scale and sourcing among other factors, Motilal Oswal said.
“In the post-Covid world, where 30-40 per cent of restaurants are expected to shut down permanently, QSRs are likely to emerge stronger and are well placed to gain share from other food-service segments,” the brokerage added.
Clearly, fast-food chains have a bright future ahead.