Summary
Westlife Foodworld Ltd. - Q3 FY 2026 Earnings Call Summary Wednesday, February 04, 2026, 5:00 PM
Event Participants
Executives 4 Akshay Jatia (President & CEO), Chintan Jajal (Lead Investor Relations), Saurabh Kalra (Managing Director), Shardul Doshi (Chief Financial Officer)
Analysts 10 Amnish Aggarwal, Awais Bakshi, Devanshu Bansal, Gaurav Jogani, Harit Kapoor, Jignanshu Gor, Krishnan Sambamoorthy, Percy, Rehan Saiyyed, Rishi Dilip Mody
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Revenue | ₹670 crores | +2.6% YoY; 9M FY26 growth at +4.4% YoY despite a challenging macro environment. |
| SSSG | -3.0% | Negative 3% for the quarter; however, guest counts stabilized in Nov/Dec and turned positive in Jan. |
| On-Premise Revenue | ₹470 crores | +6.0% YoY; supported by strong dine-in footfalls and the ₹99 value platform. |
| Off-Premise Revenue | ₹200 crores | Slight decline YoY; impacted by volatility in 3PO aggregator performance and delivery channel shifts. |
| Gross Margin | ~65-67% (Implied) | Broadly stable QoQ; optical 400-500 bps shift due to regrouping processing charges from Opex to COGS. |
| Restaurant Operating Margin | 15.0% - 17.5% (Range) | +150 bps YoY; driven by internal cost optimization and supply chain efficiencies. |
| Operating EBITDA Margin | ~13-14% (Implied) | +70 bps YoY; improved despite higher advertising (A&P) spends and growth investments. |
| Cash PAT | ₹58.3 crores | 8.7% of sales; reflects steady profitability amid softness in top-line growth. |
| Digital Sales Contribution | 74% - 75% | Stable contribution; supported by 50 million cumulative app downloads and 3.5M MAUs. |
| Store Count | 458 Units | 10 new openings in Q3; management remains on track for 580-630 stores by 2027. |
Geographic & Segment Commentary
- West Region: Outperformed Southern markets with stronger recovery in guest counts. The ₹99 everyday value meal was first launched here in December, seeing immediate healthy momentum in dine-in footfalls.
- South Region: Continued to underperform relative to the West, though management noted convergence in momentum toward the quarter-end. Strategic interventions and value-led communication are being deployed to bridge the penetration and performance gap.
- Digital & Delivery: Own-app (McDelivery) performed strongly with a promise of 20-minute delivery, while third-party aggregator (3PO) performance was mixed. One major aggregator relationship saw significant softness, which the company is currently addressing through a more sustainable, non-transactional partnership model.
Company-Specific & Strategic Commentary
- Winning Consumer Value Proposition: Re-anchored strategy on five pillars: Value, Experience, Relevance, Profitability, and Consistency to drive guest count momentum. Early results showed mid-single-digit guest count growth in January.
- Menu Innovation & Merchandise: Launched merchandise-led campaigns (socks, sippers) and the “Merry Meal” which sold out in 6 days. New product categories like the “Protein Slice” (first of its kind globally) target health-conscious consumers.
- McCafé Strategy: Achieved 100% penetration across all eligible restaurants. Focus has shifted to building daily coffee habits through a new digital subscription plan and consistent beverage innovation.
- Operational Efficiency: Implemented a major regrouping of processing charges from other operating expenses to COGS to simplify financial reporting and align with operational reality.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Store Openings | 20-25 Units (Q4 FY26) | Catch-up expected in Q4 after a slower Q3 to maintain long-term expansion targets. |
| Total Network | 580-630 Stores (FY 2027) | Sustained target for FY27 based on better site selection and location intelligence tools. |
| SSSG Momentum | Positive (Jan 2026 onwards) | January saw positive SSSG; management is optimistic but cautious about calling a “sustained revival.” |
| Margin Trajectory | Accretive Expansion | Higher guest counts and SSSG recovery are expected to drive significant operating leverage. |
Risks & Constraints
| Risk | Context |
|---|---|
| Demand Volatility | Management noted the Informal Eat-Out (IEO) market remains flattish with no immediate macro uplift visible. |
| Aggregator Dependency | Growth in the off-premise channel is sensitive to the terms and planning alignment with 3PO partners, specifically one underperforming partner. |
| Regulatory (BIS) | Happy Meal sales have been impacted by the inability to import toys due to BIS regulations; shifting to books is a temporary, less effective measure. |
Q&A Highlights
Guest Count & SSSG Recovery
- Question: What is driving the January SSSG recovery and is it sustainable? (Gaurav Jogani)
- Answer: Momentum is driven by the ₹99 value platform and improved digital engagement. January showed healthy mid-single-digit guest count growth, providing early evidence that the value playbook is working across geographies (Akshay Jatia).
Aggregator Relationships
- Question: Why is delivery soft compared to peers who see aggregator growth? (Devanshu Bansal)
- Answer: Performance was inconsistent between the two main aggregators due to a shift toward a more profitable, sustainable partnership rather than transactional discounting. Corrective steps in Nov/Dec led to improvements in January (Saurabh Kalra).
Value Platform Margins
- Question: Is the ₹99 meal dilutive to margins? (Rishi Dilip Mody)
- Answer: No. It was designed to land the product mix right by shifting consumers from other entry-level offers (like the ₹69 1+1). Supply chain efficiencies and volume offsets ensure it remains margin-protected (Saurabh Kalra).
Regional Divergence
- Question: Why is South India lagging behind the West? (Percy)
- Answer: The West has higher brand penetration. The South interventions (value communication and execution) were deployed slightly later than the West but are now starting to converge in terms of momentum (Akshay Jatia).
Key Takeaway
Westlife Foodworld reported a resilient Q3 FY26, characterized by a 2.6% YoY revenue growth to ₹670 crores despite a -3% SSSG. The quarter was a transition period where management pivoted toward an “aggressive guest count growth” strategy centered on a ₹99 everyday value platform and high-impact digital campaigns. While October and November were soft, guest counts stabilized in December and turned positive in January, leading to positive SSSG at the start of Q4. Operationally, the company expanded margins by 150 bps through cost discipline and supply chain efficiencies, even while increasing brand investments. Strategic focus remains on own-channel delivery growth and McCafé habit formation. Management maintains its long-term guidance of reaching 580-630 stores by 2027, banking on the validated “value playbook” to drive sustainable volume-led growth in both Western and Southern markets.
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